ZIMBABWE has set a vision of getting to an upper middle income (GNI) status by 2030. The target of the policy is to fundamentally transform Zimbabwe into an upper middle income economy, with a per capita gross national income of over US$4 000 in real terms by 2030, from the current US$1 449 lower income bracket.
Attainment of this vision is doable but is not a walk in the park and will require a departure from business as usual as it means an annual growth in income of no less that 14% in the eight years from 2022 to 2030!
Zimbabwe annual GNI must go up from the current US$22 billion to US$69 billion. This takes into account Zimbabwe’s population growth of 1,48% a year.
In 2023, Finance minister projected a GDP growth of 5,3%. By comparison, the most impressive sustained economic growth in history is China, which delivered a sustained annual growth of 9% over the last 20 years to 2021.
Attainment of a middle income status means that by 2030, that is within the next eight years, Zimbabwe’s GNI must go up more than three times to around US$4 500 from the current US$1 449.
According to 2022 world bank statistics, a GNI of US$4 500 will usher Zimbabwe into the same league as Namibia (US$4 880), South Africa (US$6 780), Botswana (US$7 360), Malaysia (US$11 780) and China (US$12,860).
As can be learnt from China delivering top drawer performance constantly over long periods of time requires discipline, a strong governance culture and intense accountability structures.
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Strengthening good governance will have a positive impact on promoting investment in the region, hence it must be catalytic in economic transformation to assist in the achievement of the 2030 goal. This requires a more robust, no-nonsense governance framework.
This is because good governance creates a stable and predictable environment that is attractive to investors. Governance and accounting professionals are the custodians of governance within their institutions.
When investors perceive that the rule of law is respected, human rights are protected, and corruption is kept in check, they are more likely to invest in the region.
Here are some specific ways, in which strengthening good governance so as to set up conditions that will promote investment in Zimbabwe and thereby assist and catalyse economic transformations.
Rule of law
Strong governance structures will instil discipline by ensuring that there are clear and strong documented legal and governance systems that are fair and transparent.
Clear rules of engagement are essential for attracting investment. To bring in transformative capital, investors need to trust that their investments will be protected and that disputes can be resolved through legal governance structures that are not only impartial but are also efficient.
For Zimbabwe to be able to sustain a growth of 7% over the next seven years, there is need to bring in capital, which in turn is timid and demands solid governance structures
Transparency
Transparency in government processes, such as procurement, can help to reduce corruption and increase investor confidence. When investors can see that government contracts are awarded in a fair and transparent manner, they are more likely to invest.
This transparency will reduce costs through the removal of middle men/women, who really do not add any value to the development of infrastructure.
It is interesting and commendable to see the amount of roads Zimbabwe managed to build over the last five years by simply engaging direct players.
Zimbabwe has a huge infrastructure deficit, which needs to be closed over the next seven years if we are to attain a middle income status.
One of the key areas where good governance is critical is in the management of public finances.
Effective management of public finances is essential for ensuring that resources are used efficiently and that public services are delivered effectively.
In Africa, corruption and mismanagement of public funds are widespread, and this has had a negative impact on economic growth and investment.
According to a report by the United Nations Economic Commission for Africa (UNECA), corruption costs Africa around US$148 billion per year.
To tackle corruption and improve public finance management, many African countries have adopted measures such as the establishment of anti-corruption agencies, the adoption of open budgeting processes, and the implementation of e-government systems.
These measures have had some success in improving governance standards, but there is still a long way to go to ensure that public resources are used effectively.
Accountability
Another critical aspect of good governance is ensuring that there is transparency and accountability in government decision-making processes.
This requires effective public institutions, a free and independent media, and civil society organisations that are able to monitor and report on government activities.
In recent years, there has been a growing recognition of the importance of transparency and accountability in promoting good governance in Africa.
One way in which transparency and accountability can be promoted is through the adoption of open data policies.
Open data policies aim to make government data more accessible to the public, which can help to increase transparency and accountability. Many African countries have adopted open data policies in recent years, including Ghana, Kenya, and Tanzania.
