Eric Bloch column

Business sector new economic scapegoat


By Eric Bloch


FOR many years government, being unable to acknowledge any capacity of its own error, has attributed Zimbabwe’s distressed economic circumstances to Britain and its allies in gene

ral, and to Tony Blair in particular, to the minuscule white Zimbabwean population, and especially the former white commercial farmers, to non-existent international economic sanctions, to its political opposition, and to climatic conditions. Government has assiduously sought to shift the burden of blame for decimating the economy from its own shoulders to those of others.


For a long time, its endeavours to disclaim responsibility for reducing most of Zimbabwe to pronounced poverty, deceived and deluded the majority of Zimbabweans. Most were sufficiently trusting, naïve and gullible as to believe that government was blameless, and that all Zimbabwe’s economic misery was a consequence of vile machinations of government’s enemies, compounded by the elements.


But even the most unworldly and easily persuadable eventually cease to believe a never-ending reiteration of the same explanations for their continuous suffering, begin to query the failure of government to counter the alleged perfidy of others, and start to ponder whether there is not, in fact, an element of culpability on the part of government.


Over the past eight years, when- ever government realised that it was no longer successfully convincing the populace that it was faultless, and that all the economic ills were solely due to others, and to circumstances beyond government’s control, it has desperately sought new third parties upon whom it could place blame, even if without foundation. Heretofore it has always achieved a high rate of success in convincing most that the responsibility for the economic woes was not that of government, but of others.


This pattern of blame transfer has recurred yet again.


A fortnight ago Zanu PF political commissar, Elliot Manyika, accused the business sector of sabotaging the economy. He did so when addressing a representative body of more than 40 industrialists and businessmen, claiming that the two-fold motives of profiteering and of discrediting government were the reasons for the supposed actions of the business sector to destroy the economy.


In doing so, he was ably aided and abetted by the Minister of State for Public and Interactive Affairs, Chen Chimutengwende, who stated “authoritatively” that some industrialists and retailers are economic saboteurs bent on effecting government change through increasing people’s suffering due to offending price increases. Such increases were, he claimed, wayward practices.


The previously alleged causes of the near-destruction of the economy were very far-fetched, only readily believable because so many had been indoctrinated into deep-seated belief that government is omnipotent, infallible and aware of all and that, therefore, if it stated a cause or causes for ongoing and intensifying economic hardships, such cause or causes had to be fact.


But as the economic decline continued and intensified, and government was perceived to be doing nothing to address it, other than blame others, or by making empty and false promises of economic turnaround and recovery, the deep-seated beliefs have progressively worn thinner and thinner.


Hence, it is not surprising that government has found it necessary, once again, to deflect the ire of the economically oppressed Zimbabweans by finding others upon whom to place the blame. Doing so has become increasingly difficult for the ruling party, for over the years it has blamed so many, without foundation and without effective remedial actions, that there are ever fewer that can be blamed with even superficial credibility.


So, it has focused upon the business community, believing that it can conjure up credibility by intensive reference to the pronounced price escalations that have become a daily characteristic of the economy, and a source of hardships for the majority.


But the suggestion that such price increases are driven by avarice, greed and orchestrated profiteering is specious and spurious in the extreme. So too is the contention that the business sector resorts to such price increases in order to discredit and displace government.


These allegations are far-fetched and ludicrous beyond all credibility. The reality is that most industries, wholesalers and retailers are desperately struggling to survive and to stave off liquidation.


The hyperinflation caused by excessive state spending, pronounced corruption, state-driven decline in agricultural production and numerous other factors beyond the control of the private sector, impacts upon the operations of the business sector to as great an extent as upon all Zimbabweans.


Industry, and the distributive trades are faced by markedly lesser demand for their production, and their commodities, due to a major decrease in domestic market purchasing power, and due to lower volumes of exports as a result of loss of export-market price competitiveness (caused by increased production costs not for by adequate exchange rate movement).


But the reduction in production is not matched by reductions in operational costs. Instead, commerce and industry is confronted by the same crippling hyperinflation as is its customer base.


It is faced with quarterly increases in salaries and wages, with interest charges on working capital borrowings at over 400% per annum, endless increases in input costs and in overhead charges. To survive in such an environment, enterprise has little alternative but to increase prices, and especially so after it has taken all possible, reasonable actions to enhance productivity and to contain costs.


If industry cannot achieve productive efficiencies, due to erratic and inadequate availability of the foreign currency necessary to source imported inputs, and yet is faced with massively rising costs which are subject to little opportunity of containment, it is faced with only two options.


One is to discontinue operations and cease to exist, and the other is to increase prices to enable the rising costs to be funded. That is not profiteering, it is an act of attempted survival. That is not a political action to discredit
government, it is an act of self-preservation.


But a devious government, steeped in duplicity which includes self-delusion, is incapable of accepting unpalatable facts, and therefore misinterprets and distorts them so as to absolve itself of blame.


Chimutengwende went so far as to destroy any, even remote, possibility of his contentions, and those of Manyika, being received as factual, by stating that government does not own or control any industries or service providers, this being “in line with the free market system existent in Zimbabwe”.


Obviously, he said this in order to distance government from the price increases which it claims are driven by malice and self-interest of the private sector. It should be brought to his attention (although he should already know it) that government owns the Industrial Development Corporation of Zimbabwe Ltd, which owns one of Zimbabwe’s leading fertiliser producers, Chemplex Corporation Ltd, Willowvale Mazda Motor Industries (Pvt) Ltd, which is a leading producer of motor vehicles, and diverse other industries. Government also owns the Zimbabwe Iron & Steel Ltd (Zisco), the Cold Storage Company Ltd (CSC), and many other industrial enterprises.


Moreover, it owns service enterprises such as Air Zimbabwe, National Railways of Zimbabwe (NRZ), the Zimbabwe Electricity Supply Authority (Zesa) and its underlying companies, and also Tel*One, Zimpost, the Zimbabwe Broadcasting Corporation, and 38 other parastatals.


It is of particular relevance that increases in prices and charges of most parastatals have risen over the last year (and previously) to a far greater degree than the rate of inflation has risen, and to a far greater extent than many private sector price increases. Air Zimbabwe’s fares go up more frequently than its aircraft! Electricity charges have soared, as have the costs of telecommunications and postages (postal services rose in cost by 2 915,2% in the year to August
2005!)


If the claims of Manyika and Chimutengwende have any substance, then it must be taken for granted that the state-controlled enterprises, which the minister claims do not exist, have increased their prices and charges solely in order to discredit and displace their masters! That surely is as baseless as were those governmental claims .