eBusiness Weekly
Clifford Shambare
Part One
Zimbabwe is currently faced with a paralysing economic condition, which has dogged her for the past twelve years. The symptoms of this state are a high unemployment rate, current local currency loss of value and a high inflation rate. Lying under these challenges is corruption. I say ‘lying under’ because corruption is an insidious phenomenon.
A high unemployment rate means that the level of investment in the economy is lower than it should be.
And looking further into this phenomenon, we find that unemployment has always been the bane of economies, starting from the days of the Industrial Revolution. Because of low levels of industrialisation, in the underdeveloped economies, unemployment has always been a serious challenge.
But even then, the same challenge is always lurking in the developed and emerging economies.
As a result political leaders the world over, are judged according to the way they manage unemployment rates. In Zimbabwe this has always been a challenge. It has been so even under colonial rule—a period during which industries seemed to work well. But today, this challenge has assumed alarming proportions largely because of three major reasons.
One of these is the economic sanctions that have, and still are, responsible for the current conditions of which the scarcity of capital is the major one. The other reason is the seemingly inexorable population growth.
Regarding the latter, developing countries, Zimbabwe included, seem to be ignoring it whereas the developed and emerging economies always take it seriously. China is a good example here.
The other no less important reason is the failure of the country’s industries—particularly the agriculture and manufacturing industries.
But in this case, Zimbabwe is in a class of its own since it already has the industrial structures —the factories—which however, have become redundant.
But there is a story behind this redundancy.
These industries belonged to the colonists but they abandoned them in protest of the land reform programme that the government implemented in 2000. This is a situation that has caused serious disagreements among the Zimbabwean population.
One section of the population is for the programme since it recognises the importance of land for the achievement of a state of economic prosperity.
The other section, however, is strongly opposed to the programme.
On critically scrutinizing these two positions, one finds each of them to be, in a way, justified depending on the who is judging the matter. But this is a question of perception—a not uncommon condition in many situations the world over. Sadly, in Africa, these differences sometimes become quite vexatious and divisive.
The cases of Nelson Mandela and Robert Mugabe—two prominent African leaders who were, and still are, regarded differently by different sections of the African, and even the outside community, are instructive here.
On the one hand, the former category sees ‘nothing wrong’ with the government’s policy on most accounts. But the latter sees the government as ‘wrong’ on most aspects of life.
Under normal circumstances, this is the reason for voting for different parties anyway. But Zimbabwe’s situation is not a normal one since up until now, the economy is still largely owned by foreigners. This is a condition that one section of the community does not mind having. To this section, foreign direct investment FDI—is the way since it provides them with jobs.
However, the former section puts more emphasis on empowerment—a position that views FDI from a different perspective. It believes that FDI without empowerment is not a good thing.
One issue that has divided the Zimbabwean community because of its association with economic sanctions is that of land reform. This is a matter that has put Zimbabwe in bad light in the Western world today.
But there is a need to consider this issue from a more balanced perspective. Here we have the views of other Africans—those who have suffered from the disenfranchisement brought about by the phenomenon of colonialism. And black South Africans serve as an appropriate example here.
In his book; The Land is Ours, Tembeka Ngxukaitobi—a South African lawyer—brings to the fore, the complexities that surround land ownership in Southern Africa. In the process, he proves beyond doubt that, despite arguments to the contrary, South Africa’s land belongs to the blacks of that country.
Back to the matter of employment. Currently, Zimbabwe’s industries are not able to absorb all the graduates from the country’s schools and colleges. Sadly, very few if any, Zimbabweans have cared to follow this matter up by looking into the history of this country. This is what Ngxukaitobi is doing in his excellent treatise of the South African case.
In doing this, one finds that this country has never been able to absorb all the job seeking youth. This has been especially so in the case of black youth.
This means that, in order to achieve such a condition, the economy needs to raise its current rate of employment considerably. This condition implies considerable expansion of the existing industrial system, as well as the number of startups there in. This needs considerable amounts of investment in human resource development, money and technology.
But currently, this state is almost impossible to achieve largely because of four conditions. The first one is lack of capital—particularly patient capital. The second one is lack of capacity.
The third is lack of appropriate technology. And the fourth is the corruption that is now endemic in the economy. And corruption negatively impacts on the other four by somehow, rendering unavailable, the much needed funds.
On considering solutions to these challenges under such negative conditions, one finds that effectively dealing with corruption is the most , if not the only viable method at the moment.
This is because, even though this method does not really create new capital, it avails to the economy, that capital which would otherwise be lost, in some cases, forever.
This is capital that can be quite substantial. In this respect, consider all the tax revenues that run into millions, or even billions.
