By Eddie Cross
We all agree with the basic facts about Zimbabwe, it has abundant natural resources, a literate people who are enterprising and hard-working, a strategic location in the southern African region.
All good, but, we have a serious and long term energy deficit, an agricultural system that is simply not working, an infrastructure deficit that does not allow for the cost effective movement of goods for consumption or export and a whole raft of weak or non-functioning State institutions that are a drain on the fiscus and an impediment to growth.
I think we could all add other problems – collectively we could fill a book.
But we have a new Government and in many ways this is a very big change from the past. We are a functioning democracy, many will argue that the President fudged the last election and that the playing field was not level.
But no one is challenging the membership of the House of Assembly, no one is challenging the election of 2000 local Government Councilors and the new President has had his election confirmed by our Supreme Court. For that, we have a well-qualified and experienced Chief Justice and the two new Judges, just appointed have both been recognized as good professionals.
We have come a long way since 1997 when we were in all respects a ‘One Party State’ with a dictator in charge. It’s been a rough ride these past 20 years but we are now a multiparty democracy with a decent Constitution. That is something that all need to accept and recognize. What other changes can we recognize?
Firstly, I think we should acknowledge that a start has been made in the effort to re-engage with the global family of Nations after nearly 60 years of sanctions and isolation. Our Membership of the Multilateral Group of global financial institutions led by the International Monetary Fund is being revived and a program of reform adopted and signed. This has resulted in a period of self-imposed austerity to get our macro fundamentals back into line and some volatility in local markets.
Secondly, we need to acknowledge that a process of political reform is underway which, if fully implemented, will meet the demands made in ZIDERA, the US sanctions legislation and the often repeated shortcomings highlighted by Western Diplomats over the years. This is a slow process but is underway and the progress made should be highlighted when appropriate.
Thirdly, there is progress in the field of the rule of law, violations are being prosecuted and the Prosecuting Authority and the Attorney General both seem to be operating more independently. Property right violations are being recognized and some action taken, nothing like enough but in sharp contrast to the flagrant abuse of property rights in the past. The worst example was the ‘fast track land reform program’ but at last the obligations of the State to provide compensation and recourse is being recognized and negotiated.
BUT, and it is a big BUT, we must argue that the ‘Ease of Doing Business’ and ‘opening up the economy to investment’ – both local and foreign, seems to have simply run out of steam. The One Stop Shop approach looks lack luster and inefficient, even counterproductive.
Investors looking for opportunities are swamped by good projects that look great on paper but when looked at closely are fraught with problems – land claims, politically connected people with rights over resources that they can never exploit and a bureaucracy that lacks any motivation to do the right thing and seems to do everything to stop progress.
It’s like a gigantic version of the Beitbridge border post where visitors are greeted with a swarm of hustlers who offer their services to get you through the bureaucracy that has deliberately created a nightmare of a process and queues that will take you hours to clear before you can get onto the open road to your destination. Progress seems impossible unless you pay.
If this is not enough, you then have to take into account a thing that the bankers call ‘country risk’ and pay again. Punitive interest rates and a jungle of regulations involving tax and exchange control. I was asked by a potential investor from a major international company – ‘what is exchange control ‘and why is it necessary?
I never thought about this issue – it seems to have always been a feature of our everyday lives. When we abolished exchange controls and controls on prices in 2009, I think the Reserve Bank must have thought it was the end of the World, let alone the leeches in the Ministry of Industry and Commerce who seemed to control everything – import licenses, export licenses and permits to go to the Loo.
A good friend of mine who is a major foreign investor here tells me he needs 9 signatures on documents to export a free sample of his products to a client who wants to buy by the stuff from him. Why? Why does he need a permit to do something that is absolutely routine in the business world?
When we opened up the economy in 2009 and for four years became the most open economy in Africa, did the ceiling fall down? No we did not even feel the transition but the impact was huge – no queues in 10 days, for anything, after a decade of mayhem in all local markets for everything, except poverty.
The last major change that I see in our situation is those, what the Chinese call ‘the Veterans of the Long March’, being the men and women who accompanied Mau on the march that brought the Communist Party to power, have been largely mothballed.
The veterans of the Liberation struggle that led to Independence in 1980 and who formed our first independence Government, have at long last been retired. In their place we have a younger and more professional Cabinet of just 20 Ministers.
The new Minister of Finance, has set out a clear road map to a more open and market driven economy with stability in both prices and exchange rates. This road map is being systematically implemented despite opposition from many of the old guard who think that their ‘command economy’ was better. So we have seen in the past 12 months the following changes.
The elimination of the Fiscal deficit which has been the main source of our macro-economic woes and the rapid growth in the national debt;
Recognition of our own currency and its separation from the international currencies we have been using for exchange purposes in the local market;
Granting individuals and companies full control over any hard currency balances they might hold in local Banks;
The creation of an open interbank market system with a Monetary Policy Committee of real professionals to help manage the system; and
The reintegration of a local currency denominated as the Zimbabwe dollar for use for exchange purposes in the domestic economy and abolishing the multicurrency system introduced 10 years ago at the height of the crisis.
Sometimes it has seemed like a roller coaster experience or white water rafting, but the direction seems set in political and economic terms. Zimbabwe is going through probably the most profound and extensive overhaul of its governance in over a 100 years.
We all have a stake in this process and we simply have to make it work. If we do, we will look back on this period of change as a time when we put our country, Zimbabwe, onto a new path into the future which will eventually lift the majority of our people out of poverty and give our children and grandchildren a real future.
Published by the British Business Association, July 2019