Business must emerge from its shell — Biti

ZIMBABWE has suffered decades of economic mismanagement partly because of business leaders’ failure to directly influence government policies, Finance minister Tendai Biti has said.

He said resistance by the past government to open debate silenced many business leaders whose views could have positively contributed to sound economic policies.
He said this on Wednesday in a wide-ranging discussion at the launch of the Independent Dialogue, an interactive forum on policy issues affecting the country.
The Independent Dialogue is an initiative by the Zimbabwe Independent. The Independent was partnered by accouning firm Ernst & Young to host Biti.
Biti said that failure by business leaders to frankly express views on government policy had contributed to the country’s ill-advised economic measures.
“One of the biggest challenges facing our country is lack of serious, honest and brave dialogue,” he said. “We have suffered from a state that has been unkind to debate, open discourse and democracy. So we are now beginning to crawl out of the shells of safety that we have taken refuge in the last 30 years.
“I found that because of a long tradition of a relationship or lack thereof between government and business, business has not been very keen to interact with government in a win-win relationship because the precedent that has been set is of a top-down approach where government is either arresting you or giving you instructions.”
Biti said past government policies were vindictive against local businessmen and failed to nurture a “black bourgeoisie”. He cited the closure of locally-owned financial institutions during the 2004 financial crisis.
“Part of the illiteracy of the post-Independence state is that it doesn’t understand business, but is suspicious of capital, particularly black capital,” he said.
Biti told the business leaders who attended the Independent Dialogue that government was engaged in talks with an unnamed construction company to build a hydro-electric power unit that could ease current power shortages.
Local industry blames the energy crisis, limited access to external lines of credit and high interest rates from the local banking sector, among other factors, for the stifled capacity utilisation estimated to be averaging 40%.
State-owned power utility Zesa is currently generating 1200MW against a daily peak demand of 2000MW. The financially-beleaguered energy company blames limited funding and vandalism for its failure to meet demand.
“We are in serious negotiations with a company over the construction of a Sino-hydro project,” Biti said.
“It will cost us about US$310 to US$360 million to put in two generators and I’m told by experts that it will increase our electricity generation by 35%. Governments in Africa are concentrating on power generation, but they do not have the capacity to invest.”
Governments, Biti said, should establish infrastructural projects through Public Private Partnerships (PPP) with privately-owned companies. 
The PPP concept involves a contract between a public sector authority and a private party, in which the private party provides a public service or project and assumes substantial financial, technical and operational risk in the project.
Construction experts say foreign investors are reluctant to engage government on PPPs because of an absence of laws that bind the mega projects.              
Biti told delegates that the government expected to finalise the signing of a Bilateral Investment Promotion and Protection Agreement (Bippa) between Zimbabwe and Botswana that had been on hold since 2003. Negotiations on this agreement had stalled because of the past government’s disregard for property rights.
Talks with Botswana came to a standstill in the midst of the heated period of the controversial land reform exercise that started in 2000. The agrarian reforms saw over 3500 white commercial farmers violently evicted from farms by government agents and civilian militia loyal to President Robert Mugabe to make way for landless blacks, mostly politically well-connected ones.
“We were in Botswana over the weekend,” Biti said. “They are going to give us US$70 million but they want the Bippa to be signed. I hope it will be signed before the end of September”, Biti said.
The minister used the occasion to attack business for its appetite to profiteer despite low production levels.
“You were making margins of 4000% during the hyperinflationary era and you still want to make those margins in a dollarised environment. It’s not possible,” he said. “If you make 8-20%, you have done well and shareholders should be smiling. If it is anything else, then you are “burning” (profiteering) and you shouldn’t be in business.”
Government tamed the unprecedented inflation last year when it adopted use of the US dollar and the South African rand under the multi-currency payments system. Biti has in the past threatened business with statutory interventions over huge profit margins.
He said it was “unjustified and unreasonable” for business to effect price hikes for bread based on Russia’s cut on exports. Russia, one of the leading exporters of the cereal has reduced exports to avoid domestic shortfalls.
This has resulted in bread prices spiking by 10% in Zimbabwe, whose baking industry relies heavily on exports because local production has fallen as the newly resettled farmers lack capacity.
On land tenure, Biti accused unnamed politicians of an “anti-capital mentality” after opposing his proposed plan to have securitised 99-year leases or “proper deeds” for land acquired during the land reform exercise.
Zanu PF lawmakers openly jeered at Biti’s proposals during the Mid-Term Fiscal Policy statement announced in parliament in July.
Meanwhile, government is yet to carry out a land audit for farms acquired during the land reform exercise amid reports that politicians are throwing spanners into the land inventory exercise.

 

Bernard Mpofu

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