Setting the agenda for Zim’s post-Covid future

THE current Covid-19 pandemic raging across the world is a curve-ball for humankind. It presents an unexpected and multi-faceted crisis, the most obvious being the health crisis as the pandemic wreaks havoc on the health of nations in ways that have not been experienced for generations.

Alex Magaisa
Lawyer

The effects of the pandemic and the efforts to combat its spread have spawned a global economic crisis. The national lockdowns across the world have virtually shut down economies and stalled the global economy. Businesses are shutting down and going into liquidation. Many, including the largest companies are gasping for breath, demanding bailouts by the governments.

There is also the social dimension to the crisis given the abrupt reorganisation of social life in efforts to combat the spread of the disease. Long-held norms and traditions that societies have taken for granted for generations have been dropped as people are encouraged to practice social distancing. The economic lockdown has resulted in job losses as businesses find ways to stay afloat. The impact has been severe on socially-vulnerable groups, including the aged, orphans and the disabled.

The fourth dimension of the crisis is political, with the pandemic forcing governments to take strong measures to manage the crisis and to reorganise their role in society.

With more power to the state, including surveillance and reduction of human rights, there are concerns that it will be hard to let go of it after the pandemic.
Despite warnings that the world should prepare for such a pandemic as is now in existence, all governments were caught unawares by the Covid-19 pandemic. Initial responses showcased ineptitude and incompetence among many governments, including global powers. Even deep into the pandemic, some governments are still demonstrating compelling incompetence and blundering.

The enormity of the global crisis is quite obvious. Life across the globe has changed in just a few months. The pandemic has been described in war terminology, with world leaders and governments describing it as a war against an invisible enemy. While it does not have the physical destruction of regular warfare, the human toll is large.

But the best point of comparison is concerning socio-economic life. The pandemic is causing havoc on economies and social lives of communities in ways that approximate to the destruction resulting from physical warfare. Most businesses are going to have to start from ground zero. Others will never recover.
Therefore, just as nation-states need to reconstruct and recover in the aftermath of a physical war, it will be necessary for them to do the same in the post-Covid future. It is hard to make preparations for a post-war era during the intensity of physical battle.

However, there is more room during the current pandemic for intellectuals, thinkers and policy-makers to seriously consider future directions in the wake of the pandemic.

In order to sufficiently prepare for a post-Covid future, it is important to understand how the role of the state and the markets is impacted by the pandemic. The dominant economic ideas after the Second World War favoured a strong role of the state in the organisation of economic and social life of society. Conditions of scarcity meant that the state had a key role in the distribution of resources across society.

In these conditions, the state was heavily involved in the provision of public goods, including water, energy, public health, public transport, financial stability, telecommunications, and others. The state also intervened to provide social safety nets for the unemployed and other vulnerable social groups. This was the quintessential welfare state, in which the state had a dominant role in the economy.

However, the welfare state gave way to the regulatory state in the eighties. The economic challenges of the 1970s were blamed on the inefficiencies of the welfare state. The emerging dominant ideology was neoliberalism, which urged the retreat of the state from socio-economic life in favour of market forces.
It was in this context that market-based governance increasingly took over from the state interventionism of the post-war years. The predominant view was that the market, not the state, was best-placed to distribute scarce resources within society.

The state was urged to privatise state-owned businesses in sectors like energy, public transport and telecommunications where it once dominated. To oversee the newly privatised public utilities, the state established independent agencies. These agencies supervised and regulated their affairs but by and large they kept their distance, giving preference to market forces. In that brave new world of market-based governance, the state began to “govern at a distance”.

This neo-liberal model was exported to emerging multi-party democracies in Eastern Europe and Africa following the end of the Cold War. The chief agencies of this new style of governance were international financial institutions, such as, the IMF and the World Bank. They encouraged the state to step back from economic and social affairs to allow market forces to take over. This resulted in drastic cuts to social services such as health-care, education and social welfare.

However, the neo-liberal model which was hailed in the 1990s and early 2000s unravelled when the Global Financial Crisis (GFC) caused havoc in the economies. It led to the Great Economic Recession, the effects of which were still being felt a decade later when the Covid-19 pandemic struck.

