Eric Bloch: Economic Genocide: a Luta Continua

LAST week this column addressed the tragic circumstance that, for most of the last 25 years, major players in Zimbabwe’s governmental hierarchy have consistently pursued policies which have devastated the economy. 

They did so dogmatically, callously disregarding well-informed advices as to what needed to be done to assure a virile economy.  They did so in pitiless contempt for the consequential suffering of the Zimbabwean population.

So vigorously did they pursue their policies of economic destruction despite the authoritative contrary advice given them by so many, that it is an inevitable, and undoubtedly incontrovertible, that they did so in pursuit of absolute power and authority, and with extensively fulfilled objectives of self-enrichment. Their actions were indisputably devastating, but that accorded them no concern.

Distraught from their malnutrition, pronounced and endless hunger, grievous ill health and endless anguish, the populace had great expectations of economic recovery when the “inclusive government” came into being.

And their hopes were not wholly misplaced for the economic decline ceased, and progressively Zimbabwe experienced some meaningful upturn of the economy, albeit miniscule compared to what was needed.

Hyperinflation was replaced by deflation, scarcities of all basic commodities ceased and were replaced by widespread availability of most essentials.  Excessive and oppressive economic regulation diminished, exchange controls were substantially reduced, industrial productivity marginally increased as did that of mining and many other facets of economic recovery.

However, clearly these constructive developments were of great concern and distress to some of the political hierarchy, being those who had previously exercised absolute power and had in 2009 sustained, for the first time in 29 years, real erosion of their power base.

Determined to recover lost ground, they have recently resumed pursuit of destructive policies and action targeted at restoring their power base, their absolute authority and wealth enhancement.

They are energetically striving to rebuild their support base by making specious and potentially disastrously negative economic promises, by enacting catastrophic legislation which can only weaken the general economy (whilst increasing their access to wealth), and by ongoing and intensifying actions in blatant contempt for law and order, and for due and proper respect for human rights.

Farm invasions continue unabated, with increasing violence, destruction and misappropriation of property, targeted at the very few farms still operated by whites.  Not only are there no attempts to curb the invasions, or to ensure compliance with law, and not only are Bilateral Investment Promotion and Protection Agreements (Bippas) studiously ignored, so too are the cataclysmic consequences upon the economy and upon Zimbabwe.

Agriculture was always the foundation of the economy until those supposed to care for the nation destroyed it.  Not only are the ill-conceived, poorly implemented land policies the cause of the near-annihilation of agriculture, but the invasions and those policies are a massive deterrent to investors, whose perception is   “they have expropriated the land, so next they will take the mines, then industry, then hotels, and then all else”.

And that perception is not devoid of substance.  Having unconstitutionally promulgated the Indigenisation and Economic Empowerment Act in March 2008 ahead of the presidential, parliamentary and senatorial elections, last week a Statutory Instrument pursuant to that Act was apparently finalised for imminent gazetting.

If it is, in fact, gazetted, it will confirm the long-declared governmental intent that all business in general, and foreign owned businesses in particular, must be at least 51% owned by indigenous Zimbabweans.  To that end, within periods ranging from 60 days to three years all such businesses will have to have Zimbabwean indigenous equity holders of not less than 51% of total equity, existing owners either divesting themselves of shares, or allowing their equity to be diluted.  With immediate effect, therefore, no non-indigenous existing or potential investors will invest in Zimbabwean enterprises.

Suddenly, and very understandably, all investment to enhance mining production, industrial capacity, and so forth, has discontinued.  This is not because investors object to indigenous co-investors (and, in fact, most welcome it), but they are unwilling to be reduced to junior partners, subject considerably to the whims and fancies of the majority equity holder, and especially so as they are not even assured of equitable recompense for the capital, technology and other inputs they have provided.

Major investment is an essential element of economic wellbeing, yielding employment creation, market liquidity, export revenues, downstream economic growth, fiscal inflow and much, much more.  But, in order to gain political mileage and, in some instances, self-wealth enhancement, policies are being enunciated and pursued fiercely discouraging such investment.

But recently not even those cataclysmic policies sufficed to satisfy the obdurate determination of the hard core political hierarchy, striving to have the masses onside, even if by misleading them, and by promising impractical and economically catastrophic actions.

Only last week, if Zanu PF-biased media is to be believed, the president promised an almost immediate reincarnation of the Zimbabwe currency, stating that doing so would restore liquidity for the populace.  The reality is diametrically the opposite.

That liquidity would only arise if, upon the reintroduction of the currency, Zimbabwe would once again endlessly print money, in total disregard for virtual non-existence of resources to support such money.  That, in turn, would immediately fuel intense hyperinflation, potentially even greater than that which was the characteristic of 2008.
Concurrently, foreign exchan

ge availability will again be minimal, reinstating the previous environment of extreme scarcities of virtually all commodities.  Business survival will again be in extreme jeopardy, unemployment will increase to levels even greater that the current more than 85% formal sector unemployment.

The grievously suffering populace of Zimbabwe will be subject to even more intensified hardships and miseries.  There can be no credible reason for promising imminent restoration of Zimbabwe currency other than to garner support from an ill-informed and misguided populace, and to belittle minister Tendai Biti, who is justly opposed to a return of the currency in the foreseeable future.

Incontestably, these and other policies, actions and public statements are a continuance of the economic genocide that has plagued Zimbabwe for all too long.

 

Eric Bloch

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