However, there is still a need to ensure that open data policies are effectively implemented and that the public is aware of the data that is available to them.
In addition to open data policies, there are other measures that can be taken to promote transparency and accountability, such as the establishment of public procurement laws and the adoption of freedom of information legislation.
These measures can help to ensure that public resources are used effectively and that the public has access to information about government activities.
Political and governance stability
A stable political environment is crucial for attracting investment. Investors need to have confidence that their investments will not be threatened by sudden changes in government policy or instability. To this end Zimbabwe has been able to hold elections when due and deliver a relatively stable political environment.
There is room for improvement though to avoid the winner take all mentality and have an all embracing social contract that will ensure the nation is united on delivering high growth.
Another key area where good governance is essential is in ensuring a stable and predictable regulatory environment. Investors need to be confident that the rules and regulations governing their investments will remain stable over time and that there will be no sudden changes that can undermine their investments.
This requires strong institutions, an independent judiciary, and a legal system that is predictable and consistent.
Business-friendly environment
A business-friendly environment that encourages entrepreneurship and innovation is an absolute must if the country is to attain Vision 2030.
The commercial arbitration system must work well and be in a position to fairly deliver judgements timeously in a manner that can be seen as free from political interference.
A governance system that delivers on justice will help to attract investment. Further confidence can be achieved through measures, such as reducing bureaucracy, eliminating unnecessary regulations, and providing incentives for investment.
In recent years, there have been some positive developments in this area, with many African countries adopting measures to improve their regulatory environment.
For example, the World Bank's Doing Business report shows that 39 African countries have implemented regulatory reforms in the past year, with improvements seen in areas such as starting a business, registering property, and enforcing contracts.
However, challenges remain in ensuring that regulations are enforced effectively and that there is no political interference in the regulatory process. This requires ongoing efforts to strengthen institutions and improve governance standards.
Human rights
As we journey to the creation of a middle income status, respect for human rights, including labour rights, is important for attracting and sustaining the necessary investment.
Investors are more likely to invest in countries that respect human rights and have a stable and peaceful environment. Currently Zimbabwe has many skills outside the country who are unable to contribute to the Vision 2030.
In summary, strengthening good governance is essential to promote investment in Zimbabwe so as to achieve the 2030 vision. This is best done through creating a stable, predictable, and attractive environment for investors.
The African governance architecture
One of the most significant developments in recent years has been the African Union's adoption of the African Governance Architecture (AGA) in 2014. The AGA is a framework that provides guidance on how African countries can improve governance and enhance democracy, peace, and stability.
The AGA includes several key components, such as the African Charter on Democracy, Elections, and Governance, which outlines the principles of democratic governance and the rule of law.
Despite these positive developments, there is still much work to be done to strengthen good governance in Africa.
The Mo Ibrahim Foundation's 2020 Index of African Governance shows that overall governance performance has stagnated over the past decade, with only six countries showing significant improvements. This highlights the need for continued efforts to improve governance standards in Africa.
Finally, it is worth noting that improving governance standards is not only important for attracting foreign investment but also for promoting domestic investment.
Domestic investors also need a stable and predictable regulatory environment, effective public institutions, and transparency and accountability in government decision-making processes.
Conclusion
In conclusion, strengthening good governance is a priority for the investment drive necessary for Zimbabwe to attain its vision. There have been some positive developments in recent years, such as the adoption of the African Governance Architecture and improvements in the regulatory environment.
However, challenges remain in areas such as public finance management, transparency, and accountability.
Continued efforts are needed to ensure that public resources are used effectively, regulations are enforced, and government decision-making processes are transparent and accountable.
By doing so, Zimbabwe can attract foreign investment, promote economic growth, and improve the lives of its citizens.
Seven years to the vision is a short time. We need more collective efforts and strong social contact.
- Mafukidze is a development finance expert and also the chief executive officer at Alpha Media Holdings. — [email protected].