Ironically, the state has once again had to intervene just like it did during the GFC, when it moved in to save banks that were on the verge of collapsing.
This time, however, the scale of the intervention has been on a totally different scale. In the richest countries, the state has had to take over paying wages of private companies. Private capital has always benefited from the state, but this is uncharted territory, with the taxpayer literally coming to the aid of capitalist enterprises on a massive scale.

Across the Limpopo, South Africa has injected a massive R500 billion (US$26,2 billion) into the economy. This is a million miles away from Zimbabwe’s capabilities. By comparison, Zimbabwe is offering the equivalent of less than US$5 to vulnerable persons. For perspective, that is the same price for a chicken in Zimbabwe.

The Zimbabwean economy has been an outlier for close to two decades now. The global economic crisis spawned by the pandemic will only worsen a situation that has always been bad.

In Zimbabwe, the state has been in interventionist mode long before the pandemic. The neo-liberal experiment was abandoned in the late 1990s. The state still owns the utilities. In recent years, it has taken on a highly interventionist role in food production, through its Command Agriculture policy.

The scheme has been controversial because of allegations of corruption. A number of watchdogs, including the Auditor-General, the Public Accounts Committee of Parliament and the International Monetary Fund have raised serious concerns over the mishandling of taxpayers’ funds under the scheme.

Most of the parastatals are either broke or closed. Ziscosteel, the steelmaker is moribund. Air Zimbabwe, the national airline and National Railways of Zimbabwe, the rail utility are technically insolvent. They survive only on state bailouts. The Zimbabwe Electricity Supply Authority (Zesa), the energy company is also heavily-indebted and technically bankrupt.

If the other state-owned enterprises have not collapsed yet, they are similarly on life support from the taxpayers. The RBZ has been engaging in quasi-fiscal activities for years.

So, the Zimbabwean state has always been heavily involved in the economy, with disastrous consequences. What is missing is the quality of governance. The state is a conduit of corruption and looting by political elites and their associates.

A post-Covid world is likely to see greater roles of the state in many countries. But for Zimbabwe, where the state has always been heavily involved, it is set to escalate but unless the governance weaknesses are attended to, the outcome will be as disastrous.

This is an opportunity for Zimbabwe to reset its governance systems by vacuum cleaning and removing corruption, patronage and incompetence. Nation states are rediscovering the centrality of good and robust public healthcare systems. The health of an economy is closely attached to the health of the nation. An economy cannot flourish in a sick nation.

Countries that have long neglected their healthcare systems are learning that they must invest more in public health. Public healthcare is a public good that should not be left to market forces, especially in poor countries where access to private healthcare is limited to the elites. The state must invest heavily in the health of the nation.

In Zimbabwe, the public healthcare system has been neglected. For years, Zimbabwe has depended on foreign support for its public healthcare system with at least 90% of medical drugs being supplied by donors.

Telecoms billionaire Strive Masiyiwa has been funding the public healthcare system with Higher Life Foundation, the charitable arm of his Econet Group paying wages of healthcare staff.

The reasons for the neglect are several but they all stem from the lack of incentives for political elites to invest in public health care. Why would they be concerned by a public healthcare system that they do not use?

After all they fly out to foreign hospitals and locally, they can always use private healthcare facilities. It is this elitism that results in underinvestment in public healthcare. A post-Covid future demands a comprehensive revision of this narrow and selfish approach to healthcare.

In conclusion, it seems to me that like in a post-war scenario, the need for economic reconstruction and recovery as well as distribution of scarce resources will require a more central role for the state in several nations’ socio-economic affairs.

In countries like Zimbabwe, where the state has been central for the last two decades, the question is whether it can enhance competence and reduce corruption and the resultant misallocation of resources. Whatever the circumstances, even as the pandemic rages across the world, in addition to the anti-Covid strategies there is need to invest in strategies for the post-Covid future.

Magaisa is a Zimbabwean lawyer and academic at the University of Kent, where he teaches public law and governance. He was chief of staff in the Prime Minister’s Office during the inclusive government (2012-13). Feedback: Twitter: @wamagaisa, email: wamagaisa@me.com