Zimbabweans can do a lot themselves to solve the problems. And last week the Governor of the Reserve Bank of Zimbabwe, Dr Gideon Gono, yet again stressed that Zimbabwe must produce its way out of trouble.
He has been saying this ever since he took over the helm at the central bank three years ago. The Government and the Reserve Bank have introduced a number of programmes that have halted the production decline and started recovery. Tobacco production this year was, for example, well above that of last year.
Now Dr Gono is going further.
He sees, as many other economists see, that getting agriculture fixed is the first and fundamental requirement. Zimbabwe must once again be totally self-sufficient in food, thus ending the continual drain on very limited foreign exchange needed for food imports, and must boost exports of its tobacco, cotton and other cash crops to earn more hard currency.
A lot of the inflationary pressure in Zimbabwe comes from continual pressure for foreign currency, and from the activities of those Zimbabweans who prefer selling essential food and other goods through the black market at very high prices.
The Government obviously makes food imports the number one call on its hard currency reserves. No one in Zimbabwe starves, but far too high a percentage of export earnings have to be spent on importing what Zimbabweans should grow and process themselves. Cut that drain and suddenly a lot of pressure on hard currency vanishes.
Secondly, flooding the market with Zimbabwean grown and processed food ' maize meal, sugar, cooking oil, soaps, and the like ' will kill the black market. Inflation can also be reduced by a decent harvest since the harvest is delivered over a couple of months, allowing many prices to be held steady, or almost steady, for a year.
Last season saw tobacco turn around. New farmers benefiting from land reform started taking the crop seriously. But the Reserve Bank helped a lot by allowing tobacco farmers to retain a significant percentage of their earnings from this export crop in hard currency. That incentive worked, and the coming season will see an even larger jump in production. All those new vehicles bought by tobacco farmers over the last few months with their foreign currency have excited a desire by others to join them.
So Dr Gono has extended the privilege of being partially paid in foreign currency to maize and cotton farmers, in the expectation that they too will go all out to boost production. He is almost certainly right.
Funding the cotton payments will not be difficult. Cotton is a double crop, the seed being sold to Zimbabwean industry for processing into cooking oil and stockfeed, and the lint being exported. Those exports can finance the foreign currency cotton payments and still leave a lot in the Reserve Bank coffers for other imports.
The willingness to add maize to the list implies that Dr Gono is pressing not only for self-sufficiency, which will save him one of the major drains on his limited currency reserves, but also for a resumption of exports.
Boosted agricultural production has many benefits downstream. Agri-industries processing the harvest can start moving towards full use of their factories, cutting unit costs and boosting gross national product. This, in turn, can be translated into higher real wages for industrial workers.
Mines have always, except for coal, been largely export-orientated and Dr Gono has done some clever footwork here to ensure that they get a decent price for the foreign currency they sell to the Reserve Bank, other compulsorily or optionally.
The stock markets took note of this. Mines shares doubled in price in three days as everyone worked out that mining was going to be really profitable once again.
Zimbabwe's economy was built on farming and mining. Industry came in to supply inputs and to process the products.
Dr Gono wants to go back to basics. He is correct and by building on the successes for previous pilot programmes launched by the Government and his bank, Zimbabwe's prospects should be a lot brighter this time next year.
