Erich Bloch column – 14 Mar

Economy’s death-knell now ringing

LAST week, after holding back for nearly five months, President Mugabe decided to proceed with final and absolute destruction of the Zimbabwean economy.


Notwithstanding that the constitutionally prescribed period within which legislation passed by parliament and the senate must receive the presidential assent in order to become law had long elapsed, the president saw fit to give his belated assent to the Indigenisation and Economic Empowerment Bill.
Thus, despite the effluxion of time in excess of constitutional prescription, the Bill has now allegedly been promulgated and, subject to any challenge to the courts being upheld, is of force and effect.
Irrespective of whether this foolhardy, disastrous legislation is successfully challenged or not, the cataclysmic consequences of its promulgation are immense, and effectively become the final nail into the Zimbabwean economy’s coffin.
However, despite pronounced, authoritative representations to government from the captains of commerce and industry, from many parliamentarians, from some of the hierarchy of the ruling party, from the central bank, and from many others, the leadership of Zanu PF has dogmatically dismissed those representations, and obdurately persisted in its intent to enact the grievously ill-considered legislation.
And, undoubtedly, the timing of the misguided promulgation has been significantly influenced by an even more misguided expectation that doing so would positively influence the electorate to vote for the president and for Zanu PF’s senatorial, parliamentary and local government candidates.
None can credibly deny that much is necessary and very long overdue, to achieve economic empowerment for the majority of Zimbabwe’s economically emaciated populace.
It is unacceptable that almost three decades after Zimbabwe’s Independence, the overwhelming majority of Zimbabweans are extremely impoverished, with appallingly few having had any significant opportunities of achieving entrepreneurial aspirations, more than four-fifths of the employable population being without gainful formal employment, and few having any credible expectations of economic advance.
Admittedly, a very major portion of the economy is notionally indigenised, in that the greatest element of economic presence vests in the state, and in insurance companies and pension funds operating primarily for the benefit of the indigenous policy holders and members, and almost wholly managed by indigenous executives.
But despite providers of electricity, telecommunications, rail and air services, water supplies, media, and much, much more being indigenised parastatals, and the majority of major companies being substantially owned by indigenised financial institutions, few of the populace have benefitted from such indigenisation.
Similarly, the endlessly heralded land reform programme — pronouncedly trumpeted by government as an overwhelming success — has in reality benefited very few, whilst at the same time it has rendered hundreds of thousands unemployed, and millions the victims of extreme poverty and misery.
That has not deterred government from its vociferous contentions that in the same manner that land, and agriculture thereon, must be “owned” by the people, so must the mines, industry, and all other components of the economy.
Not satisfied with having destroyed agriculture, which was the foundation of the Zimbabwean economy, government is now determined to implement similar failed policies upon all other economic sectors.
That the failure of doing so will be just as great is arrogantly dismissed as baseless mouthings of those presently economically endowed, of the ruling party’s political opponents, and of the mis-perceived, alleged international enemies of Zimbabwe.
The reality is that one of the greatest and most critical needs for Zimbabwe’s economic recovery, and for the resultant restoration of wellbeing for much of the population is investment, both foreign and domestic.
Investment creates capital inflows, employment, revenue flows to the fiscus, downstream economic activity, technology transfer and development, exports and attendant foreign exchange generation, and much else.
But very few, if any, investors are willing to invest if:
lThey are deprived of control and authority over their investments, and such deprivation is the result of legislative limitation of non-indigenous investment to 49% of any controlling interests in the investment venture. Investors are understandably unwilling to be minorities in entities funded by them, having little or no authority and influence on their operations;
lExisting investments are expropriated, for purposes of indigenisation, without full and fair compensation, as has been the case in government’s theft of agricultural lands, spuriously justified by contentions that Britain is liable to effect such compensation.
Bilateral investment protection agreements, determinations by international courts, and common justice, irrefutably demonstrate such contentions to be false and without justification;
lThe intending investors are not even assured that they can, without governmental interference, select their own co-investors, and the terms and conditions of future relationships between the investors, and of the future operations of the underlying enterprise.
Neither foreign nor domestic investors will invest under such circumstances, and hence the legislation means that future investment will be non-existent, depriving Zimbabwe of one of its greatest economic recovery needs.
Instead, the already gravely moribund and declining economy can only sink further at an ever-accelerating pace, until it has sunk so low as to be beyond redemption.
Government would constructively advance economic indigenisation if, instead of enacting draconian, cyclonic legislation, it would vigorously facilitate and enable indigenous entrepreneurship.
Thereby it would grow the economy, instead of constantly shrinking it further.
Economic wellbeing is not forthcoming from emulating the Robin Hood act of taking from the perceived to be rich, to give to the poor, so that the rich become permanently poor, a few of the poor become temporarily rich, and the majority of the poor become poorer.
Hopefully, the legislation’s enactment is naught but an ill-conceived election ploy, to be reversed and abandoned once the elections are over.

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