IT is almost trite to say that Zimbabwe has been stuck in economic turmoil since the dawn of the current century.
The standard explanation for this sorry state of affairs largely revolves around factors, such as droughts, cyclones, floods, Covid-19 pandemic, sanctions/restrictive measures, and more recently, the disruptions of the global supply chains caused by the Kremlin-Ukraine war.
Although this view is widely shared, it only tells half of the story about Zimbabwe’s economic difficulties.
The other half, which is hardly acknowledged, is that the country is under siege from its own version of John Perkins’ “Economic Hit Men”.
In his book, Confessions of an Economic Hit Man, 2004, Perkins gave a detailed account of how global South economies have been pillaged and destroyed by “Economic Hit Men” that extract trillions of dollars from the poor countries using both licit and illicit circuits routing them to the Euro-Western countries.
The notion of “Economic Hit Men” is ostensibly deployed in this think-piece in an attempt to unpack the bleeding of Zimbabwe’s economy beyond the conventional explanation.
Zimbabwe’s political elite have incubated their own version of “Economic Hit Men” who are responsible for the economic mess that the country finds itself in.
This group is constitutive of top politicians, militicians, senior civil servants, politically exposed persons, and high net worth individuals who work as clients of multinational corporations and transnational capitalist class that operate in offshore financial centres.
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Additionally, Zimbabwe’s “Economic Hit Men” also work in cahoots with a network of shell companies, management consulting firms, law firms, accounting firms, insurance companies, and audit companies, as well as a chain of banks that facilitate the actual flow of the ‘dirt money’ for ‘dry cleaning’ safe keeping and sometimes for ‘round tripping’ purposes in secrecy jurisdictions such as Dubai, Mauritius, Hong Kong, Bermuda, and Bahamas, among others.
In 2016, Panama Papers as well as some subsequent Paradise and Swiss Leaks pulled the curtain back a bit on the operations of Zimbabwe’s “Economic Hit Men” that are involved in offshoring practices.
Their names have been withheld in this think-piece to avoid reducing this discussion into a shouting match about personalities instead of steering an informed debate about institutions and systems that have kept Zimbabweans riding on the Hedonic Treadmill-sweating but going nowhere.
What is worrying though is that Zimbabwe’s own version of “Economic Hit Men” consists of those who are supposed to be the stewards of the country’s wealth.
In other words, those that are ‘responsibilised’ by law to curb illicit financial flows are themselves chief conveyor belts of capital flight from the country to secrecy jurisdictions, thereby afflicting deep economic pain on the ordinary citizens.
For the avoidance of any doubt, capital flight here denotes the movement of assets or money out of the country. This can be a completely legal process as when foreign investors decide to withdraw capital from a country as a result of an event of political or economic significance.
However, the focus here is on both, the morally unacceptable practices, such as tax dodging, aggressive tax planning, mispricing, and tax avoidance as well as the illicit financial flows including tax evasion, embezzlement, and illicit trade among others.
Both press reports and academic researchers have been evidencing that large amounts of financial capital have exited Zimbabwe either with tacit approval or acquiescence of monetary and fiscal authorities.
Apparently, these authorities control the entire infrastructure that is required to safeguard national wealth including the security apparatuses, and legal instruments that could puncture the ecologies of illicit financial flows if there was a political will to do so.
And yet, the relevant authorities often turn a blind eye and even use their privileged positions to enable their business associates and foreign investor allies to evade detection, prosecution, litigation, fines, and charges that should be levied against the offenders.
Moreover, they adopt some selective policies such as tax incentives for their favoured foreign investors especially in the extractive industries, fuel sector, and Special Economic Zones among others in return of kickbacks and financial support for power retention purposes.
While Zimbabwe is currently enmeshed in multifaceted crises including poverty, unemployment and inequality, the political elite and their business associates have chosen to keep their ill-gotten wealth in offshore financial centres in order to protect it from forfeiture in the event of change of government.
It is strange that some of the loot from Zimbabwe is hidden in some offshore financial centres in the global North, which is routinely described as the centre of the neo-imperialism.
With this in mind, it is therefore not unreasonable for anyone to conclude that Zimbabwe’s political elite are the enablers and beneficiaries of financial imperialism that they purport to be fighting against.
On the other side of the ledger, one of the main external beneficiaries of illicit financial flows from Zimbabwe is China, which gets an average of 62% of capital outflows in the form trade mispricing.
This flies on the face of Sino-Zimbabwe relations that are touted as based on the ‘win-win’ doctrine. In practical terms this ‘win-win’ mantra simply means a net gain for both China and Zimbabwe’s “Economic Hit Men” but a gross loss for the generality of Zimbabweans.
From the table above, it can be noted that between 2009 and 2018 the country lost approximately US$11.52 billion in trade related capital flight (i.e.US$6, 26 + US$5, 256) most of which went to China as well as South Africa, Kuwait, and United Arab Emirates enroute to secrecy jurisdictions.
This amount was enough to clear almost all the country external debt of US$13.5 billion as per 2022 official statistics.
Hypothetically, if the bleeding of Zimbabwe could be stymied, the country will be able to service its debts and adequately pay its civil servants in hard currency as well as reset the economy on a recovery trajectory. However, the ongoing haemorrhaging of Zimbabwe’s wealth means that the country remains in economic turmoil. To end this economic tailspin, Zimbabweans should collectively adopt the same kind of attitude, energy, and determination they marshalled when they fought and defeated colonialism over 40 years ago.
This fight against financial imperialism and the decapitalisation of the economy should not be reduced political theatralisation but should be launched as a non-partisan project for the common good. The how part of it is left for the reader to figure out.
Moyo is the director of the Public Policy and Research Institute of Zimbabwe. He is an expert in African Agency, Global Finance and Emerging Markets and Developing Economies . These weekly New Perspectives articles published in the Zimbabwe Independent and co-ordinated by Lovemore Kadenge, an independent consultant, past president of the Zimbabwe Economics Society (ZES) and past president of the Institute of Chartered Secretaries & Administrators in Zimbabwe (ICSAZ). [email protected] and mobile No. +263 772 382 852.
