PRESIDENT Emmerson Mnangagwa’s op-ed piece he penned for the New York Times, published online on March 11 and 12 in the print version, supplies the chess pieces of how he intends to play the political economy game after elections.
The Brett Chulu Column
Published in the financial heart and soul of the world’s economic powerhouse, it was calculated to send a clear message to New York’s Wall Street, to Number 700 19th Street, NW, Washington, DC (International Monetary Fund), and to Number 1818 H St NW, Washington, DC (World Bank): Zimbabwe will gravitate towards neoliberal economics.
The question is: in practical terms, is the new political dispensation really committed to limiting subsidies, expand the tax base, reduce deficit spending, limit protectionism, liberalise exchange rates, permit private property and privatise state businesses? The clue to decoding Mnangagwa’s post-election commitment is found in what he wrote on Monday: “We will continue taking bold steps to liberalise and introduce greater market forces, building an economy in which enterprise is allowed, encouraged and protected.”
Private property rights
A billionaire sipping tea in a penthouse in New York, reading through Mnangagwa’s sweetly-worded pitch, would be looking for a clear statement on government’s position on private property rights in Zimbabwe. The whole idea of a liberalised market hinges on private property rights based on three facets: the right to exclude others from the benefit or use of the property, right to exchange the property on a voluntary basis and that title to ownership belongs to one and only one individual. Without that property has nil market value.
Mnangagwa did not explicitly state an intention to restore private property rights; he would not dare do that openly. He took a big risk by employing terms in his New York Times write-up such as “liberalise”, “introduce greater market forces” and “open economy”.
In the citadels of capitalism, this is interpreted as a code for restoring private property rights. It is no nuclear science: free market or open economy is not possible without private property rights.
One would like to give our president the benefit of the doubt that he carefully and deliberately chose the terms he put on paper in making his business case to the captains and legionnaires of the foreign capitalist enterprise. With that assumption, the fog is lifted from ED’s political economy game.
Following this thread of logic, it would appear Mnangagwa is biding his time until after elections to make bold decisions on property rights. His plea to New York’s money revealed his political soft underbelly: “Our recovery strategy is based on creating conditions for an investment-led economic recovery that puts a premium on job creation.”
He further revealed his vulnerability; in his own words he needs an open economy to create jobs for the youth. He is fully alive to the changing political dynamics that the hash-tag generation has now assumed the mantle of kingmakers. His vision 2030 of making Zimbabwe a middle-income country by 2030 is predicated on rapid economic growth in the next 10 years.
Middle-income countries are defined as countries with a per capital Gross Domestic Product (GDP) between US$1 005 and US$12 235. Our baseline per capita GDP as of today is almost on the lower limit of the middle-income countries band. Clearly, the president has his sights on an audacious per capita GDP by 2030.
Realistically, a nominal GDP growth of 9%; thatis as ambitious as we can get, will see us touching per capita GDP of US$2 400 in 10 years. To just reach Botswana’s current per capita GDP level will require that we become a US$108 billion economy in the next 10 years, meaning an unheard of annual GDP growth of 21%. Friends, this is how far our economic life has been wreaked by the toxic politics and policies of our sorry past; we have been left behind in the scrap heap of economic mediocrity fuelled by vainglorious political bravado.
The youth political constituency, in Mnangagwa’s political economic strategy, can be carried if he facilitates creation of jobs. To do that, he has revealed he needs foreign investment. He knows that if his articulation on private property rights is as clear as mud, international capital will not be interested in empty rhetoric; the measure of a man is sticking to his word.
The New York Times in 2016 revealed that US corporations were parking US$1,9 trillion in their balance sheets, not investing it. They would rather invest their excess dollars in US bonds earning less than 2%. It is not that all of a sudden capitalism is disinterested in capitalism. When capitalists are faced with a risk that capital will not be returned in the context of absent private property rights, they would rather park their capital.
Mnangagwa fully knows this. He cannot call the bluff on international investors, preaching an open economy by day and deny private property rights; his credibility would see the nation immediately down-graded to junk status, a signal to say “run away”.
Post-election market reforms
How then do we reconcile Mnangagwa’s open economy sermon with his Zimbabwe Business Forum and Davos political economy homilies where he made it clear that the land reform was irreversible: no private property ownership in commercial farms? He envisages securing an electoral mandate this year.
With that, Mnangagwa is likely to push for the 99-year leases to be transferrable and tradable. He will give investors something closer to private property rights without using those terms. This will be politically palatable to key constituencies in his political party. That is the sub-text in the New York pitch he made this week.
The intimation of Mnangagwa’s New York pitch is that after elections, he will work towards ripping apart the pretense that bond notes have the same value as the greenback; his commitment to an open economy means that he will want the quasi-currencies to face the forces of the market, if not, getting rid of them completely on the back of envisaged flows of foreign currency.
Mnangagwa disclosed that US$3,1 billion is waiting in the wings. He has resigned to the fact that investors want him to first get an electoral mandate to give him unchallenged political space to forge ahead with branch-and-root economic and fiscal reforms.
He restated his intention to abide by neoliberal tenets by hoisting the 2018 budget as a harbinger for sustained fiscal consolidation and fiscal discipline. He reiterated his government’s commitment to repay all sovereign debts. That is sweet music in the ears of the neoliberal institutions of the West. After elections, the axe of privatisation is likely to fall on parasitic state enterprises; neoliberalism demands that. The revised 51-49 indigenous policy will become law after elections. Do not be surprised if the 51-49 policy is scrapped for gold and platinum.
Mnangagwa is bringing his political style to the economy. His political modus operandi is biding time, patiently lurking in the shadows, striking with a decisive blow when time hands the opportunity. If anything, the New York pitch this week tore open our president’s game plan; after elections, if he wins, he intends to pull the political economy tree by its roots. Many political and economic taboos will be trampled upon.
Chulu is a management consultant and a classic grounded theory researcher who has published research in an academic peer reviewed international journal. — email@example.com