The Institute for Public
Affairs in Zimbabwe (IPAZ)
GRAVITASLite
Dialogue Series Brief No.2/2017
17 February 2017 Contact:
gravitas@ipazim.com
Statecrafting Public Institutions for
Economic Transformation: Some Basic Observations
By Tamuka
C. Chirimambowa & Tinashe L Chimedza*.
1.0 Economic Stagnation: Contemporary Context
& Ghosts of the Casino Economy
In a
Monetary Policy Statement delivered on the 27th of February 2017 by
the Reserve Bank of Zimbabwe (RBZ), the Governor revealed the extend of
Zimbabwe’s economic stagnation. The RBZ
revealed some shocking figures for 2016: that the diaspora and other
international remittances declined by a whopping 17.9%; foreign direct investment
declined from US$399.2 million in 2015 to
US$254.7m; exports declined by 6.9%; economic growth was a pitiful
0.7% and projected to be a miserly 1,2 % in 2017.
The current account deficit has exploded from a deficit of
US$25.8 million in 2015 to a mind boggling negative US$186.4 million in 2016. The
RBZ has been increasing public debt through acquiring more non-performing loans
and according to Treasury the national debt, as of 2016, stood at $11.2billion.
The government is suffocating from debt and the RBZ Governor had to admit in an
interview with the The Independent that
Zimbabwe needs a ‘new economic model’.
The
country is flying on borrowed money and the citizen will pay. For doubters, the
Reserve Bank of
Zimbabwe (RBZ) Debt Assumption Act in 2014 added $1.4billion
to national debt and this is testament
to the fact that it is the citizen who
will always pay. Some of these debts were accrued during Governor Gideon Gono’s
‘Casino Economy’. For those familiar with how a casino works,
they know that the casino (njuga, amakasi,
feja-feja) is designed to bankrupt the players. In this case citizens are
bankrupted while ‘yours truly Governor’ shuttles between his mansions in Harare
North and some shout ‘so far so good’. The concoction above has led to extensive
de-industrialization; a sprawling low income
informal economy; an agriculture sector locked in crisis; subdued rates
of savings; lack of capital accumulation and a pitiful national aggregate
demand funded by a morbid public sector. But how did we get here?
2.0 Fanon’s Warning: The Parasitic and
Decadent Black ‘Business Class’
Zimbabwe’s
post-2000 political economy has been dominated by ‘extractive’ and ‘illicit
accumulation’ especially by those networked with party and state power. This
networked elite parade their access to state power to put their hands on
various corners of the economy and peddle favours. The ruling elites have colluded
to propagate an emotive but very narrow vision of ‘black economic empowerment’
and or ‘indigenization’. The speculative black business class trades in tenders
and attempts to front themselves as the ‘51%’ partners of real capital. Having harvested
and laid waste to productive agricultural land that same class of black
business went on a prowl trying to muscle into businesses. The so called
business class gloats openly; ‘if you want to be rich join ZANU PF’; ‘Mugabe
must rule for life’; then they accumulate non-performing loans from local
banks; drive the latest European made vehicles; they have a virulent disdain
towards any ‘foreign’ business and after all they are the ‘party of revolution’
and their pockets are the ancestors of
the revolution who must be appeased endlessly, as they claim that ‘they don’t
board helicopters for nothing’.
The ‘dear
leader’, who will rule from a wheel chair, a grave or as a cadaver, is the
anchor of this opprobrium: he excoriates western ‘imperialists’ and their
‘stooges’ while his family gallivants the world in a Boeing and at home he rides in a pornographic cavalcade of western
manufactured vehicles. The shameful ghastly spectacle is protected by machine
guns, bayonets, anti-riot police and state funded snipers on rooftops pointed
at the citizen. The First Family’s patriotic motorcade devours the budget of a
whole small town.
This
business class is not dynamic, not geared for industrial production, not interested in innovation and
is basically lazy, it has become predictably what Frantz Fanon called
‘intermediaries’ ‘agents’, ‘decadent’. Moeleletsi Mbeki’s called them the ‘architects
of poverty’ because they want the benefits of the real owners of capital
without going through the process of producing any goods or services. The net
result is economic stagnation dominated by ‘land barons’ speculating in land
and re-selling that to citizens at preposterous prices; tender-preneurs siphoning
state money but building nothing; managers of public companies and local
authorities who have turned these institutions into personal piggy banks.
This
fake business class exports capital to safe havens and builds ‘mansions of
shame’ on top of hills with profligate architectural designs ever witnessed. Juxtapose this business class to the
likes of Shingi Mutasa’ Joina City, Strive Masiyiwa’s Econet, Dr Lance
Mambondiani’s financial inclusion revolution at Steward Bank, Kubi Indi’s Hair
and Cosmetics Business, Divine Ndhlukula’s Securico, and Natalie Jabangwe’s
impact at EcoCash. Governor Mangudya laments Zimbabweans spending US$202
million on DStv. The governor fails to appreciate that (1) one can’t instruct
citizens how to use their hard-earned money; ( 2) it points to the un-competitiveness
of Zimbabwe Broadcasting Corporation (ZBC) and (3) they denied Strive
Masiyiwa’s Kwese TV a broadcasting licence. Kwese TV could have been licensed
and required to purchase local content,
that it registers a local subsidiary employing local people in the process creating
opportunities in the arts, culture, entertainment, lifestyles and sports
industries. They fail to realise the power of public policy as a tool of
leverage and instrument for economic transformation. But the Machiavellian
supremacy of dominion reigned.
