MIDLANDS STATE UNIVERSITY

FACULTY OF COMMERCE

DEPARTMENT OF BUSINESS MANAGEMENT

STRATEGIC MANAGEMENT

LEVEL 4.2 PARALLEL

NAME SURNAME REG. NUMBER

Tafadzwa Murungu R0645048

Kudakwashe G Chapanda R0645087

Edina Tengende R0645047

QUESTION:

Evaluate the adequacy and relevance of STERP 1 and STERP 2

Mindful of the urgent need to restore economic stability, immediately after its formation,
the inclusive Government, on the 17th of March 2009, launched a home-grown economic
blueprint, the Short-Term Emergency Recovery Programme (STERP). STERP is a
stabilization programme, which lays the basis for a more transformative medium- to
long-term economic programme.

The Finance Minister Tendai Biti launched the 3 year Macro-Economic Policy and
Budget Framework: 2010-2012 (STERP II) as a follow-up recovery programme to the
Short Term Economic Recovery Programme (STERP) which he announced when he took
office at the beginning of the inclusive government in February 2009. The Minister said
the vision of both programmes was to create a functioning, democratic and viable
economy. Both STERP Programmes prioritize and pursue democratisation as well as
socio-economic strategies that guarantee the integrity of the poor in the economic growth
policy framework.

The implementation of STERP was to a greater extent not successfully implemented.

This is because it did not consider how the country will get the finances to finance its
operations. Robertson (2010) stated that, bringing about the recovery would be
challenging enough even if the country had actually suffered from the claimed effects of
“sanctions”, but Zimbabwe began to suffer from self-inflicted damage long before
anyone reached for the almost entirely invalid “sanctions” excuse. If this enlarged and
revised document included any evidence that the recovery proposals included efforts to
repair the damage deliberately done, assistance would almost certainly be offered much
more readily and much more generously. But no such lines appear in the text, or to
address the fact that the country’s problems are as serious as they are because decisions
were taken to close down Zimbabwe’s biggest business sector and to dispossess the
investors who had built this capacity.

What does appear in the statement is that, “The Framework strategies to transform
Zimbabwe’s agriculture will involve a greater reliance on efficient inputs delivery and
farm output marketing systems and a smooth integration of agriculture with the domestic,
regional and international markets.” Regrettably, the phrases suggest we will all be
putting our trust in bureaucratic procedures in the apparent belief that they can make
business acumen and talent unnecessary. The importance of the people who had already
transformed Zimbabwean agriculture and who used to be relied upon to deliver all of the
efficiencies required is not acknowledged, not recognised and not admitted.

Dairy development Consider the paragraphs under the heading Dairy Development:
Challenges experienced with overall livestock production have also undermined dairy
farming. As a result, raw milk supply, which was 256 million litres per annum in 1990,
has since fallen to current levels of 23 million litres. This is against national demand of
96 million litres, and an installed capacity of 350 million litres.

The general decrease in dairy production is also a result of viability challenges,

unavailability of stock feeds on the market in previous seasons, as well as crippling
labour shortages. The Framework targets increasing dairy production to around 25
million litres in 2010. Supportive measures during 2010 to 2012 include support for
growth in the dairy herd, which had been depleted to around 140 000, against an all-time
high of about 1.4 million.

Simply dishonest While a few facts can be identified in those lines, the relevant facts are
missing and some of the claims are simply dishonest. Dairy farming was not undermined
by livestock production challenges. It was undermined by the eviction of the owners of
nearly all the dairy farms in an acquisition process that destroyed a large percentage of
the dairy herds. True enough, “livestock production challenges” did follow, but for
reasons carefully avoided in the STERP II document. The relevant facts are that highly
skilled dairy farmers used to produce more than 10 times the current volume of milk, and
because this was well in excess of national requirements, a wide variety of diary products
could be exported. Now that production is about a quarter of the country’s requirements,
substantial imports are needed.
The confiscation of dairy farms, complete with the massive investments in equipment and
breeding stock, was as expensive to the country as it was unjust to the investors who had
created the businesses. The claims now implied in the STERP II programme that the
industry can be revived as if all this never happened and as if people who acquire such
farms for nothing can run them as well as those who spent sometimes a lifetime building
them is as dishonest as it is stupid.

Choosing to redefine farming as a social or even political activity instead of a business

activity does not release the population from its need of food or paid employment, any
more that it releases food processing factories of their need of agricultural inputs.
Equally, any attempt to claim that farming skills are inborn, natural, inherent, intuitive or
instinctive simply denies the existence of the vast range of technical, scientific,
engineering, financial and marketing experience that farmers need in order to survive.

