The price of inflation will be very high for Government of Zimbabwe

 The price of inflation will be very high for Government of Zimbabwe
Published: 22 August 2019
How many jobs were created in the Midlands province in the month of June 2019? Were there policies put in place, 12 or 6 months ago, in Midlands that can be referenced as explanatory to the job numbers in June 2019? Where does one start to find such data, statistics, and information? The assumption is that the Government of Zimbabwe has aspirations to create jobs; though unlike, say, ZIMASSET, this administration has not given a numeric target at the end of a specific time horizon. It follows that those aspirations, which logically direct the government's industrial agenda as it relates to job creation, should have some form of data, statistics, and information to track efforts from day 1 to day x of an intentional job creation program, right?
In the famed Silicon Valley, there is a phrase: "you make what you measure". It implies that at a micro-level, an enterprise is determined by what it clearly states as its intended measurable outcomes. As the source of the phrase suggests, in Silicon Valley, start-ups are differentiated by financiers on what it is they intend to measure! The question raised in financing rounds is not what product or service a start-up is into, as many others in the same industry are obviously into the same business, but rather, what will the start-up intend to measure from using sought finance? Measures offer a more specific cause of a business's agenda than what product or service it is into; for instance measures are as diverse as, sales as per receipts, profit margins as per gross or net, user subscriptions as per receipts or actual human numbers, patents, or licenses etc… All these measures differentiate an enterprise's strategy and approach to what seem common businesses. Moreover, these measures attract varied appeal of financiers. The premise of "you make what you measure" is the often the overlooked context when arguing the market valuation and stock equity of Silicon Valley companies. The tech sector is aware that, it is not just future discounted cash flows that determine stock prices.
As a parent, you wish for your child to get an education. The education business is quite standard is it not? Of course, it is not! There are more than 50 schools that as a parent you can consider to send your children, but what makes you so selective about your eventual decision? It is the differentiated measures pursued by specific schools that influence your decision! This means of selection is muddled by the broad use of "quality"; "we want the children to go to quality schools". But within quality, there are many varied measures of quality, such as grades, social grooming, disciplinary customs, cultural and diversity exposure, etc…that schools measure themselves to achieve. As a parent you are more intentionally vested in the differentiated measures pursued by each school you consider, and eventually make your choice on these measures!  
A parental anecdote was necessary as not many of us have played, or are likely to play, the role of financier than we are to be parents. Hey, look at what inflation is doing to the value of our monetary savings! It is important to grasp a deliberate context of how measures differentiate entities, from businesses looking for finance, schools looking for student enrollment, and governments looking for conviction in their policy aspirations. Why would you lend your conviction to a government's seriousness to job creation when it has no measures for itself? Data, statistics, and information are generically standardized, but an administration distinguishes itself by giving its own emphasis to these measures!    
first sign President Mnangagwa's administration's lacking intentionality was the mantra "middle income by 2030". It was as arcane as the policies that we have seen so far. Vague measures produce ambiguous efforts. Predictably came the issue of managing inflation; what is the cost of living in Zimbabwe, and how is it measured? Zimbabwe's inflation measures wouldn't be received so skeptically and unkindly by global regulators, investors, and asset managers, if the government was confident and intentional in its own measure. This starts with a definite description of the basket of goods that government chooses to include in its measure. For instance, this year the Office for National Statistics in the UK added baking treys and electric toothbrushes to their measurement of inflation. Yes darling, the cost of living is relative, and while baking treys and being particular about the kind of toothbrushes citizens use may seem outlandish to your low expectation having self, this is how the Brits have chosen to determine theirs! Have some tea as you digest those scones, love! Inflation measurements are ultimately determined by the standard of living a government boldly claims for its citizens. The Government of Zimbabwe is timid to share its own benchmarks! That is a fundamental problem.

Perhaps though, a greater consideration is that Zimbabwe's non-definitiveness makes counterparts just as unsure. Inflation, to the Americans for instance, has a more serious interpretation. It is a tool used to manage the value of incomes and savings of franchised citizens. Listen buddy, so sensitive is this matter that the discipline of monetary policy since 1945 has been to approach it in basis points. The incomes and savings of recent World War 2 veterans under Harry Truman must retain as near value, to the basis point, as under Donald Trump today. That is 12 presidents apart. When Zimbabwe doesn't show near reverence for the value of incomes and savings, institutions such as Fitch remove Zimbabwean stock indices from their product line. From a bi-lateral perspective, how can a counterpart take you seriously in aiming to be middle income by 2030 when you exude such inconsideration to the value of incomes and savings? What is the monetary value of a Zimbabwean pension that was invested a year ago?       
Indeed the problem of undefined measures is more pervasive across the continent than just Zimbabwe's administration. Developmental agencies such as the World Bank and Organization for Economic Co-operation and Development (OECD) have emphasized for years that data, statistics, and information have to be pertinent matters! Minister Mthuli should reach out to developmental agencies to receive capacity building to ZimStat so as to compute reliable macro-economic figures, as defined by the government of Zimbabwe.
Inflation is a measure of great consequence. It is perhaps the single most important measure that portrays an administration's control of the macro-management. The price of incongruent inflation data, statistics, and information may end up too high if there is no definite alignment. If Minister Ncube wishes to gather conviction in his TSP, he may need to step back and start from a fundamental reflection; which measurements differentiate this government? You are what you measure!
- FinX
Tags: ChrisChenga,


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