Good afternoon Zimbabwe

WHEN Severe Acute Respiratory Syndrome (Sars) hit China in the middle of 2003, citizens squinched down in their apartments and crowded compounds as they knuckled down in Asia’s most overheating economy.

Christopher Mugaga

This proved a springboard for some Chinese businesses. The government’s restrictive social media rules gathered pace. So did e-commerce. Today, another fledgling industry is about to take a bullish path in China, courtesy of the Covid-19 pandemic which originated in that same country: telemedicine.

China has almost 1,4 billion people and the number of hospital beds does not correspond with the headcount. This has seen Chinese citizens resorting to the internet for answers, and, indeed, their government is egging them on.

Back home in Zimbabwe, Covid-19 has given us a taste of what it must feel like to be a wild animal confined in a zoo. Given the underlying fragilities of the Zimbabwean economy, a Covid-19 spread can only aggravate the already ailing nation. The focus is on how to disrupt the curve before it peaks, otherwise flattening it given the dilapidated state of our health centres will be a torrid task. Indeed, health facilities have not been upgraded or spruced up since Independence.

Tomorrow, Zimbabwe marks its 40th Independence anniversary. This is a country which gone through various experiences in its socio-economic and political trajectory. A nation which, for almost four decades, was under the rule of late former president Robert Mugabe, who was toppled in dramatic fashion in November 2017.

At Independence, Zimbabwe had a strong and stable currency, which was the envy of the entire world. But he bequeathed the country a tattered economy. Zimbabwe’s prospects appeared promising in 1980, as it gained Independence after a protracted liberation war. The country exhibited steady economic growth, enabling the new government to provide free education and widespread access to health care. Challenges multiplied in the 1990s as rising inflation and unemployment bred discontent.

There were frequent student and labour protests, leading in 1999 to the formation of the opposition Movement for Democratic Change (MDC). The new party surprised many with its initial successes, campaigning against a referendum in the year 2000 that would have legalised Mugabe’s continued rule, made government officials immune to prosecution, and allowed the uncompensated seizure of white-owned land for redistribution to black farmers. The referendum failed and the MDC won nearly half the seats in the 2000 parliamentary election.

In life, it is said from birth to the age of 40, it is good morning life. From 40 to 60 years, it is good afternoon life and at 60 and above it is good evening life. The same ranges can still be used to define life thus: 0-40 years, the learning years; 40-60 are the earning years and 60-plus are the yearning years. Judging by this sociological reasoning, Zimbabwe has actually reached the good afternoon stage of life. What makes it disheartening is the supposed earning years have morphed into the learning years. It is an economy which is learning to have its own currency, learning to industrialise, learning to review its education curriculum. This even leaves pessimists doubting the readiness of the nation to adopt Industry 4.0.

The lack of capacity for a digital economy is to a certain extent also the reason why we see corporate paralysis during Covid-19 as companies did not adequately invest in technology.

With its stellar literacy rate beyond 90%, Zimbabweans found it convenient to fly to all corners of the world in search of greener pastures following the demise of the economy at the turn of the century. Today, Zimbabwe has a huge diaspora. According to the Solidarity Peace Trust, an organisation founded by clergy from Zimbabwe and South Africa, an estimated 3,4 million Zimbabweans are now living outside the country. The trust calculates that this amounts to 25% to 30% of the total population or 60% to 70% of total adults. Remarkably, the Zimbabwean government has never run out of ideas in churning out economic blueprints.

Since 1980, the country has drafted about 13 economic blueprints, the equivalent of almost a blueprint every 36 months. In 1980, there was the Growth with Equity document, in 1982 we had Transitional National Development Plan, in 1986 the National Development Plan, in 1991 the infamous Economic Structural Adjustment Plan (Esap), in 1996 the Zimbabwe Programme for Economic and Social Transformation (Zimprest), in 2001 the Millennium Economic Recovery Plan, in 2003 the National Economic Revival Programme, in 2007 the National Economic Development Priority Programme, in 2008 the Zimbabwe Economic Development Strategy, in 2009 the Short-Term Emergency Recovery Program (Sterp), in 2010 Sterp 2, in 2013 the Zimbabwe Agenda for Sustainable Socio-Economic Transformation (Zim Asset) and, last but not least, the 2018 Transitional Stabilisation Plan (TSP).

