It’s
true that Zimbabwe is besieged today and has been for years now. But it’s not
true that we could not have, if we real wanted, set ourselves free.
Sanctions
are real – targeted or not – but they are breakable. And Zimbabwe can and could
have broken them. So it’s a myth that all our problems today are
sanctions-made.
Maybe
to understand this, one has to go back to as early as 1990s when the economy
started but slowly to give in.
It’s
a fact that at independence in 1980, Zimbabwe spent a lot of money in health,
education and various other sectors to bridge gaps created by an unfair and
unjust system.
Spending
on education rose from Z$227,6m in 1979 to Z$628m in 1990 while health
expenditure went up from Z$66,4m to Z$188,6m.
A
huge public service sector, subsidies, the 10-year involvement in the
Mozambican civil war from 1982 to 1992 and then subsequent drought years
further debilitated the economy such that by mid 90s prices had become
unstable.
The budget operated on a deficit and taxes became high. This drove
public debt higher.
To
recover lost economic growth, the government accepted the Enhanced Economic
Structural Advancement Programme (Esap) in 1991.
The programme that ended in
1995 meant that all subsidies had to go; public enterprises either be
nationalised or privatized
to enhance growth; streamline government by cutting down on expenditure.
Esap was supposed
to be a short term programme that would first snuff out some jobs in order to
create more. But it did not work. The privatisation or nationalization of PEs
without better management led to further decline in productivity. Government
did not reduce expenditure. No jobs were created. And deficit went further up.
Instability chipped in.
A few black
business people operating as advocates for black empowerment demanded their
entitlements and government acknowledged them by giving contracts and
concessional loans.
This further put pressure
on government forcing it to borrow domestically thereby causing even more
instability. Consumer prices skyrocketed.
Under Esap,
government was also forced to fall into heavy debt and international donors
refused to write off the debts because the Zimbabwean government had failed to
honour its part of the deal.
After the failure
of Esap, government cooked up the Zimbabwe Programme for Economic and Social
Transformation (Zimprest) in 1996. Zimprest was supposed to be implemented by
government, business, labour and civil society through the National
Consultative Forum (NECF).
Although Zimprest was promising in the first two years
when growth reached 7%, the depreciation of the Z$ because of low tobacco and
minerals’ prices hit the economy hard. This was followed by a disastrous 1997/
98 rainfall season. Inflation took its toll and most industries did not perform
as expected.
One major event that drove the economy onto to its
knees was the ex-combatants’ payouts in 1997 when government was forced to fork
out Z$4b as compensation to former freedom fighters.
Since the money had not been budgeted for, the Z$ lost
with a record 72% against the US$ and the stock market crashed by 46% on 14
November 1997 signaling the economic meltdown that is still haunting the
country today.
The payouts depleted foreign reserves which according
to Kingdom Financial Holdings statistics at the time fell from US$760m early
1997 to US$255m by November of the same year. This exposed the local currency
which at the time was worth US$1,315.
The Reserve Bank of Zimbabwe was also exposed because
it meant that with such low foreign reserves, it could only underwrite imports
for a month.
Government’s debt in 1997 was more than $60 billion and it was
estimated that servicing the debt cost more than a billion a month.
Servicing
this debt ate into resources that could otherwise have been channeled towards
education and health which started to decline.
In response to the crisis, the government increased bread, sugar,
soft drinks, commuter fares, milk and mealie meal prices and the consumers rioted
in protest.
As if that was not enough, Zimbabwe was sucked into
the DRC civil war in 1998 resulting in the IMF and several other donors
suspending financial assistance.
By 1999, it was clear that the economy was heading
west. The final nail was the haphazard takeover of farms by ex-combatants as
part of their demands. This drove agricultural input down.
With the birth of the Movement of Democratic Change
(MDC) and political violence, economic sanctions – the Zimbabwe Democracy and
Economic Recovery Act (Zidera) - were imposed in 2001 by the US. This meant no loan
extensions, no credit guarantees and no debt reduction or cancellation.
The fact is that the sanctions came to haunt an
already battered economy and in a bid to revive the economy, Gideon Gono was
appointed the RBZ governor in 2003.
This is the man who could have saved Zimbabwe had all
the money he gave out been utilised for the benefit of the nation at large. His
policies are not in any way different from those of US president George Bush
and his successor Barack Obama and indeed other government elsewhere.
The only difference is that Gono’s biggest enemy was corruption.
Most of the people who received money, diesel or machinery from the central
bank misused them. Up to now, there has
not been any audit to bring to book people who squandered the resources.
The other factor was that some Zanu-PF members thought
they were entitled to enjoy the gifts from the reserve bank while the
opposition stood by - criticising.
In an interview two years ago, Gono admitted that his
programmes failed because of farm under-utilisation and disruptions; rampant
corruption; indiscipline as well as lack of law and order.
So this sanctions beat is like repeating the same lie
over and over again until we start believing it.
Maybe the start would be dealing with corruption.
No comments:
Post a Comment