HomeCommentEconomic decay the genuine Third Force

Economic decay the genuine Third Force

Writing in The World’s Wasted Wealth 2, Smith (1994) states that: “One cannot separate economics, political science and history. Politics is the control of the economy. History, when accurately and fully recorded, is that story. In most textbooks and classrooms, not only are these three fields of study separated, but they are further compartmentalised into separate subfields, obscuring the close interconnections between them.” He could not have summed it any better. The three subjects are interlinked and have a deep reliance on each other.

Daniel Ngwira

Politicians have a strong influence on the economy and can decide what happens immediately or in the long-term. However, the outcome of their decisions determines their continued existence in a democracy. In a non-democratic situation, the politicians can prolong their existence using the state machinery, but as history has it, they always fall. In recent times, the Arab Spring has all to tell.

This article has been inspired by utterances by Zimbabwean authorities and the ANC secretary-general Gwede Mantashe that there is a “third force” in the protests and uprising that Zimbabwe has witnessed in the last few weeks. The claim is as absurd as it is sad. Cosatu has distanced itself from that.

Zimbabweans have been known for patience to the extent that even South Africans and other neighbouring countries have been perplexed. The idea that there is a third force presupposes that Zimbabweans are not capable of staging such protests and it ignores the fundamental cause. The pronouncement that there is a third force ignores the causation theory which requires that a decision-maker must understand the problem first before they prescribe a solution.

If anything, the economy’s poor performance is the third force. The massive company closures and job losses that have occurred over the last few years and the worsening situation after the government of national unity have precipitated the popular protests. Citizens have become impatient with both the government and the opposition parties so they decided to mark their own destiny.

Zimbabweans first turned to prophets for individual redemption, but have realised that they need to act to bring the much-needed change into their lives. I, for instance, have eight degrees and professional qualifications, but I cannot get a job in my country. What is that? There are many more in my situation and many more who have never worked after graduating. It is about the economy; it is about survival. No third force is using us to point out at the wrong things in the economy.

Besides, I know Mawarire from a young age in Mazowe back in the 1990s when he used to drive his father’s brown pick-up Datsun ferrying people from Jumbo Mine to Mazowe Hotel together with the likes of Okay Jakachira. He is not being used. He was quiet and disciplined. It is the economy forcing him and millions others to be restless.

Citizens in the urban areas are being more agitated because they bear the bigger economic burden than those in the rural areas. They look after the people in the rural areas. They have to fend for their immediate families in urban areas and at the same time look after their extended families in the rural areas. With the current economic climate, it is hard to do that.

Each time Zimbabweans try income-generating projects, the government comes through with mechanisms to stifle progress. Typical examples include how the quails business has been handled. People were making a living out of it and government came through to disturb the peace.

As if that was not enough, the import restrictions or ban closed the chapter. If one were to look closely, they will notice that this was the defining moment for Zimbabweans. Thousands of households, including civil servants (who by the way are privileged to be employed in Zimbabwe at the moment), have been making a decent living on cross-border activities. They would not worry much about a salary delayed because they would be having supplementary income. Government must understand the interconnectedness of the economy. These same cross-border traders are a major constituency in churches. It is a pity that people who went to school on government assistance and are supposed to advise authorities appropriately do not do so due to fear or greed or both.

That everyone is saying civil servants must be paid on time does not necessarily mean they love civil servants so much. The private sector has been struggling to pay salaries for some time now. In addition, there have been related dramatic episodes at the National Railways of Zimbabwe and Grain Marketing Board. Civil servants are customers to the self-employed cross-border traders and other entrepreneurs. Their nonpayment affects their business. It has a multiplier effect in the whole economy; banks and money lenders will not collect their loan repayments and service charges (they will only accrue); major shops will register lower sales thus affecting their viability.

Before that, the worker, who is packing groceries for customers, will be laid off. Further business closures could be experienced, but before that businesses will not collect as much value-added tax let alone remittance of the taxes to government.

When government introduces a new policy, why can’t it consult first and give prior notice to its citizens? It seems the ban on imports was an urgent matter. If government had given sufficient notice, people and businesses would have made arrangements to meet the deadline. The abrupt stoppage or ban means that some capital was lost. Some people imported goods on order so they used their capital, but when they got to the border post, those goods could not be cleared due to the ban. The customer cannot pay for goods they have not received. When one is given notice they can decide to unwind their positions and focus their capital into other areas. In addition, notice enables dialogue to occur and the best way of implementation crafted.

The ban on imports could be equated to the mistake made by former US president Herbert Hoover’s administration in the United States during the great depression when it signed the Smoot-Hawley Tariff Act in 1930 effectively raising import tariffs exponentially. More than 1 000 economists and all the major trading partners objected before the Bill was signed into law. The trading partners immediately retaliated and the consequences were catastrophic.

