guest column:Blessing Machiva
Few weeks ago, there was a heated debate on the causes of poverty in Zimbabwe. Many, especially the ruling elite, have blamed the USA economic sanctions against our country. This is a naive argument since the effect of sanctions is insignificant in explaining our current state of poverty. Zimbabwe started failing economically in 1983 but many couldn’t notice until 1987 when the government started drafting some economic blue prints which they never implemented, anyway. When this country got independence in 1980, the liberators were too emotional from suppression and when they got power to rule, they thought what the country possessed was theirs per se; hence they enjoyed the returns without re-investing. There is nothing much that was done by this current administration in terms of capital investment, besides human capital which we all praise the former President for. That’s why we see that all companies that were operational in early 1980s are either limping or no longer functional today. We can mention them, NRZ, Air Zimbabwe, Ziscosteel, CSC, Zesa, African Distillers just to mention a few. Zimbabwe’s economic woes are a result of political corruption!
Zimbabwe has industries, mineral resources, good climatic conditions and soils for agriculture, good human brains to push investment and production, yet we are the poorest on the continent, with the majority surviving on less than US$0,35 per day. Botswana has nothing except diamonds and beef, yet for the past five decades, it has emerged as a growth miracle country with a GDP per capita of US$8 031,01 in 2018 and from 1965 to date it grew at an average rate of 7,7% (Acemoglu et al, 2001). Zimbabwe, during the same period, is becoming poorer by day, with a GDP per capita of US$1 322,34 in 2018, which is six times less than that of Botswana, and it grew at an average rate of 0,74% annually.
Economists have attributed the economic success of Botswana, with a highest growth rate than any country in the world, to orthodox economic policies and how the country managed to implement such policies is a puzzle because in Africa, good economics is bad politics. Botswana implemented inclusive institutions that support growth and development. Zimbabwe is failing today because of extractive institutions that don’t allow mass participation in the production process. Good economics in Zimbabwe is bad politics; suggesting good policies are seen as a ‘regime change agenda’ and the person becomes the enemy of the State. Why?
Corruption and bad economic systems benefit a few, especially the elite and those who are in power at the expense of the majority. Why those in power do not want to implement good systems and policies is because good systems will reduce their economic rents. An efficient bureaucratic system, rule of law, voice and accountability will expose corruption and make it difficult to practise it. No wonder why even if you see that the economic systems and policies being implemented are not working, those in power would continue to push them forward, they have personal interests to protect. So many years after independence, we have one TV station, State-controlled, why? Zimbabwe has gold, diamond and other precious minerals, who is benefiting from them remains a mystery and why good systems can’t be put in place to make sure that everyone benefits from such minerals, the revenue passing through Treasury is a puzzle. The country survives on a supermarket budget of US$4 billion when we have vast resources that are capable of bringing good revenue to our coffers, it’s so embarrassing.
Why we can’t revive NRZ so that we reduce the demand for fuel, damage to our roads, congestion and accidents requires deep investigation into the owners of haulage trucks, public transport like buses and service stations. Why we are underutilising our pipeline to transport fuel from Mozambique to Harare and prefer to use road is unknown. I remember two months ago when the EcoCash cash-out facility was suspended and later restored with a maximum limit of $100 per transaction, only a day after to see money changers cashing out thousands again and why the maximum limit was removed if it was believed to be worsening the economic situation is unknown. Recently, RBZ issued new bank notes and coins in order to allow depositors to access cash from their banks, only to see these new notes flooding the streets, someone in possession of more than $20 000 when the maximum withdrawal limit is $300 per week. How those involved got so much cash in a space of a day is unknown, then we have the audacity to blame sanctions, no its corruption.
I saw masses of Zimbabweans pinning their hopes on the 2020 budget that was announced by the Minister of Finance a few weeks ago but then analysing the paper work closely, you see a doomed Zimbabwe.
There are so many projects that have been allocated funds in previous budgets and continue to be allocated more funds even today, what happened to the money that was allocated to such projects before is unknown, the progress of such is unknown as well. How can one see hope in a supermarket budget of US$4 billion that has allocated more funds to defence and home affairs instead to industry, health and education? Many economists argue that many poor countries allocate more funds to security because how the money will be used is difficult to assess because of the secrecy involved, hence that money can be expropriated easily than the money allocated towards health and education.
If the current leadership was serious about economic recovery, they should target industry more, opening and reviving few big companies like Zisco steel, NRZ and Air Zimbabwe would make a huge impact in a very short space of time than the basket weaving and informal brick moulding activities that the camera and screen-loving politicians are targeting. After independence, Zimbabwe had very few big companies (with NRZ being the second largest employer of 20 000 workers) but with an unemployment rate of less that 5% of the total labour force but today we have more SMEs and informal business operating, with their head offices and branches encroaching residential areas near the city centre, but the unemployment rate stood at more than 90%. These informal businesses that the politicians are vying for in order to cover up for their failures destroy the economy worse than their marginal contribution. This country is becoming ungovernable because of such informal activities.
From the study of corruption I carried out in Africa, I discovered that a 1% decrease in corruption would increase per capita incomes by nearly US$9.60 across time, isn’t that a good improvement? Knack and Keefer (1995) argued that security of property rights, good policies and management of the public sector are significant determinants of economic growth.
Tanzi and Davoodi (1997) are worried by huge public investment with ribbon cutting ceremonies as these are vehicles for corruption and are done at the expense of operations and maintenance.
No wonder why we concentrate of constructing new power generators when we have many thermal power stations at Hwange and Harare; hydro-power stations in Kariba not functional or operating below capacity.
Mauro (1995) reiterates that an inefficient government acts as an obstacle to investment, entrepreneurship and innovation.