The Eric Bloch Column

Govt stranger to reality
By Eric Bloch


FOR the greater part of Zimbabwe’s 26 years of Independence, the government has demonstrated a remarkably great skill at distancing itself from realities.

Anything and everything that may be

negative in the economy is due either to the whims of nature, or the evil machinations of the international community, the political opposition and those of other races.    On the exceptionally rare occasion that there is any positive economic wellbeing, that is perceived to be wholly due to the government’s skills and actions, even when the authorities had nothing to do with it.

But this self-induced divide of the government between fact and fiction has been intensifying and growing more and more pronounced, at virtually the same pace as the economic decline accelerates, and the hardships afflicting the majority of the Zimbabwean population become greater and more oppressively unbearable.  

This was very evident when President Robert Mugabe delivered his 26th Independence Day address at the “celebrations” at the National Stadium in Harare.  What on earth was there to celebrate? Over a quarter of a century the country has witnessed millions becoming unemployed, more millions struggling to survive at levels far below the poverty datum line, while there is extensive malnutrition and endangerment of life, a near destroyed agricultural sector, a rapidly weakening manufacturing sector, an emaciated tourism industry, a mining sector thrown into disarray by threatened nationalisation policies, and near pariah and leper status with much of the world at large!  That is cause for celebration?

Mugabe’s address demonstrated, yet again, that he is surrounded by those who ill-advise and misinform him, or that he is using speech writers who write that which they think he would like to say, whether or not that is the case, even if that is far apart from the actual situation on the ground.  In his address, he did correctly record that the economy has suffered, but attributed that suffering to the effects of devastating droughts and unjustified sanctions. 

However, the economy has been in decline for eight years since late 1997, fuelled by grossly unaffordable government spending including massive compensation packages for war veterans, widespread corruption, a bloated parliamentary infrastructure including a financially unsustainable, little-purpose senate. A massively mismanaged land reform programme, incompatibility between fiscal and monetary policies and a great deal more have also fuelled it.

In particular, the economic disasters can be ascribed to a near total lack of constructive economic policies and good governance.

To ascribe the economic malaise to drought has incredibly little substance. Although it is indisputable that Zimbabwe has suffered several very severe droughts, in reality they had relatively little economic impact, for it is a strange agricultural fact that that which isn’t planted does not grow, irrespective of climatic conditions, and the little that is planted also does not grow if not timeously cared for with requisite nutrients, chemicals, fertilisers, insecticides and the like.

Similarly, the never-ending contention that Zimbabwe is the victim of unjustified economic sanctions is specious in the extreme. No country has imposed such sanctions upon Zimbabwe since Independence.

Some have barred those connected to the government from travelling to their countries and from holding assets in such countries. Some, such as the United States with its Agoa programme to incentivise and boost African development, have withheld such incentives and bonuses from — but continue to trade with — Zimbabwe.  

Some have diminished aid, but not as an economic sanction but responsive to many abuses. Others, such as the International Monetary Fund, do not lend to Zimbabwe as it has been a defaulting debtor for many years and, although it has been reducing its arrears, it is still in default and has an economy which cannot be expected to service further debt commitments. 

These are not “unjustified economic sanctions” but normal exercise of rights against individuals seen as being politically abhorrent, vested with contempt for human rights, justice and law and order, and decisions based upon sound fiscal practice. But the Zimbabwe government and its state-controlled media have duped themselves into absolute belief that such sanctions exist, and they have contended that so often that they are convinced that their existence is fact.

Mugabe said, in his address, that rationalisation of the Bilateral Investment Promotion and Protection Agreements (Bippas) showed the government’s commitment to bolster investor confidence.  If there is any such rationalisation, the signatories to those agreements and the international investor community are unaware of them.  None of the dispossessed farmers from countries with whom Zimbabwe has such agreements have had their farms returned to them. Based thereon, who can place any faith in any such agreements, for they are clearly not worth the paper that they are written on?

And it is difficult to believe that there is any substantive change of attitude on the part of the government to honour Bippas, for now the government appears to be determined to subject the mining sector to the same “tsunami” that it afflicted upon the agricultural sector, albeit possibly not to the extent of total dispossession.  

Only six weeks ago, Mines and Mining Development minister Amos Midzi announced that the government was contemplating proposals, to be placed “shortly” before parliament, whereby the state and Zimbabwe’s indigenous population would acquire 51% of large gold, platinum, diamond and other major mineral producing mines, and 50% of all other mines, with only half of that being acquired being subject to compensation (of an unspecified nature, and over an unspecified period), concurrently with all mines having to pay royalties to the
state.

There was an immediate furore and within a fortnight Mugabe, when addressing the 65th Ordinary Session of the Zanu PF Central Committee, said that there was no such policy in place, and hence the uproar was uncalled for.
 
But a little more than a fortnight later, in his Independence Day address, the president said that his government would soon put in place policies and regulations to ensure that all Zimbabweans would take control of the exploitation of the country’s natural resources, including minerals.  This statement does not align with the contentions of compliance with Bippas, or with his denials a fortnight earlier, and cannot in any manner be a motivant to investors to invest the very considerable capital and technology necessary for the significant development of Zimbabwe’s vast mining potential.

That potential is immense.  Zimbabwe has an estimated 13 million tonnes of gold resources, and presently only mines 20 tonnes a year. Platinum reserves are estimated at 2,8 billion tonnes, while annual production is a minimal 2,4 million tonnes.  Nickel reserves exceed 4,5 million tonnes, of which 9 000 tonnes are presently mined annually, while estimated reserves of diamonds are 16,5 million tonnes, chromite 930 million tonnes, coal 26 billion tonnes, iron ore 30 billion tonnes, and there are diverse other minerals, with all of those minerals presently yielding less than 6 million tonnes per annum.

Mining can be a great source of Zimbabwean wealth, but not if the government drives away investment with foolhardy, destructive policies.

Mugabe justified the government’s intents by saying that although investors bring in money and machinery, they must know that the resources belong to Zimbabwe and, therefore, while the investor should get a reward, that must be balanced with what Zimbabwe keeps for itsself. He supported this by saying that over the years the country has lost considerable wealth, as only foreign companies benefited from the exploitation of Zimbabwe’s minerals.  But that is not factually so.  

The fiscus has benefited markedly from the direct and indirect taxes paid by the mines, and the mines’ employees.

The downstream economy has benefited considerably from the patronage of the mines and of the mineworkers.

Hundreds of thousands have benefited from employment.  Zimbabwe has accessed substantial  (although not sufficient) foreign exchange to keep the wheels of the government, commerce and industry, and Zimbabwe as a whole, turning (even if presently at a lesser pace, for the needs for foreign exchange exceed that being generated).   

The government and its speechwriters need to “get real”, instead of having the president embarrass himself through reference to the incorrect, and instead of driving further nails into the coffin of the Zimbabwean economy.