Then there are those funds that are lost through tender kickbacks, as well as the monies that government avails to the national budget—that is largely an expenditure budget, and [to] loss making state enterprises.
For example, consider that in 2017 an amount of US$2.4 billion in taxes was not accounted for.
In 2016 or thereabouts, the Ministry of Youth Recreation and Employment under Patrick Zhuwawo was not able to account for US$ 2 billion. The diesel power plant built in Seke, that never worked, was built for US$500 million. The Gwanda solar power station that never materialized gobbled up US$7 million dollars. This totals nearly US$ 4.5 billion dollars.
Corruption has the effect of directing money where it is not useful—or at least beneficial— to the nation.
In a country such as Zimbabwe with such a dire need for capital, that kind of situation has the effect of throttling economic growth.
And money laundering in which large sums of money in the form of foreign currency that is needed to purchase machinery and raw materials, is diverted outside the country.
It is estimated that of the US$90 billion externalised from Africa every year. A sizeable proportion of this amount is from Zimbabwe. (See the Panama Papers, the Pandora Papers and one or two others). Most of this money is externalized by corporate and individual business people, a good proportion of whom are Caucasians.
This is a paradox in itself since these agents are the ones who should be assisting young business start ups to start and grow businesses in the country.
Public funds are another area that handles large amounts of money running into billions of US dollars. The government is the major destination of these funds, mostly tax payers. However, the way the latter is managing these funds has become a big issue today.
The tendering area is one where a lot that is negative happens; the infrastructural development area being a good example. Here unsuitable applicants usually end up being awarded the bulk of these tenders.
The latter may not have the machinery and expertise to implement the project concerned.
But because they offer bribes to the tender managers, they end up being awarded these tenders.
The end result of such practices is failure through non performance or [the production of] substandard work and/or products.
In a good number of cases prospective entrepreneurs—those who have the potential to contribute meaningfully to economic growth—end up on the lurch. Sadly, this practice goes on ad nauseam.
As a result of corruption many systems and subsystems in the country are failing. For example, the country’s road network is now in a state of disrepair.
The railway system has become redundant.
The power delivery system is in a sick bed. Most, if not all, urban centres are now largely unable to deliver the necessary services.
The agricultural industry is another area where large amounts of funds are abused. As it is, the Command Agriculture Programme has run out of funding while crop production is declining at the same time. The cause of this state of affairs is the awarding of loans to ghost farmers and to those without the capacity to farm profitably.
Considered from a broader perspective, corruption is the bane of a growth strategy for any economy.
The current Chinese political leadership’s attitude and consequent strategy of dealing ruthlessly with corruption and that country’s resultant economic growth and prosperity clearly attests to this assertion.
Now, let us proceed to the other areas than corruption. For the economy of Zimbabwe to change for the better, the capacity of her people to resuscitate the economy needs to be enhanced. This is critical for a number of reasons.
Firstly, capacity improves the self confidence and courage of the leadership—both political and business, as well as the general populace—to deal with the country’s challenges. But self confidence is (almost) a culture that can however, be acquired through a number of strategies.
Education and training are the main ones, but they take time to produce desired results.
Here Zimbabwe is in another dilemma; she has done the above but they are leaving the country in droves in search of better conditions, mainly employment.
If only we could halt this trend, we could achieve a lot on the economic front. But this needs extraordinary strategies by government; China solved it through the 1000 talents programme (see below).
One area in which Zimbabwe has bungled is that of technical training. Here the practical component of technical colleges has been done away with by default. Now what you have in its place are courses in supply management and ICT.
These are courses that produce graduates that are only good in running an already functional economy, hence their suitability for, and consequent demand, in an economy such as the South African one.
Having realised this challenge the Zimbabwean authorities designed a programme called Education 5.0 but still, there is a challenge here; but why? It all boils down to systems, values and culture.
First of all, most systems in Zimbabwe are no longer functioning. For example, existing, but now redundant industries, need to create avenues for the said graduates.
This means the apprentice training systems of old must be resuscitated. But again, there is a challenge here because there are virtually no manufacturing industries.
This in itself, presents us with another dilemma; what should start first, a manufacturing firm or a trained artisan? In any case, at one point the country had a reasonable number of artisans but, like other specialists, they left the country.
The other issue to consider here is that of the diaspora.
Zimbabwe has tried to call back its diaspora but here is another dilemma; they will not come back until the economy is sorted out. Here, the government is bungling by failing to deal effectively with corruption. Under such conditions, what the country can only have from the diaspora are funds for consumption and not for economic growth.
Shambare is an agriculturist cum economist and reachable on 0774960937
