HomeBusiness DigestRebuilding confidence in Zimbabwe

Rebuilding confidence in Zimbabwe

By Alex Tawanda Magaisa

ONE of the key challenges facing Zimbabwe is to rebuild and inspire confidence among its citizens and within the wider global community.

Arial, Helvetica, sans-serif”>As long as confidence in the country remains at the prevailing dismal levels, chances of succeeding on the economic front are very slim. There are at least three key areas of improvement that Zimbabwe ought to focus on in order to regain the confidence of the local and global communities.

Firstly, at the risk of stating the obvious, it is necessary to sort out the politics because the economic problems are direct products of political problems that have grown over the last four years.

Secondly, it is necessary to revive the key institutions of the state that in principle ought to remain outside the dynamics of party politics.

Third and probably most crucial, citizens’ rights must be sufficiently protected and more particularly, there must be a restoration of property rights systems.

Much has been written about the politics of this country and undoubtedly, a lot needs to be done to ensure that the political game is played fairly and freely before the rest of the world, including our friends, can take us seriously again. At present the single greatest factor inhibiting confidence and investment in the country is political risk arising from years of uncertainty and relative instability For various reasons, Zimbabwe has been a high-profile developing country and consequently its problems have been highlighted all over the world.

The images beamed across the world hardly inspire any confidence. While the political issues have received much attention elsewhere, this article is mainly concerned with the need to maintain the integrity of the key institutions of the state and the importance of recognising and enforcing rights to property for the revival of the economy.

There are several institutions of the state which have a life beyond the government of the day. The idea of a civil service is that people are employed by and to serve the state and its life-span or composition does not depend on the incumbent government. For example, diplomats owe allegiance not to political parties but to the state which they can serve even beyond the tenure of their respective parties in government. Key appointees may leave the civil service upon the departure of the incumbent government whose policies they are meant to implement but by and large, the generality of the civil service remains in place.

A mass departure of the civil service would cripple the wheels of the state. Institutions such as the judiciary, the central bank, police, and central intelligence also fall within the same bracket. Persons might come and go but the integrity of those offices must be maintained at all times.

For instance, the central bank is the key institution in the formulation of monetary policy and regulation of the finance and banking industry and its independence is vital. It is important to ensure that these key institutions retain independence and integrity in the eyes of the general public. In some collapsed states, these key institutions either do not work at all, or at best they serve in a partisan fashion that fails to inspire confidence. Due to excessive political interference in the workings of some of these institutions, Zimbabwe risks crippling the wheels that drive the state.

The politicisation of key institutions of the state is one of the gravest errors in young developing countries. The levels of interference and manipulation mean that those who use the institutions no longer have confidence in the system. In my view, whatever political views we hold, we should not be ruining the institutions upon which the state is built.

The lack of independence has meant that these institutions cannot retain or recruit key personnel with skills that are necessary for their proper functioning. This is because people no longer view the institutions as separate from the ruling political party and therefore tend to associate working for these institutions with sustaining the ruling party. Yet in fact there would be nothing wrong with working with and for these institutions if the political parties did not meddle in their business.

It is precisely for this reason that when renowned economic consultant Eric Bloch became part of the Reserve Bank of Zimbabwe-backed body to harness foreign currency from Zimbabweans in the diaspora, he invited a barrage of criticism from some members of the society. Yet, in my view, in principle there is nothing wrong with taking steps that help and sustain key institutions of the state. If someone has an idea for the improvement of the welfare of these key institutions, then they should be allowed to put it across.

Both the ruling party and the opposition ought to desist from politicising affairs of key state institutions. Whether it is Zanu PF or the MDC that is in power tomorrow, it must always be clear that state institutions remain largely apolitical. There is no point in destroying important institutions of the state when fighting for political office because when you get to power you will need to have those institutions in place.

If the South African anti-apartheid movement had gone on a rampage and destroyed key institutions, they would have had serious challenges when the time came for them to ascend to positions of power. When we write and critique policies of the RBZ, judicial judgements, police actions, it is not because we are attacking the officers personally. In fact, we are trying to place ideas in the marketplace, to hold them accountable for their actions and to ensure that the institutions that they serve function in the best way possible. It is necessary to keep those who run our key institutions on their toes so as to deliver as best as they can. They have in us, best friends whose key interest is to preserve the integrity of the institutions and act as sounding boards for their ideas and policies. Unfortunately, some do not take it in that light, and tend to dismiss criticism as sabotage.

Property rights are key instruments in a market economy. They are necessary for the processes of exchange that take place in the market. Individuals cannot be expected to pay or work for things to which they cannot assert their rights. The right to property enables an individual to use and expend a thing without undue interference from others. Any reasonable investor expects that the law adequately protects rights to his investment. Part of the reasons for the success of the commercial farmers was that they had secure title to property and were therefore able to use it in many ways, including as security for loans and were able to venture into long-term farming projects with greater commercial benefits.

The insecurity over property in Zimbabwe has not only caused capital flight and reduction of asset values but it also deters potential investors. The expansion of Zimbabwean companies to other countries in the region is not simply a result of any newly found entrepreneurial ideas but is largely motivated by the desire to protect investments in more stable environments where property rights are better protected. In fact, most of these companies are slowly divesting from Zimbabwe and placing their assets in other countries and with the passage of time, they will totally dispose of local operations if things fail to improve. In an environment where people make inflammatory statements that threaten property rights and assets of commercially viable enterprises such as Kondozi and Charleswood are usurped wantonly, confidence cannot be expected to flourish. Instead of laying down arms and beginning the process of nation-building, there seems to be an insistence on breaking down all forms of property ownership.

Despite all the familiar rhetoric, economically Zimbabwe cannot go it alone in this globalised world.

Zimbabwean businesses need to access loan and credit facilities in the global markets and political risk is a key aspect in assessing the credit-worthiness of a borrower in those markets. In fact, most Zimbabweans living abroad are a potential source of investment. Ghana has started well, marketing itself and harnessing the wealth of its citizens living abroad for investment in their country.

Whatever their shortcomings, international financial institutions such as the World Bank and the International Monetary Fund remain important sources of funds for aid and development in the world. Their willingness to engage generally gives positive signals to other potential sources of funds. That is why we ought to continue to engage them and the RBZ governor Gideon Gono is well aware of that. All this support, from citizens abroad, foreigners and international institutions depends on goodwill. The goodwill in Zimbabwe has diminished significantly over the last few years. After the chaotic land redistribution exercise, the institution of property rights has been fundamentally undermined and citizens’ rights are generally insecure. The rights in property previously held by commercial farmers have not been replaced by new rights to those people in current occupation of the land. The commercial value of that land has diminished drastically in the marketplace because it cannot be properly delimited and valued nor is title secure enough. As a result of the prevalence of lawlessness the image of the country is unattractive.

In order to regain the confidence, it is necessary to protect property rights, restore the independence and integrity of key institutions of the state and sort our messy politics. That will be the beginning of rebuilding the goodwill of the nation and an important part in the platform for greater development and prosperity. It matters not whether one is Zanu PF or MDC – the wheels of the state must be kept in motion, for the state is greater than partisan party politics.

In his efforts to rebuild the stability of the economy and lay the ground for better prospects, Gono must persuade the politicians that the image of the country must be improved drastically. To do that, lawlessness ought to cease and there must be greater respect for property rights and the sustained integrity of key institutions of the state. Building confidence is a process, and a lot will need to be done in the case of Zimbabwe.

* Alex Tawanda Magaisa is Bake & McKenzie Lecturer in Corporate & Commercial Law at the University of Nottingham. He can be contacted at alex.magaisa@nottingham.ac.uk

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