This brings me to my next argument that since 1980 to date, Zimbabwe’s major undoing which continues haunting it includes but is not limited to monumental failure to implement economic plans , disregard of property rights, corruption, compromised and weak institutions, an ugly culture of entitlement which have all led to utter dysfunction. Most challenges Zimbabwe faces as a nation faces can be traced to these shortcomings. Even if Ben Bernanke and Gordon Brown were to take charge of the central bank and Treasury respectively, without independent institutions Zimbabwe cannot go far.

The Indigenisation and Economic Empowerment Act of 2007 (Chapter 14; 33) and subsequent regulations which required that at least 51% ownership in any business be in the hands of indigenous Zimbabweans was very damaging to the nation’s economic interests. It turned out to be a toxic piece of legislation — not because empowering locals was a bad move, but owing a culture of entitlement which saw the daylight looting of foreign companies by well-connected individuals.
Coupled with corruption, that piece of legislation marked the downgrading of Zimbabwe as an investment destination by rating agencies. In international investment markets where you hear of neighbouring South Africa being downgraded, Zimbabwe, for its part, remains ungraded.

What was amiss and conveniently ignored when the indigenisation law was crafted is the fact that since the 1990s, the Zimbabwean economy had already opened to locals. This saw the proliferation of rich black Zimbabweans, some of them under the banner of the Affirmative Action Group. A number of local bankers came into the fray including William Nyemba of Trust Bank, Julius Makoni of NMB, Patterson Timba of Renaissance Merchant bank, Duradaji of Royal Bank, Enock Kamushinda of MetBank and a host of asset management, securities and discount houses which were cropping up.

If there were any misdemeanours some of these institutions might have been involved in, the solution should have been anchored on strengthening their governance systems rather than locking their doors. What is disheartening is that the “crimes” of those yesteryear financial institutions do not come anywhere near the transgressions of today’s businesses which have been allowed to continue operating with impunity.

Fast forward to 2018, a “second republic’ was born. The euphoria surrounding its birth was unprecedented. Prospective investors swarmed the nation with enthusiasm, they were really keen to do business here, but the policy environment was not ready to welcome them. We had an economy which had just graduated from a multi-currency to a currency regime which no one could define. Trapped dividends and cash shortages became common.

A mispriced exchange rate was against the tenets of property rights; indeed, we were mismanaging the monetary side of the economy, fuelled by fiscal recklessness which created a hole that could only be funded domestically. Instead of correcting the anomaly, we foisted a rushed currency on the citizenry, most of whom still had fresh memories of the disastrous “casino economy” policies of yesteryear where “quantitative easing” was celebrated as an instrument for busting US sanctions.

In the “second republic”, when the populace dared to dream, inflation visited them, drought throttled them and, today, Covid-19 is threatening to break the already clogging arteries of a limping economy. It is a pandemic of unfathomable proportions.

The 2008 financial crisis paralysed the world economy, leading to negative 0,1% growth. Covid-19 is erasing 3,3% from world economic growth with only a few countries, such as China, expected to register a positive but subdued growth of just above 1%.

The future of Zimbabwe, in the short term, appears grave. Inflation and the cost of living remain on the rise and the country appears clueless on how to bring to finality the currency conundrum we face as policy flip flopping remains the order of the day.

A leaked document on de-dollarisation has left tongues wagging and government is distancing itself from the write-up. As we celebrate our 40th Independence, let us strive to rebuild a better Zimbabwe which will not continue being a laughing stock in the international community. It is time to regain our lost pride, to respect tenets of democracy, to root out corruption as well as to embrace diversity regardless of skin colour, tribe, creed or social status.
Mugaga is an economist and chief executive officer of the Zimbabwe National Chamber of Commerce.