MR MUGABE , YOU ARE RESPONSIBLE FOR ZIMBABWE`S ECONOMIC MELT DOWN

First and foremost, for over three decades, the government strenuously asserted that the economic ills confronting Zimbabwe were a result of the Machiavellian stratagems of the former colonial powers to recolonise Zimbabwe. The plan, they said, was to denude Zimbabwe of its resources and, to all intents and purposes, to enslave Zimbabweans.  Occasionally they varied their theme song, by also ascribing the ills to negative climatic circumstances and other “acts of God”.  On rare occasions, the latter contention had some limited credibility, whilst the primary claims of recolonisation intents were blatantly devoid of any substance. As the Zimbabwean populace progressively recognised that not only were the stated causes of Zimbabwean ills wholly without foundation, but also that the actuality was a combination of intense economic mismanagement and of even more intense profligacy and actions of self-enrichment and engrandisement. So the politicians had to find other explanations for the ills.  They needed desperately to prevent the electorate from recognising the real causes, which would endanger their retention of power.

Although with the best of intents and motivations, many of the international community then played straight into the hands of the Zimbabwean politicians.  Having previously imposed selective sanctions upon named Zimbabwean political leaders, and their families, in 2002 they extended the sanctions.  Initially, the sanctions precluded those leaders and their families from travel to the imposing countries, and from investing therein, but in no manner were those sanctions directed at the economy, or at the populace as a whole.  However, the extension of the sanctions created barriers upon any economic interactions with the Zimbabwean government, its parastatals and other entities owned or controlled by government.  Foremost amongst the instruments of sanctions imposition was the Zimbabwean Democracy Act of the United States of America, and very similar measures were pursued by the European Union and various of the member states of the Commonwealth.

But none of the increased sanctions were targeted at the Zimbabwean economy per se.  Zimbabwean private sector enterprise was not barred from exporting to the US, to Europe, or elsewhere and similarly remained enabled to source any goods or services they required from those countries.  Admittedly, the US legislation prescribed that country from supporting funding to Zimbabwe by the Bretton Woods’ institutions (the International Monetary Fund and the World Bank), but this was only notional in  effect, as Zimbabwe’s debt servicing defaults in any event barred it from accessing such funding.  Furthermore, government and its puppet media vehicles endlessly alleged (as they still do) that the sanctions were “illegal”.  That allegation is spurious and specious in the extreme, devoid of any credibility, for none of the countries were in breach of their own laws, or of international law, by constricting economic interactions with the government and its underlying entities.

It is the absolute right of any country to determine which countries it will interact economically with, and the nature and extent of such interactions.  Therefore, the never-ending description of the sanctions as being illegal is only a political stratagem to mislead the Zimbabwean people. As stated courageously and authoritatively by former President Joaquim Chissano, the reality of Zimbabwe’s tragic economic circumstances has been, and is, nothing but politics. No country that pretends to be a democracy, but in practice is driven by non-democratic, authoritarian rule, can have a viable economy.  A country that has contemptuous disregard for property and human rights, rule of law and for Bilateral Investment Promotion and Protection Agreements cannot have a virile economy.  Endless, oppressive economic regulation rings the death-knell for an economy.  Pronounced governmental profligacy, far beyond national means, not only does not provide a foundation for economic development and growth, but guarantees an economy’s decline and collapse.

All of these, and many other, negative political actions and inactions have been the cause of the cataclysmic contraction of the Zimbabwean economy.  They fuelled the greatest hyperinflation ever experienced anywhere in the world.  They destroyed much of Zimbabwean agricultural productivity, which was the foundation of the economy.  They grievously eroded business confidence, which is a prerequisite for economic growth.  They deterred much-needed foreign and domestic investment, essential for the creation of employment, the generation of foreign exchange, the access to state-of-the-art technologies, enhancement of inflows to the Fiscus, and much else.  

 They undermined confidence and trust in the banking system and in the financial sector as a whole.  The Zimbabwean economy has overwhelming potential, and great opportunity for the populace, but only when politicians put the country and its people ahead of their own interests, when they govern the country consistently with internationally accepted norms, when they govern according to national needs, instead of their own, and when the politicians have the courage to recognise and acknowledge facts, instead of allowing megalomania and paranoia to drive them and to ascribe all ills to the actions and deeds of others.

VITALICY Kramarenko,  leader of the International Monetary Fund (IMF) team to Zimbabwe, is reported as stating that fully unlocking the country’s considerable growth potential would require significant progress in structural reforms.  Expanding thereon, he said, the priority areas requiring such reforms include reducing labour market rigidities, establishing security of land tenure, and clarifying ownership requirements under the indigenisation legislation, in addition to other necessary economy-related reforms.

