Eddie Cross: “We have civil servants who can spend US$2m on their daughter’s wedding”

I have often told foreign diplomats who are assigned to serve their countries in Zimbabwe and to visiting specialists, that we specialise in confusing foreigners. But this confusion is found even among our own people and Government. So here I am going to try and unpack this issue.

Our economy has three main segments, they work and subsist together, but in many ways, they are quite separate.

They are the formal economy now estimated to be about US$50 billion in GDP per annum.

The second major element is the informal economy which everybody agrees is probably larger than the formal sector, I agree with that and it employs in one form or another the great majority of our adult population.

The third element is what I call the grey economy – I call it grey because it is dominated by white, brown and black oligarchs who control substantial resources and operate under the radar, not always illegally, but very often operating criminal enterprises.

The formal economy is growing strongly and supports regular employment of probably over a million adults – half in the public service which is probably twice as large as it needs to be and consumes half the national budget.

It is generally underpaid because it is larger than we can actually afford based on our tax base which is 90 percent dependent on the formal economy.

In a perfect world I would cut the budget for salaries and pensions for the public service (including the armed services) to 35 percent of the national budget which would be 20 per cent of the formal GDP.

But I would pay our top Civil Servants and the heads of our armed services 80 percent of what their private sector counterparts earn and scale up the rest so that our public servants can live decently on their salaries. I would cut staff numbers radically.

I would allow our formal economy to operate on a market driven basis with a domestic currency that was undervalued to stimulate exports and discourage imports.

I would abolish exchange control and close down three quarters of the State run and dependent agencies that charge for their services and are accountable to no one.

I would take action to ensure that all domestic monopolies are forced to compete or face open imports to ensure that they compete to survive.

I would take steps to ensure our legal services are honest, professional and able to service the country effectively. I would ensure the Constitution and all human; political and property rights are not only recognised but enforced.

The Reserve Bank would be placed under a completely independent Board and ensure it operated properly as the bank of last resort and the regulator of all financial institutions.

The informal sector! What can we say, its dynamic, its thriving, its competitive and it provides for the great majority of our people. Without it we would hardly survive. I was in Mbare last week and did a walk about with local leaders.

Astonishing, this is the heart of our economy. On 500 hectares of tightly packed enterprise and people, its turnover runs to billions every month. The stock on site was enormous, and you can buy anything.

In the middle is a branch of OK Bazaars – I walked in and was shocked to see the state it was in – very little stock, staff outnumbering customers. Why shop in there when you can buy everything they sell outside their front door at a lower price?

It may be many things, but it is orderly, well managed and clean. The produce fresh and delivered daily from the whole country and even neighboring States. There is virtually no theft because if you do try to steal anything, justice is immediate and severe.

Prices are fixed by consensus. There are areas dedicated to manufacturing, furniture and light steel structures. I wanted a water tower for an elevated tank at home – went to a formal sector industrial plant and was quoted 6 weeks delivery and US$1600.

I went to Mbare and got what I wanted for US$500, it was delivered to my home in 5 hours, still wet with paint. It operates perfectly.

In the same area I found a motor workshop specializing in maintaining small taxis from Japan. You could drive in at 08,00hrs and collect the vehicle with a new engine at 16.00hrs for US$350.

A valet service was US$5 per vehicle. While you waited you could get a decent meal for US$2 in a makeshift restaurant on site.

We have a building boom underway with perhaps a million homes under construction. Many of these are really decent homes, brick under tile, many are architecturally designed, nearly all are being built by informal sector builders.

I built an extension to our home – 180 m2 for US$75 000. It would have cost me four times that if I had hired a contractor. It was designed by an architect.

In the rural areas we have 700 000 small scale farmers, nearly the same number of small scale miners producing chrome and gold. Nearly all of this is informal, and they produce very substantial quantities of bananas, small grains, maize, beans, potatoes, vegetables and oilseeds.

We have perhaps 20 000 taxis and you can make a call at 3 in the morning and be picked up and taken to the airport 20 kms away for US$13 compared to US$40 in a formal sector taxi. 5000 cross border traders operate daily. Our real imports may be double the formal sectors.

Then the grey economy! The other day I made a statement that this sector may exceed our national budget in value, that statement was never challenged. I estimate that grey operators syphon off over US$2 billion a year from the fuel industry.

Dubai bought 450 tonnes of raw gold from Africa in 2024, all of this without certificates of origin. At today’s price of US$3900 an ounce that would be worth nearly US$50 billion.

A very large proportion of that came from here. The buyers paid for this with local or imported currency (Money laundering) but the proceeds were externalized.

One of the well known gold oligarchs handled US$1,4 billion last year, he does not have a bank account, another handled over US$5 billion.

In Ghana where the State has regularised their gold industry they have gone in three years, from a state where they were seeking emergency funding from the IMF to now when they have a current account surplus, they can service their debt and foreign trade.

Our situation is no different. We have oligarchs who can hand out hundreds of motor vehicles and millions of dollars in cash, wives who can fly to Europe first class, with friends and spend a million dollars a day.

We have children who can walk down to a jetty in Dubai and buy a US$37 million boat for cash. Some of these people have no visible means of support.

It’s not limited to the oligarchs – we have civil servants who can spend US$2 million on the wedding of their daughter. Many parts of our cities look like Hollywood – homes with helicopter pads, heated pools, irrigated gardens. Luxury cars crowd our roads.

Yet our public education system is a disaster, private schools play sport internationally and win bagpipe competitions in Britain.

Our public health system has no drugs, even cleaning materials. We are now one of the most unequal societies in the world and this simply cannot go on.

Eddie Cross is a former opposition MP and respected economic commentator. You can follow his blog here