Can Zim’s inflation beast be tamed?

16 Dec, 2022 - 00:12 0 Views
Can Zim’s inflation beast be tamed?

eBusiness Weekly

Part Five

Clifford Shambare

In the last paragraph of Part Four, I am aware that — like me — you may have reached the point of exasperation, frustration and despair—all at the same time.

I also realised that, at that point, we had suddenly fallen into another paradox in our discourse. The paradox is that, while in the current scenario, we have been arguing for a functional local currency for Zimbabwe, we cannot help realising that — in order to correct the country’s economic system, there is a need to inject money in the form of a functional and strong currency — into this same economy.

We can deduce such a fact from the Second World War when — in order to rebuild the destroyed European economies — the now developed and rich economies — led by America — founded the Breton Woods Institutions on 4 July 1944, while at the same time, creating the hard currencies.

The BRICS strategy — that has catapulted the Chinese economy to the current stage in the past 35 years or so — is another example of the effectiveness of such a strategy.

As it turns out, this latter case demonstrates the need for the African economies to work together. (Here, remember my articles on Africans and the need to create their own capital markets?)

When considered in its totality, this whole matter shows us that such challenges cannot be solved piecemeal and in isolation. At the same time — through the Zimbabwean situation — we are compelled to observe that this is what happens when a system lacks discipline, is corrupt, lawless and disorganised, lacking unity of purpose and foresight — in the way it runs its affairs.

What this all boils down to, is that Africans cannot hope to get anywhere economically without first inculcating those attributes — that is discipline, unity of purpose, focus and foresight, at the same time ridding the system of corruption — among themselves through their unified economic system.

To me, such a system is the one that our brave and brilliant founders in the form of first; Kwame Nkhrumah, Ahmed Sekou Toure, Jomo Kenyatta, Ahmed Ben Bella and others; and later; Julius Nyerere, Yoweri Museveni, Robert Mugabe, Joshua Nkomo, Nelson Mandela, and others — envisioned through Vision 2063.

Interestingly, but sadly, the latter is a vision that is loaded with controversy in as far as it may be rendered, by circumstances, to become both irrelevant and unrealistic—what with the global warming phenomenon threatening to destroy the planet earth in the not so distant future. Couple this with the carbon emissions reduction challenge currently aimed by the super powers, at being achieved by 2030 and suddenly, you are confronted by a complication of mind boggling proportions!

As it turns out, the Africans seem to have woken up to the urgent need to adopt a united front to this matter of effectively dealing with the continent’s economic challenges, hence their efforts at having Zimbabwe’s economic sanctions revoked by those who promulgated them in the first place.

So here, the Africans simply have to get down to business, or else their economies perish in the long run.

But again, without industrialisation, they cannot go very far in this, or even future eras, if there are any. At this juncture, we have arrived at that point at which we have to ask ourselves rather uncomfortable questions — the sort of questions that most of us would rather avoid addressing.

But then, if we continue to agonise over such matters, we get to a stage at which we come to appreciate the very strong role played by attitude in our lives in general. Here we realise that attitude drive actions.

But then, when considered collectively, we come to realise that attitudes –especially those leadership, at any given time and/or period — have over time, gone on to build whole cultures.

We see this phenomenon playing out throughout history, starting with ancient wars going on to the age of exploration.

From then, it progressed to the age of the Agricultural, then the Industrial Revolution, right up to the current period of the Technological Revolution.

Here we can easily appreciate the criticality of a leader and his attitude to matters of culture and development of any kind. First, it was some of the Africans in the north of the continent, then came the Europeans and now, the Asians.

This kind of argument takes us straight into that position in which we come to the conclusion that most of our economic challenges, as Africans, are rooted in our attitudes and collective culture(s).

And to appreciate this line of argument better, consider how corruption — a culture that has over the years, developed almost by default, from our attitude(s) as a people — is now threatening to destroy us on the economic front. In this case, consider the case of the 19 blacklisted Zimbabwean companies.

