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Eric Bloch Column


Politics destroyed our economy


By Eric Bloch

SPEAKING at the official opening of the Chinhoyi University of Technology Hotel School, President Robert Mugabe said that: “It

goes without saying that the main thrust of our current international economic development programme is to stabilise the macro-economic environment.


“As we work towards this objective, we should see increased capacity utilisation in the productive sectors of agriculture, manufacturing, mining, construction, tourism, transport and communications.”


He emphasised the need for increased capacity utilisation in all productive sectors, as a prerequisite for economic stability, and he also noted that efforts to achieve this must be complemented by highly skilled human capital.


It is indisputable that economic recovery, and an ongoing viable economy, requires significant levels of capacity utilisation in all economic sectors, on a continuous basis. It is equally indisputable that that utilisation does not prevail in Zimbabwe today.


Agricultural productivity has declined, since the millennium, each and every year, and although the extent of decline varies from one agricultural sector to another, overall the agricultural production in the 2006/7 season was less than 30% of that seven years ago.


In like manner, industrial capacity utilisation a few years ago was assessed to approximate 60%, whereas recent studies evidence utilisation of less than 25%. The same applies to tourism if one disregards the spurious governmental figures of tourist arrivals, which include one-day trippers, back-packers, cross-border traders, and the like, and instead has regard to the actual numbers of bed-nights sold by the tourism sector, as compared to those available.


The tragedy is that almost entirely, the gargantuan decrease in Zimbabwean productivity is due to the acts of commission and omission of government. That tragedy is compounded by the pronouncedly distressing facts that not only does government obdurately avoid recognizing its culpability, and that it dogmatically persists in pursuing policies that not only do not make increased productivity possible, but also continues to lower productivity further.


Zimbabwean agriculture was so highly productive, before government brought it to the brink of destruction, that not only did the agricultural sector feed the entire nation, but it was the bread basket of the entire region. It produced the world’s second largest crops of tobacco, and those being of exceptionally high quality. It produced the best cotton in the world, and was a producer of extraordinarily high quality beef, in significant volumes.


Its sugar, coffee, tea, citrus and numerous other agricultural products, for both local and export markets, was considerable. In consequence of these enviable agricultural operations, it was the greatest provider of employment in Zimbabwe, the greatest generator of foreign exchange, and the foundation of the entire economy.


The manufacturing sector was the most productive such sector in sub-Saharan Africa, north of the Limpopo River, embracing engineering, textiles, clothing, furniture, pharmaceuticals, diverse food processing and production, and much, much more. It provided a very great extent of the needs for manufactured products of all Zimbabwe’s economic sectors, and of its population. Similarly virile was the tourism industry, gainfully exploiting the wealth of Zimbabwe’s unique tourism resources, attracting hundreds of thousands, and later millions, from throughout the region and from very much further afield, including Europe, North America, and the Far East.


But today the situation is distressingly different. Agriculture has been brought to its knees by a politically-driven, disastrously implemented, land reform programme. In disdainful and contemptuous disregard for human and property rights, government allowed those who had the skills, resources and will to be productive to be ousted from the farms, for them to be replaced, in all too many instances, by those solely interested in some immediate wealth by the disposal of essential infrastructure, including pumps, irrigation equipment, fencing, electrical cables, and components of farm buildings. Others wished to farm their unilaterally acquired lands, but were either without the necessary capital or collateral, or without other necessary resources. Yet others, with the will to farm, were without the skills. All this was exacerbated by government’s repeated failures to ensure timeous availability of agricultural inputs. So capacity utilisation plummeted downwards, almost entirely in consequence of government’s policies.


The near collapse of the manufacturing sector is similarly almost totally attributable to government. It is that which government has done, or not done, which has occasioned near-total non-availability of foreign currency for essential imports. Government is responsible for the loss of industrial export viability, for it is almost entirely due to government that Zimbabwe has the world’s highest inflation, rendering exports non-price competitive, and yet government steadfastly fails to devalue Zimbabwe’s currency adequately and realistically, in order to compensate for the inflation-driven cost escalations. Having already severely weakened industry, government delivered it a fatal blow by ill-conceived, heavy-handed, counterproductive price controls. And some cannot learn from their mistakes. Last week, the newly appointed chairman of the National Incomes and Prices Commission (NIPC), Godwills Masimirembwa stated that all pricing models, on which prices are determined, must bring imported inputs to account at official exchange rates.


The hard fact is that industry cannot obtain its inputs at those rates. It has to source its inputs, or required foreign exchange, from those possessed of “free funds”, and those operating in alternative markets, irrespective of the legality or otherwise of such markets. As a result, all those businesses are being forced, by government, NIPC, and Masimirembwa, to cease operations, productive capacity utilisation, already down to 25% from 60%, will fall to near zero, fiscal inflows will fall further, yet again impoverishing government, and tens of thousands more will join the ranks of the unemployed, and most will join the brain drain into the diaspora, failing which even more will be condemned to extreme poverty and misery.


Tourism’s recovery is contingent upon economic recovery, for tourists require assurance of availability of all their needs and expectations, and upon a markedly enhanced Zimbabwean image, instead of one where governmental disregard for the fundamentals of law, and its contempt for human rights, results in potential tourists seeking destinations perceived to be safer and more congenial.


Very correctly, the president identified mining as a sector for enhanced productive capacity. Zimbabwe has immense potential wealth in platinum, gold, nickel, coal, methane gas and much else. But realising that wealth requires very considerable capital, international technologies and appropriate skills and, therefore, foreign investment into mining is essential. However, it is naïve to expect such investment in a rigid command economy environment, in a regime of specious rates, and where government legislates for the foreign investors to be minority shareholders. And, over and above those deterrents, the foreign investor is demotivated when confronted by an unfriendly, unwelcoming, falsely insulting, and accusative, non-investment conducive, environment.


One instance of this repulsion of foreign investment was demonstrated last Friday, when Masimirembwa had an allegedly analytical article published in the Herald, under the headline “Foreign firms bent on milking Zim.” Clearly he feels that through NIPC he is not doing enough to destroy the economy, and therefore he attacks foreign investors and discourages their investment, no matter how greatly Zimbabwe needs it and benefits from it.


Not only does he repeat the endlessly false allegation of “illegal international sanctions” on Zimbabwe, but he accuses the transnational corporates “of siphoning the same in the form of profits, interest, dividends, managerial, consultancy and licensing fees, and under-invoicing”. Not only is the latter very much the exception to the rule, but all the others are the legitimate yields for the investment of capital, the lending of monies, the provision of services, and according usage of intellectual properties. No one in their right mind invests without expectations of return, but Masimirembwa has joined the ranks of governmental economic detractors and destroyers.


The Zimbabwean economy will not attain the president’s desired increased productive capacity utilisation until it ceases to be driven by politics and bigoted politicians, and their sycophants, and instead is steered by economic fundamentals and realities.

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