Although undoubtedly some of the hard-core Zimbabwean politicians will vehemently differ with him, his forthright enunciation of the immense need for constructive reforms is most commendable. Assuredly, the Zanu PF politburo in general, and President Robert Mugabe, Didymus Mutasa, Saviour Kasukuwere, and many others will wholly disagree with him.  Instead, they will seek and strive to espouse the disastrous policies which have not only horrendously decimated the economy for more than a decade, but will do their utmost to pursue their fixative policies which cataclysmically retard the slight economic recovery achieved since 2009.

However, no matter how vigorous may be resistance to policy change, major reforms in policy are a prerequisite of a substantive economic recovery, and for realisation of the very immense economic potential which Zimbabwe has.  Only those who are myopic in their perceptions of the economy’s needs can differ with the IMF assessment of policy change needs. Kramerenko and his team are deserving of unreserved commendation for their forthright recognition of the realities.  Regrettably, however, many will not only withhold such commendation, but will also be scathingly castigatory of the call for those reforms.

While many different factors will impact upon achieving the economic recovery and realisation of the gargantuan potential of the economy, those identified by the IMF team are amongst the foremost.  Key to recovery and growth is that Zimbabwe engender very considerable investment, both foreign direct investment, and domestic investment, and that it attract substantial international lines of credit and loans. Investment is needed to create employment for the hundreds of thousands of employable Zimbabweans presently devoid of gainful, formal sector employment.  Such employment will very markedly lower the appalling poverty links characteristic of life for the majority of Zimbabweans.  Investment will generate inflows of critically required capital, and technology-transfer.  It will be a major stimulus of exports, which favourably impact upon the downstream economy of the investment ventures, and will be a significant source of revenue to the fiscus by way of direct and indirect taxation.

However, the extent of investment will continue to fall far short of requirements if the policy reforms identified by the IMF as being necessary, and allied reforms, are not determinedly pursued by government.  Investors will not invest (save for a few high-risk-takers) unless they have confidence that their investments will be secure, and potentially gainful, and those policy reforms are prerequisites of investors having such confidence.

Almost without exception, investment ventures are reliant upon employment of labour, with harmonious employer and labour relationships. Such relationships existed at one time in Zimbabwe but, as unemployment in the shrinking economy increased, concurrently with labour’s purchasing power being progressively eroded by the hyperinflation of yesteryear, that changed. Understandably, labour demanded substantial wage increases, but invariably meeting those demands was far beyond the means of employers, whose businesses were grievously contracting. Labour relations progressively declined, and the confrontation intensified as various trade union and activist bodies became increasingly aggressive.  Now government is worsening the situation with intended revisions to labour legislation which are wholly targetted at labour aspirations and expectations, in contemptuous disregard for employer needs and economic realities.

The issue of security of land tenure is most key to realising Zimbabwe’s economic potential.  The foundation of the economy has always been agriculture, but from 2001 to 2009 it contracted exponentially. Although there has been some increased productivity since 2009, agriculture remains a minuscule portion of the tragically contracted economy. New farmers, precluded from land ownership, have no collateral to access essential funding.  Concurrently, having observed government’s diabolical disregard for property rights and for obligations under bilateral investment protection and promotion agreements  in respect of rural lands, potential investors fear that in the future government will unhesitatatingly appropriate urban lands, enterprises, and other investments.  Real security of land tenure will meet collateral needs for agricultural and other entrepreneurs and will allay a key fear of potential investors.

Allaying those fears also requires a comprehensive re-think by government on its indigenisation and economic empowerment legislation. The legislation should be facilitative of indigenous entrepreneurship, and should give incentives and motivate collaboration and mutually beneficial intervention between indigenous and non-indigenous investors. It should not reduce non-indigenous investors, be they domestic or foreign, to enforced minority status, devoid of control over the wellbeing of the enterprises, and equally devoid of security over provided technologies, market access and funding.

The legislation should stimulate creation of new indigenous ventures, whilst motivating indigenous participation with non-indigenous investors, in existing and new enterprises, on a reciprocally willing, negotiated basis, rather than by enforcement and imagery of expropriation. Approximately a fortnight ago, Economic Empowerment minister  Kasukuwere, was reported as stating that revisions to the legislation will be announced by the end of this month.  Undoubtedly, the revisions contemplated by government, and by him in particular, are founded-upon the reports of the numerous economic sectoral boards established by him to consider and review the legislation.

However, indications over the last few months suggested that some of those boards (or, in any event, of a majority of the appointees to the boards) had dogmatically preconceived (and ill-conceived) perceptions, to a very major extent founded upon representations of extremist activist groups.

Government, and all the ministers, in revising and modifying the laws, need to have regard not only to the advice of the boards, but also of the existing business community at large, of potential foreign investors, of bodies such as IMF, World Bank, African Development Banks, and the like, and of economic commentators.  They need also to learn from the successful experiences (such as those of India and Malaysia) and the unsuccessful experiences of others, instead of inventing a new wheel doomed to break not only itself, but the economy as a whole.