Juxtapose ours to the other cases, and you come across an interesting scenario — a scenario that concerns the strategy of Quantitative Easing.

We now know that QE always results in the sudden growth of the balance sheet of the economy concerned.

For instance, this is what has been happening in the case of the USA (See graph in Part Four of this article).

Considered from a casual perspective, QE appears to be a strategy of creating wealth from nothing! But then, logic informs us that, in the material world, if you try to create wealth — or even anything for that matter, from nothing — everything you will have created will sooner rather than latter, blow up into the original state of nothing.

That being the case, those who apply this strategy — the developed economies — are quite aware of such a fact, so they (usually) put in place, measures, not only to prevent the worst case scenario from developing, but to also grow from implementing the QE strategy.

In this case, if we consider the world economy that is now led by the Western, with the Eastern economies in close pursuit, we find that the creation of jobs takes centre stage.

The(ir) reasoning here is that, if you create jobs for the people, in the worst case scenario, you will manage to keep them and the whole system, alive. In the best case scenario, you enable them to prosper economically.

But they are also aware that, in order to succeed through such a strategy, you have to use the money so created to produce tangible goods first.

As far as services go, those only become relevant in the presence of the former.

It is in such circumstances that we find the OECD economies, led by the USA, applying this strategy of QE starting from 2008.

In fact, some of the leading economists in that realm have reasoned that, without QE, their economies would have sauntered straight into another economic depression.

And this is a strategy that we, as Africans, are scared to even contemplate in this day and age!  It is at such a point as this one, that we find ourselves back to the matter of attitudes and culture.

When considered in that context, such a matter tends to assume a racial and/or racist hue. This is a context in which Africans are doomed — in fact, this is a position in which they themselves, believe and consequently, place themselves at the bottom of everyone else in this world.

At this juncture, since it has become clear that our challenge is one of attitude, the next questions to ask are these: For how long can we continue to tolerate attitudes that threaten to destroy us a race? And if we decide to change, or even to stop them, still, when will that be?

It is at this same point that we are compelled by circumstances, to look for solutions to our challenges. Here I want to suggest the need to inculcate the right attitudes to business matters, among ourselves, before everything else.

And since attitudes are difficult to change, I suggest the incarceration of the individuals concerned without fear or favour. This is the approach that those who have succeeded in such matters, have applied.

In this regard, closer to home are Tanzania in the time of John Magufuli and now, Rwanda under Paul Kagame.

In this case, just blacklisting the companies involved without incarcerating the culprits will, for obvious reasons — not work under our conditions. In that case, the latter will simply continue their habits under a different identity.

But having said that, we still need to appreciate that this is easier said than done in this country.

This is because our solutions, of necessity, need to be long term, while we need to survive at the meantime. And because our challenge centres on how to deal with the shortage of foreign currency — our urge to acquire this item continues to press us.

And sadly, as a people used to applying short term solutions to our challenges, at the same time being opportunistic in our current attitudes, we already have among us, individuals and entities wishing for the return of a foreign currency — specifically, US dollar — dominated economy (see article titled; Economy fast re-dollarising: CZI, dated 11-17 November, 2022 in this paper). Sadly, in this case, one cannot help noticing the double faced attitude — or is it nature — of the latter organisation. In this case, I urge you, the reader, to revisit Part Four of this article where I am talking about the regime change agenda.

On the positive front, we need to implement a complete backward and forward integration process and/or strategy.

Because of its capacity to enable any system to make the most efficient use of natural resources, this is a strategy that the developed economies have developed to the level of perfection.

Sadly, with the current uncooperative attitudes lodged among them, there is no way Africans can derive equal benefits from such a strategy to the same level that the developed economies have done.

But in the current circumstances, there is no room for being satisfied with the underdog position.

If they just have to survive, Africans simply have to push themselves to the same level of development as the rest of this world. Here, there is no alternative.


Clifford Shambare is an economist who has qualifications in agriculture. He is a practising farmer and a business consultant and contacted at [email protected]


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