What the government must do about the economy.



president Mugabe (picture from The Herald)

Zimbabwe presents unique challenges for the development community and for Africa. Zimbabwe's increased political repression, descent into economic collapse, and growing international isolation have posed a huge threat and impact well beyond the country's borders.

Donors, who have been developing strategies for dealing with 'difficult partners,' have been frustrated by their inability to encourage a more positive direction for the country.

Already the country has been through a whole lot of struggles and not having our own currency has been one of the most embarrassing thing for a  big country like Zimbabwe.

 Zimbabwe has its unique challenges and competencies to that of the US, therefore the government must create a unique innovation funnel. The government must move beyond regulation, fixing and shaping markets into creation of market processes, products and solutions. Innovation is often expensive, revolutionary, radical and risky and most financial institutions will not dare that devil.

But it’s time the government looks beyond agricultural and infrastructure banks and seed into innovation, investment and  banks that are supportive of new initaives. In addition the government should consider propagating state-owned venture capital firms as well as providing funds to design and implement private equity, angel investors and crowd-funding platform for Zimbabwe. The failure to have a structured way to develop the new economy has partly been the cause of stunted economic growth and disabled private-public partnerships.

By investing in innovation hubs and other channels the government will reap rewards through tax on new enterprises and the new jobs will create growth, growth that further widen the base to further tax in a snowballing effect. Countries like Finland, China and Brazil are actually retaining equity in the new ventures propagated by state venture capital funds.

Some countries like Rwanda retain equity and dispose the same at a profit. In the end an innovation fund and hub is not social service but a calculated investment proposal that makes a huge impact on the economic health of the country. The benefits to the country are both direct and indirect. It doesn’t mean innovations will not fail; they will and it’s risky but it’s a risk worth taking by none other than the government.

To nip the current uninspiring and retrogressive financial planning model the government must consider progressive planning that ushers in a new economy. Budgets must be lobbyist-free, must balance recurrent with incremental and incremental with radical. This will require adaptation to the new world order, development of new competencies, new strategic innovation models and development of a tradition of entrepreneurship.