TSP OF 2019-2020

The Transitional Stabilisation Programme (TSP) was launched on 5

October 2018, and was valid till December 2020. The TSP is
underpinned by the Vision 2030, ‘Towards an Upper Middle-Income
Country.
Introduction:
 The Transitional Stabilization Program (TSP) implemented
in Zimbabwe during the transitional period of 2019/2020
was a comprehensive economic reform program launched
by the government. Its primary objective was to address
the economic challenges faced by the country, including
high inflation, currency instability, budget deficits, and low
investor confidence. The TSP played a crucial role in
laying the foundation for sustainable economic growth and
development. The focus of this presentation is to examine
how the TSP affected industrial management in Zimbabwe
during this crucial period.
Transitional Stabilization Programme
Objectives
 Stabilizing the macro- economy, and finacial
sector
 Introducing necessary policy and institutional
reforms, to transform to a private sector led
economy.
 Addressing infrastructure gaps
 Launching quick-wins to stimulate growth
Thesis statement:
 The implementation of the TSP in Zimbabwe during 2019/2020
had a profound impact on industrial management, bringing about
policy reforms, infrastructure development, trade promotion, and
improvements in access to finance, all of which aimed to
stimulate the growth, competitiveness, and resilience of the
industrial sector.
 The TSP focused on several key pillars or elements
1. Fiscal Discipline
2. Monetary Stability
3. Structural Reforms
4. External Engagement.
The specific ways in which the TSP
influenced Industrial management in
Zimbabwe during the transitional period.
1. Policy Reforms
 The TSP introduced reforms to streamline regulations and reduce
bureaucracy, facilitating a more favorable business environment
for industrial enterprises.
 The implementation of policy reforms aimed to promote ease of
doing business and enhance transparency, thereby improving the
overall operational efficiency of industrial management.
2. Infrastructure Development
 Under the TSP, significant investments were made in
infrastructure development, particularly in power generation,
transportation, and telecommunications.
 These infrastructure developments supported industrial
management by improving connectivity, reducing logistical
constraints, and enabling more efficient production processes.
3. Trade and Investment Promotion
 The TSP emphasized attracting both domestic and foreign
investments to industrial sectors, promoting trade and export-
oriented industries.
 Trade and investment promotion initiatives created new
opportunities for industrial enterprises, facilitated market access,
and enhanced the competitiveness of Zimbabwean industries on a
global level.
Continued

4. Access to Finance
 The TSP aimed to address the challenges faced by
industrial enterprises in accessing affordable finance for
expansion and modernization.
 By improving financial sector stability and promoting
lending to the private sector, the TSP facilitated
increased access to credit, allowing industrial
enterprises to invest in new technologies, upgrade
facilities, and increase productivity.
Review of the Transitional Stabilisation
Programme (TSP)
 A major critique of the TSP is that there were no effective consultations
and dialogue with key stakeholders to reach a consensus and to achieve
buy-in and support.
 A major reason for policy stillbirth and failure is the lack of effective
participation by key stakeholders and the citizens in policy formulation.
 Development is not a top down approach but rather a bottom up
approach.This is key to ensure that no one is left behind.
 The TSP is also based on shock therapy (a big bang structural
adjustment approach). Such an approach may however not be desirable
for a country like Zimbabwe that has serious capacity constraints in a
number of areas.
 Developmental welfare states adopt a sequential and gradualist
approach that focus on attacking the most binding constraints to
development incrementally rather than trying to address many
constraints simultaneously.
TSP underpinned by the vision 2030
 The TSP is underpinned by the vision ‘Towards an Upper Middle-
Income Country’ by 2030. According to the World Bank, upper
middle-income economies are those economies with a Gross National
Income (GNI) per capita between $3,956 and $12,235.
 However, attaining upper middle-income status and attaining pro-
poor, decent-work rich and sustainable development are not the same
thing.
 In other words, attaining upper middle-income country status is
necessary but not sufficient to ensure the attainment of pro-poor,
decent-work rich and sustainable development.’
 Indeed, the country can attain upper middle-income status by 2030
without necessarily reducing poverty and creating full and productive
employment opportunities.
The TSP envisaged overall real GDP growth
 The TSP envisaged overall real GDP growth (%) of 6.3% (in 2018); 9.0%
(in 2019); and 9.7% (in 2020) as shown in Table 1. While the TSP has
clear economic growth targets there are no explicit targets on employment
creation and poverty reduction.
 The TSP is therefore not based on a holistic approach to sustainable
development that integrates economic, social and environmental
imperatives and considerations.
 It is rather predicated on the underlying conventional macroeconomics
assumption of ‘trickle down’ that once economic growth is attained that
will automatically result in employment creation and poverty reduction.
 Given that future economic growth is projected to be underpinned by the
natural resource sectors (in particular mining) it is highly unlikely that a
lot of employment opportunities would be created owing to high capital
intensity. Such a projected growth pattern will also likely result in many
people being left behind and left out of the growth dynamic.
Table 1
Source: ZIMSTAT, IMF World Economic Outlook (WEO) database.
Sectoral spending targets and performance based
on the 2019 and 2020 estimates
 Table 2 presents the sectoral spending performance of Zimbabwe based
on the 2019 and 2020 National Budget estimates. There has been an
increase in spending towards social protection from an estimated 0.25
percent of GDP in 2019 to an estimated 0.7 percent of GDP in 2020.
 Similarly, public health spending has increased from an estimated 7
percent of total public spending in 2019 to an estimated 10.1 percent in
2020, albeit still below the 15 percent Abuja Declaration benchmark.
 There has been a notable increase in agriculture spending from an
estimated 12.7 percent in 2019 to an estimated 17.5 percent in 2020.
 Infrastructure spending has however declined from 10 percent of GDP in
2019 to an estimated 7.2 percent in 2020. This reflects the weak fiscal
environment constraining government spending in general.
Table 2
Source: Calculations based on the National Budget statements.