Glaringly obvious in urging the international community to assist the Government in its
economic recovery and growth endeavours, the Deputy Prime Minister was perhaps
unaware of facts that are glaringly obvious to nearly everyone else: Zimbabwe used to
stand out as one of the Third World’s most successful developing countries, but it chose
to impose policies that have damaged or destroyed most of its productive capacity. It is
now asking for assistance, not to put things right by fixing what was broken, but to meet
import bills, recovery expenses and lost tax revenues with money that taxpayers in other
countries have to earn and donate to the people of Zimbabwe. All this is necessary so that
Zimbabwe’s government can pretend that it has done nothing wrong and has no need to
admit making mistakes.

As is the case with almost all aid, transfers of money to meet these requests will do
Zimbabwe no favours. Unless the country places its future into the hands of competent
investors and business operators who can again base business decisions on the rule of
law, on property rights and on security of tenure over freehold property, the country will
remain dependent on aid. Zimbabwe certainly needs aid. But it should come with the pre-
condition that steps be taken to re-engage the Zimbabweans who have the skills needed to
place the recovery onto a self-sustaining path.

Quality, affordable and readily available health care and delivery remain a priority for
Government under the Framework, consistent with the Millennium Development Goals.
Challenges for the Framework include restoration of the gains the country’s health
delivery system had witnessed since independence and up to year 2000.

Compromising these gains were the economic challenges that the launch of STERP set
out to address, with regards to the human resource base, supply of drugs, health
equipment and infrastructure, and conditions of service for health personnel. Already,
some initial progress has been made towards the reversal of deterioration in the health
delivery system, with improvements noted on all the above milestones during
implementation of STERP.

Major challenges remain with regards to the rehabilitation and re-equipping of medical
infrastructure, notwithstanding STERP interventions which have seen restoration of
haemodialysis services at both Harare Central and Parirenyatwa Hospitals.

One of the major pillars of STERP was Social Protection whose focus was to mitigate
poverty and suffering by resuscitating public services delivery, and strengthening
humanitarian assistance, particularly focusing on Specially Targeted Vulnerable Groups,
including women, children, the disabled, the elderly and child-headed families.
The review of Social Protection Programmes under STERP has already alluded to the
resource constraints which undermined the implementation of cash transfers through
public works.

In the petroleum sub-sector, projects on ethanol blending and jatropha biodiesel

production will be expanded. This plan was not a success due to a number of factors and
these include lack of agricultural inputs to the farmers. Jatropha is also seasonal which
means that we were going to have more fuel seanally as a nation. They are also not all
parts of the country that are suitable for growing the plant. This was not a relevant
decision looking at the economy of Zimbabwe

The proposed amendments seek to broaden the ownership rights in the mining sector in
line with the Indigenisation and Economic Empowerment Policy, promote foreign direct
investment, enforce the "use it or lose it" principle so as to decisively deal with
speculative holding of claims, and to reform the Exclusive Prospecting Order system in
order to facilitate exploration for new mineral deposits. This was expected to boost
mining yet it is giving 51% of ownership to Zimbabweans who will have not invested
anything. To this extent the investor will not have control over his investment.
Complications are still going on at Chiyadzwa diamond mine and we keep on saying we
are reach, we have many minerals were and how are they helping the country. Investors
are also expected to invest at Kariba Power Station, nothing has happened but instead the
station is continuing to deteriorate, currently there is one plant that is operating.

The shortage of capital should, to some extent, be alleviated by the credit lines pledged
by various development partners. In addition, Government is reviewing the Industrial
Development Policy framework so as to facilitate the promotion of value addition and
productivity in the sector. This was closer to reality, we saw countries like South Africa
and Botswana providing financial assistance. From Botswana documents were to be
signed for a USD70 million in March this year.

Such projects include the expansion of Kariba Power Station, Gokwe North Thermal
Power Station, coal-bed methane power project and the Batoka hydropower station.
Plans for these stages went unsupported as the level of power supply is continuing to
lower in Zimbabwe. Most of the industries are struggling to operate as they have adopted
to the use of generators but this cannot lead to more and cheap production. The of
generators invalidates the sense of economies of scale.

This programme is envisaged to yield an additional 710 megawatts to the national grid
within a few months' time. Efforts to engage potential investors for the development of
new power generation projects will continue in earnest. This is also not in support with
the indeginisation act. No investor will want to donate an investment. The situation at
Kariba Power Station is not as was planed in the STERP.

Reference:

http://allAfrica.com

http://www.thezimbabwean.co.uk/

www.pfphosts.com.