Eric Bloch: Real Progress Despite Marked Contradictions

ZIMBABWE’S so-called inclusive government has not yet been in office for even 100 days, and therefore some of the progress to transform Zimbabwe and bring it to the glory long-awaited by a population which has suffered for a prolonged time is both heartening and commendable.

 

That however cannot detract from the fact that progress constitutes only the first very tentative steps along a lengthy recovery path, but there is a very old and trite saying that “every journey begins with a single step”.

Yet the inclusive government has already gone beyond that, taking many necessary, albeit sometimes tentative, steps.

Some of those positive steps include:

*A constructive review, and modification, of the 2009 national budget. Of especial significance was the declared determination to curb the state’s profligate spending which has been a fiscal characteristic for too long. Minister Tendai Biti was very credibly outspoken that government must live within its means, saying that government should only “eat that which it gathers”.

*Realistic recognition that the Zimbabwean dollar had become a currency pariah, unacceptable to many. Instead of endless mouthings of the past that Zimbabwe could not, and would not, surrender its “sovereignty”, practicality came to the fore.

The establishment of a multi-currency environment was legitimised by the Minister of Finance, and by the Reserve Bank of Zimbabwe (RBZ), with the Zimbabwean dollar being declared moribund or temporarily dead. To a major extent this had been the prevailing reality for some months although, with a limited number of exceptions, unlawfully so.

According legitimacy to the situation on the ground restored some credibility to the operations of the economy, and was a major factor in the elimination of many commodity scarcities, and the consequential pronounced reduction in inflation.

*An awareness, previously oft denied, that a prerequisite of Zimbabwean economic recovery was reconciliation with the international community, and considerable funding support from that community.

That awareness resulted in a near total cessation of governmental outpourings of vituperative, vitriolic attacks against the international community and, instead, near pleadings for reconciliation and financial support.

Although, as yet, such support has been relatively minimal (with the exception of some considerable humanitarian aid), some aid has already been forthcoming, including a little assistance in governmental payment of educational and health care salaries.

Concurrently, there has been some significant progress in improving the previously very constrained relationships with international bodies such as the International Monetary Fund (IMF).

In contrast to the very negative annual evaluation reports of the IMF in preceding years, the March 2009 evaluation mission issued a surprisingly upbeat report (although it inevitably also voiced some concerns).

It stated that “a number of positive steps that are in line with previous IMF recommendations have already been implemented, including price liberalisation, the removal of foreign exchange surrender requirements and most exchange restrictions on current account transactions, the imposition of hard budget constraints on parastatal enterprises, and the elimination of the Grain Marketing Board monopoly”.

The mission also praised the new government’s commitment to eliminate central bank funding of operations, and stated “the credibility of the government’s commitment to fiscal discipline is reinforced by the adoption of the multiple currency system”.

*The discontinuance of all RBZ involvement in quasi-fiscal operations, government belatedly assuming responsibility for that which should be executed by it, instead of being imposed upon the RBZ. 

That imposition, over the preceding almost five years devastated RBZ credibility, hindered its pursuit of its core obligation, and severely fuelled inflation.

*RBZ’s extensive relaxation of exchange controls, its restoration of Foreign Currency Accounts (FCAs) retention and management to the private sector banking entities, concurrently with discontinuance of mandatory foreign exchange surrenders, at specious exchange rates, which had severely restricted exporter viability.

*Wide-ranging economic deregulation: first phases of decentralisation and minimisation of state controls, including the immediate restoration to urban local authorities of control and management of water procurement, purification and distribution.

*Declared intents to vigorously contain corruption in both public and private sectors.]

These are but a few of the extensive, positive changes and declarations of intent initiated or voiced by the new inclusive government, within a very short passage of time since it came into being.

However, despite these highly commendable developments, there have also been a few very marked and disturbing, potentially damaging, contradictions.

The inclusive government has stated very categorically that although land reform is irreversible, nevertheless it would from now be implemented effectively, equitably and constructively.

Prime Minister Morgan Tsvangirai has said emphatically that all land redistribution must be in accordance with the law, and that farm invasions must cease forthwith, any such invasions constituting acts of theft that would be justly dealt with.

Nevertheless invasions continued, despite spurious governmental denials (for evidence on the ground of such invasions is irrefutable), and as yet, there have been no signs of preventive or punitive actions.

Concurrently, although without specific reference to, or authorisation of farm invasions, President Mugabe impliedly or tacitly appeared to condone them, with outspoken reiteration that the land reform is an absolute which will not be reversed, and that all land, without exception, must vest in Zimbabweans (and insinuating that such Zimbabweans must be black).

On the other hand, last week more than 20 white farmers in the Midlands province received offer letters which would enable land allocations to them.

If agriculture is to be restored to its former productive state, and if investors are to feel assured of ongoing respect for property rights and, therefore, of investment security, these contradictions must cease. Land reform must be implemented without racialistic undertones, peacefully and fairly, and with full recognition and respect for Bilateral Investment Promotion and Protection Agreements.

Yet another contribution is that not only does government claim determination to eliminate inflation, but also to motivate and facilitate investment, but concurrently it radically raises various of its charges to prohibitive levels (such as the excessive fees now payable to the Registrar of Companies), and it fails to motivate its parastatals and local authorities to charge fair and reasonable tariffs (reasonably aligned to those prevailing elsewhere in the region).

The crossed and conflicting messages of these, and other statements and actions are major retardants to a comprehensive and expeditious economic recovery, and need to be very speedily, effectively and constructively addressed by government.

BY ERIC BLOCH

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