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Zimbabwe Digital News
By Michael Tichareva
In recent articles on The Sunday Express – we have been talking about infrastructure investment in Africa, and Zimbabwe in particular. We emphasised the importance of sound Government policy among other issues.
This requires solid policy formulation frameworks and processes.
The Government policy formulation process proposed by John Kingdon, Emeritus Professor at the University of Michigan in the US, reasons that decision making in Government follows three main streams: the problem stream, the policy stream and the political stream.
To illustrate, the SADC Industrialisation Strategy and Roadmap, 2015-2063 is a good example.
This was crafted in the context of existing national and regional policies and specifically the decision taken at August 2014 Summit at Victoria Falls.
Decision making streams in action
In developing the SADC strategy, first was identification of the problems hindering sustainable economic development and poverty reduction in the SADC region – the problem stream. This was then followed by the Victoria Falls summit decision and the strategy development process – the policy stream, and there was overwhelming political support – the political stream.
The outcome was a resounding strategy document for SADC industrialisation and regional integration to be implemented in 3 phases up to 2063. The first phase was meant to last until 2020, focusing on laying down the foundations for long term development.
The second phase, covering 30 years to 2050, constitutes a period of heavy lifting development and establishing strong momentum for competitiveness. The final third phase, covering 13 years to 2063, builds up for the convergence with the African Union long term Agenda 2063, and crossing into a fully developed country stage.
The strategy identifies accelerated industrialisation as being hampered by three binding constraints – inadequate and poor quality infrastructure, a severe deficit of the skills needed for industrial development and insufficient finance.
The issue of inadequate infrastructure and lack of finance, therefore, always takes centre stage. Skills can always be imported from global partners with local people up-skilled as long as there is funding, an enabling policy environment, and adequate political will.
Strategy on infrastructure development policy
Increased investment in new infrastructure, allied with improved management and additional spending on maintenance, are prerequisites for industrial take-off. The challenge remains accelerating the implementation of the strategy.
Efficient and affordable infrastructural services – consisting of transport, communications, ICT, energy and water supply – are critical inputs for reducing transaction costs for industry and trade, as well as for enhancing the economic and social wellbeing of society at large.
Effective implementation of the strategy would, indeed, require the building and/or close coordination of these services in a timely and optimal manner.
To this effect, the strategy calls for (i) enhanced access to quality infrastructure; (ii) timely and locational availability of services to reduce input and transaction costs; (iii) addressing the infrastructural deficits at the national and regional levels; (iv) provision of quality infrastructure for the implementation of the Industrial Upgrading and Modernisation Programme; and (v) upgrading the transport, energy, ICT and water supply infrastructure.
Extra attention should be paid to maintenance and quality, as it is not simply the supply of infrastructure that is constraining economic development, but the failure to provide adequate resources for the upkeep and maintenance of existing infrastructure, while ensuring that due attention is paid to the quality of infrastructure provision.
The strategy advocates that (i) the current Regional Infrastructure Development Master Plan (“RIDMP”) should be fast-tracked and aligned to meet the varied needs of the industrialisation strategy; (ii) a strategy for leveraging the RIDMP should be developed to catalyse industrial development and reduce current high costs of doing business; and (iii) the infrastructure support programme for industrialisation should be planned and implemented as a continuum, extending beyond the medium term.
Strategy on financing policy
To overcome the severe constraints imposed by the infrastructure and skills deficits, the strategy notes that governments need to re-order their public expenditure programmes to give greater priority to public and private investment in physical infrastructure and human capital development.
In part, this depends on the willingness of governments and electorates to embrace the paradigm of change in the form of a switch from consumption-led economic growth to investment-driven expansion.
The strategy notes that existing savings and investment levels in the SADC region fall well short of what is needed to drive structural transformation, economic diversification and poverty reduction.
Given the present and likely future state of the global economy, SADC countries cannot afford to rely on foreign savings to make good shortfalls in domestic savings, hence the need to develop the domestic sources that includes the internal fiscus, the financial sector, the capital markets, the private equity and debt funds, the public-private partnerships, SADC Development Fund, Sovereign Wealth Funds, diaspora remittances and institutional savings, including Pension and Insurance Funds.
Countries like Zimbabwe need to pay greater attention to this SADC strategy for industrialisation.
Michael Tichareva is the Managing Director of National Standard Finance Africa and the Executive Chairman of its affiliate, Claxon Actuaries. He can be reached on firstname.lastname@example.org or email@example.com.