Ask the Zimbabwe Revenue Authority (Zimra) how much unremitted taxes are out there to appreciate the full picture. No businessperson in the world pays someone before paying themselves. Reduced taxes and remittances of such would further have a negative impact on the government’s operations, including payment of salaries. The economy would eventually grind to a halt, especially given the government’s propensity to spend. By now we should have started seeing benefits of senior officials being curtailed, those big cars which they drive auctioned to raise the much-needed cash and also as a symbol of solidarity.

There is nothing unique about Zimbabweans embarking on protests because of the economic meltdown. So people must not look for a third force when there is an obvious one — the economy. Those who claim that the protests are sponsored are themselves sponsored to say that the protests are sponsored.

As the Greek debt crisis worsened and more austerity was demanded by lenders to extend bailout, government was unsettled with warnings of early elections and the social unrests that happened in Athens. In Athens, anxiety was building as the country’s April 2015 deadline to repay €450 million loan to the International Monetary Fund (IMF) approached. Subsequently, the country missed the deadline to pay €1,5 billion to IMF officially putting it in arrears mid-2015 and joining the three countries which had arrears of €1,6 billion with the IMF. These were Somalia, Sudan and Zimbabwe.

Greece has seen an unprecedented level of chaos since its debt crisis, with banks not opening for business as negotiations with creditors broke down. Between 2008 and 2012, the Greek economy nearly collapsed causing huge job losses and unprecedented levels of social unrest. A lot of protests were marked by violence.

In addition, according to a study by Charles Branas of the University of Pennsylvania, leading a team from the University of Crete, The Hellenic Statistical Authority in Greece, the World Health Organisation and the University of Edinburgh, suicide rates rose during that time as people lost hope. Men were more affected than women. From June 2011, the suicide rates went up 36% entailing 11 deaths a month.

In recent times, Egypt, Tunisia, Mexico, Ukraine, Brazil, Argentina, Bulgaria, Japan, South Africa, Singapore and Turkey have been hit by protests precipitated by social inequalities and political discontent. The role of the social media has been top-most, especially with the advent of the smartphone. It is now easier to organise protests than ever before.

The Economist intelligence unit’s Laza Kekic avers that economic distress is usually a pre-requisite for protest though conceding that it is not 100% the cause.

“Declines in income and high unemployment are not always followed by unrest. Only when economic trouble is accompanied by other elements of vulnerability is there a high risk of instability. Such factors include wide income-inequality, poor government, low levels of social provision, ethnic tensions and a history of unrest. Of particular importance in sparking unrest in recent times appears to have been an erosion of trust in governments and institutions: a crisis of democracy.”

This describes the situation in Zimbabwe. People no longer trust the government. The introduction of bond notes was being resisted because of trust issues. Until the people, who broke the trust, come to the party it is hard to mend it and there could soon be a change of government or governance structures. But the political landscape has now been redefined. It is no longer obvious. It is the economy which will determine the pace of events and the final colour.

Peter Alexander (2010) notes in his research Rebellion of the Poor: South Africa’s Service Delivery Protests — A Preliminary Analysis, that since 2004, South Africa has had numerous protests. He says that “the importance of unemployment is reflected in the predominance of young adults, particularly those who are unemployed (or under-employed), in the struggle”, and also that the protests “reflect disappointment with the fruits of democracy. While some people have gained, the majority are still poor. Levels of unemployment are greater than in 1994, and income inequality remains vast. People can vote, but all-too-often elected representatives are self-seeking and real improvements are few”.

Unhappy with the administration of Hoover, American voters decided to dump the deeply unpopular president and elected Franklin Roosevelt. This followed a series of misjudgments which Hoover had made under-estimating the support citizens needed during the great depression. When he assumed office, unemployment was 4,4% and when he left it had reached 24%. Unemployment kept rising despite him cutting figures accusing some people of not seriously looking for a job. During his reign, over 20 000 war veterans demonstrated at Capitol Hill demanding payment of bonuses and over 8 000 took a path down Pennsylvania Avenue towards the White House for the same cause. It should also be noted that even during the Great Depression, in the country most affected, the US, joblessness did not go beyond 25%, the peak was in 1933. So when one compares the current level of joblessness in Zimbabwe, it should be easy to appreciate how and why patient people have been.

Zimbabweans had, within their hearts, some pent up fury which has been building up with the way government, led by former Reserve Bank of Zimbabwe governor Gideon Gono, handled the economy through his overlapping policies (quasi-fiscal), the 2005 Murambatsvina urban clean-up campaign by government, the high levels of unemployment and the bond notes saga, among other things.

A close analysis of the effects of the Great Depression shows that those who survived it became parsimonious, developed less trust in banks and capital markets. We see these signs today in Zimbabwe. While protests have mainly been confined to the developing economies, at the height of the global financial crisis, developed nations have not been immune as the crisis hit the working class hard. At the core of the protests has been the fight against rising unemployment, inequality and the increasing power of large corporates.

Aany government facing monumental economic challenges can redeem itself if it does the right things: reforms and policy shift on a significant scale underpinned by progressive politics.

Ngwira is a chartered accountant, former bank treasurer and former university lecturer. He holds finance and business qualifications. — daniel.ngwira@gmail.com, +267 73 113 161.

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