POVERTY is an insult to human dignity. Ask Professor Mthuli Ncube. The Finance minister has found himself in the eye of a cyclone after writing a long and startling mea culpa to the international financial institutions, pleading poverty and begging for help.
Editor’s Memo brezh Malaba
If anyone in this country had forgotten how dehumanising poverty is, Ncube’s astonishing letter was a stark reminder of what happens to nations when leaders run out of ideas. Anyone can get broke, of course, so going bankrupt is really nothing out of the ordinary. But there is something worse than being broke: being clueless.
Never did anyone imagine for a moment that the Treasury chief of a government that postures as a decorated champion of anti-imperialism would go on bended knee — begging bowl in hand —and prostrate himself meekly like a lamb to the slaughter before the high priests of capitalism. Heresy!
Where I come from, if you see an impala throwing caution to the wind and sprinting straight into a vicious bushfire, you must know that something hotter than flames is after its life. What exactly has terrified our famously cosmopolitan Finance minister?
To answer that question, we must first examine the facts.Political leaders thrive on deception. Here on home soil, they wax lyrical about meaningless fiscal surpluses and transparent budgeting — even as they fail to buy basic medicines for dilapidated hospitals while powerful cartels are capturing state power — but in secrecy they confess the tragic realities of a rotten economy to the International Monetary Fund and the World Bank. Who is fooling who?
Zimbabwe’s tattered economy—much like a patient already weakened by “underlying” conditions—will find it extremely difficult to recover from Covid-19.
Ncube has announced what he describes as a ZW$18 billion stimulus and rescue package, equivalent to 9% of gross domestic product.
The government’s stimulus package sounds hunky-dory until you ask the thorny question: Where will Treasury get the money for this?
They dare not print money recklessly, or the flames of hyperinflation will be unforgiving. External funding for the rescue package appears unthinkable. The signs this week were telling. The World Bank gave Zimbabwe US$7 million. Of this amount, US$2 million is money diverted from the Cyclone Idai disaster fund. In comparison, Kenya got US$739 million from the International Monetary Fund (IMF). Mozambique got US$309 million.
Western governments have no faith in the Zanu PF government. They will not bring a cent in budgetary support — especially at a time when their own economies have been plunged into havoc by Covid-19.
China and Russia will not provide Zimbabwe with budgetary support. Beijing, interestingly enough, is unwilling to pour money down the drain. The Kremlin, on the other hand, has little interest in this country beyond the platinum in Darwendale. Besides, Russia may be a nuclear-armed military giant, but in economic terms it is a midget — its GDP easily dwarfed by the likes of Italy and Canada.
Forget about the European Union. Covid-19 has caused enough grief for Europe and there is really no patience in Brussels to put up with a delinquent African government. In fact, the EU has just added Zimbabwe to a list of countries that promote or tolerate illicit financial flows.
Which leaves us with what options? Well, the government could try to float a bond, but how many investors would be interested in that sort of paper?
There is lots of excited chatter in the corridors of power these days about a plan to launch the Victoria Falls Stock Exchange (VFEX). It comes after the government recently appointed the inaugural board of the Zimbabwe Investment and Development Authority (Zida).
These two new institutions are meant to spearhead efforts to attract investment and generate foreign currency. On paper, it is a noble quest. In reality, though, it is fraught with immense difficulties. The most obvious obstacle is the Zimbabwean government’s bad reputation on the international markets. Owing to policy inconsistency, failure to respect property rights, violation of the rule of law and human rights, foreign investors will continue treading with caution.
Perhaps the quickest way out of the quagmire is through the smart management of mineral resources. But, again, would you trust this government to do the right thing?