The
Minister of Finance during the Government of National Unity (GNU) complained
that only paltry royalties were coming from the Chiadzwa Diamond mining
operations, yet the seating Minister of Mines could reportedly buy a bank for
$29million. The diamond fields were operating without providing revenue figures
to the Zimbabwe Revenue Authority (ZIMRA) and a Parliamentary Committee was denied entry. The
President later complained that ‘$15billion’ disappeared. Where was the so
called Joint Operations Command (JOC) in such matters of national security?
Colluding perhaps. The attempts to nationalise
the diamond mines are being done after the proverbial horse has bolted out of
the barn.
3.0 Zimbabwe’s Pillaging Juggernaut: From
Banks to State Owned Enterprises.
Pressed
with so called ‘sanctions’ the government went on an offensive towards the East
(China, India, Russia and even Japan) yet these manoeuvers yielded scant
results. The Chinese demanded bankable projects; the Indians introduced Essar
and walked from the mess; the Russians came and went silent, while the African brother Aliko Dangote has become nervous.
In ‘revolutionary Zimbabwe’ state owned
enterprises are personal fiefdoms; leeches on the fiscus; unproductive and a
source for campaign funds for ZANU PF elites and industry contributions are
appropriated for indulgent carnivals, buying tricycles and alleged transfers to
a ‘girlfriend’s account’. At the National Social Security Authority (NSSA)
pension contributions are incompetently managed and millions are poured into
non-functional banks. Close to 15 banks have collapsed under the weight of
insider loans and the non-performing loans are now public debt. It seems even
the former Governor who used to start briefings with animated supplications has
a few of these non-performing loans. Millions are parlayed to build a hotel
which according to the Herald will take
300 years to recoup the investment.
The
tragic scenario is played out at NETONE, ZBC, ZIMRA, Town Hall and a Minister even allegedly
pilfers health funds (donated by the West!) for his surgery. The RBZ turned to all
sorts of shenanigans; Basic Commodity Supply Side Intervention Facility
(BACOSSI), Productive Sector Facility (PSF), Agriculture Productivity Enhancement
Facility (ASPEF), Parastatal and Local Authorities Reorientation Facility and
the list exploded public debt. It seems only the small-scale tobacco farmers and
artisanal miners have risen to the occasion. Intoxicated with power the
Governor brewed dazzling inflation. The state blamed worsening problems on
sanctions.
The
reality of the crisis is that it was rooted in historical structural questions,
of an economy designed to service a racial minority, while most of the blacks
lived outside the state and modern
economy. The excluded black majority were incorporated into the state and
modern economy after independence hence the massive expansion in health,
education and social services. The missing piece in the matrix was how to grow
and expand the economy to sustain the social programmes being undertaken. Yet what
has been called the ‘enclave economy’ remained, meaning a small modern economy
imposed on a vast non-dynamic feudal-rural structure. Zimbabwe’s policy makers
failed to realise that the so-called jewel was small and never meant to shine
for a majority and they needed to prospect for more jewels.
4.0 Glances into the Future: Crafting
Functional Public Institutions
The
current government’s promises have been vast: a growth rate of a whopping 7.4%
(2013-2018); create 2,2 million jobs by 2018; unlock US$1,8 trillion; transfer
US$7,3 billion through indigenisation; eliminate corruption and unlock US$7,6
billion of idle assets in the custody of state owned enterprises. Against this
Minister Patrick Chinamasa’s budget statement promised a modest 1.7% economic
growth rate in 2017 through what he called ‘Pushing Production Frontiers’. These will remain bar-room whispers and
the attempt to re-integrate Zimbabwe into the international financial
institution will only open floodgates for more debt.
Firstly,
the government must intelligently craft functional state institutions meaning a
robust effective state apparatus; secondly these institutions must display
policy consistency to build confidence nationally and internationally; thirdly Treasury
must be the centre-piece of policy
coordination and be ring-fenced from salivating ideologues; fourthly the RBZ must
return back to its statutory obligations
and fifthly the state has to weave institutions capable of handling foreign
direct investment projects that bring real capital. Incentives must be focused
on the productive end of the line not at the beginning like with command
agriculture which breeds speculative behaviour.
The statecrafting of public policy institutions
capable of functioning is critical to re-orient economic governance framework
away from an expropriating (jambanja,
fast track etc) framework and get Zimbabwe working again. Thankfully there are good examples: Singapore,
Malaysia, South Korea all built good examples of effective public institutions.
The Japanese built the Ministry of International Trade and Industry (M.I.T.I) as
an anchor of industrial production and recently the Chinese have begun to
unlock $500billion worth of rural assets (land) to boost national output and
increase income levels across the country.
What
is it the brother Chirikure Chirikure
said? ‘No-one is going to sleep a wink
this year; till we fix this whole mess; No-one
is going to close an eyelid; till we get to the bottom of this’.
Ultimately
we Zimbabweans must thoroughly interrogate and passionately debate ‘which and what form of government is
enough government’ ?
*Tamuka C. Chirimambowa is a founding
Co-Editor of Gravitas and a DLitt et Phil in Development Studies Fellow at
University of Johannesburg & Tinashe L. Chimedza is a founding Co-Editor of
Gravitas and studied Social Inquiry at the University of Technology, Sydney.
Editorial Note. On the 7th of March we will
publish a Gravitas Special Issue to
commemorate International Women’s Day,
edited by Guest Editor Grace Kwinjeh.
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