The Cost of Bad Political Leadership
Last week the United Nations stated that three countries, Zambia, Zimbabwe and the Congo, have a 'Human Development Index' lower than they had in 1970. This represents 40 years of lousy leadership and failed economic policies in all three countries. Strangely, all three are enormously rich in natural resources and have great potential.
I was not at all surprised by the Congo and ourselves, but the inclusion of Zambia in this group of three global failures was a surprise. It suddenly made me realize how long it takes to get back ground lost in periods of poor governance and economic collapse. I remember the Zambia episode because I had family in Zambia at the time. It was five years after Independence when Kaunda announced that all companies that employed more than 100 people had to have majority Zambian ownership (sounds familiar!).
The result was immediate, economic activity just crashed, investment fled and Zambia slid into a donga of stagnation and failure. From a peak when they produced a substantial proportion of the global demand for copper, the newly nationalized mines slumped into insignificance and the former owners took their dollars and invested elsewhere.
When finally, after 30 years, the Zambian people were able to cast off the corrupting mantle of Kaunda, the new government was slow to put things back on their feet. It took another change of government after Chiluba to start things moving and they reversed the policies of Kaunda and sold off the mines. That was in the first years of the new Century and for the past five years, Zambia has been growing rapidly. So much so that they have watched the collapse in Zimbabwe with a sense of justification in their own political and economic actions and policies. Where once they suffered from snide remarks by Zimbabweans about the Zambian Kwacha, they gasped as we went even further and more rapidly than they had, down the slope of inflation and collapse.
Once economic growth resumes, people relax and think that times are better and they can look forward. However, they seldom count the real cost of the wasted years and here is the United Nations reminding them of just that, Zambians are worse off today than they had been after Independence in the early 60's. What a tragedy and what a waste of all the hopes and aspirations of the struggle for democracy and independence.
In Zimbabwe the failure has been even greater than it was in Zambia and more precipitous. The foundations of the collapse were laid in the first two decades of Independence when the new Government could do no wrong and was allowed to get away with both economic and political violations that in other areas of the world would have wrought instant condemnation.
Poor macro and micro economic policies retarded growth and distorted incomes, the budget deficit ran at unsustainable levels through the whole period increasing public debt, which at Independence had been a paltry $700 million, to $6 000 million equal to two years exports or 80 per cent of GDP. When finally the State went just too far, the collapse was instant and dramatic. Mr. Mugabe ordered the payment of Z$3,5 billion to war veterans - unbudgeted and completely beyond the capacity of the economy. Punishment by the markets was immediate and the Zimbabwe dollar crashed.
10 years later the inflation peaked at world record levels, a loaf of bread cost a billion Zimbabwe dollars and salaries were worthless hours after they were paid. All savings were destroyed - the accumulated surpluses of a century of hard work and effort by the entire nation, wiped out. All banks, building societies, all pension funds and other financial institutions were bankrupted. Tax revenues were essentially worthless. Zimbabweans were beggars and 75 per cent of the entire population was being fed on a daily basis by a consortium led by the United States in the largest food aid programme in any country at any time in history.
Rescued by South Africa and the region, the Transitional Government was negotiated and came into being in February 2009. The Zimbabwe dollar was abandoned, the Reserve Bank isolated and rendered ineffective and the economy completely liberalized - no exchange controls, no price controls. What remained of the economy was kept afloat by nearly a billion dollars of aid and over a billion dollars of remittances from the 5 million Zimbabwe refugees that had fled the chaos into other countries, especially South Africa.
In February 2009, the total tax collected was $5 million. The Minister had to borrow funds from a local company to pay the 250 000 civil servants $100 a month irrespective of seniority. Our international debt had soared to $7,6 billion - ten times the debt in 1980 and equivalent to 5 years of exports and 150 per cent of GDP. Zimbabwe was suddenly in the lowest quintile of the poor in the world, surrounded by the debris of 100 years of conflict, hard work, development, aid and hopes. The most educated people in Africa with one of the most highly qualified (in academic terms) governments in the world were on the bones of their backsides.
It was the consequence, not of 'sanctions' as the Zanu PF propagandists would argue, but of poor government and bad policy. First, by Ian Smith who took us into the political morass of UDI and then a futile war where we would win all the battles and lose in the end. Then the flawed process leading to the formation of a Zanu PF government with all the promise of a new start, only to find ourselves caught in a savage struggle for complete political control that was to persist through the demise of Zapu in 1987 and the elimination of all the attempts at democratic plurality in the 90's to the struggle against the MDC after 2000.
In the process we have destroyed what was once a diversified and vibrant economy, we had wrecked our agricultural system - not just the farming industry but the support infrastructure and organized marketing that carried it through the years of UDI and was the backbone of growth from 1980 to 1997. Our manufacturing industry lies in shreds and our financial sector is still very fragile. We are heavily indebted and have little to show for it. Our people are poor, marginalized and humiliated and it will take us many years to recover to where we were at Independence in 1980.
The extent of this collapse is still not fully appreciated by Zanu PF. However it is clear that they fully understand the reasons and the remedies. This collapse was a deliberate act of national economic suicide and the so-called 'indigenisation' laws are simply an extension of this economic sabotage and subversion. The reason? Any economic recovery will be attributed to the MDC and its team of Ministers and quite rightly so.
Since Mr. Mugabe simply refused to implement agreed GPA based reforms some three weeks ago, Mr. Tsvangirai has been engaged in an exercise to bring the influence of regional leaders into the crisis. He has refused to meet Mr. Mugabe and is touring the country holding report back meetings. He has written to all African leaders who have a role to play and this past week MDC raised the temperature by closing down the Senate when the illegally appointed Governors tried to enter the Senate Chamber.
This has now triggered a response from the region and a SADC summit has been called and some SADC leaders are pushing for the immediate deployment of a SADC team to oversee the reform and electoral process. Mr. Zuma has also come in with a strong message calling for the immediate implementation of all outstanding agreed GPA reforms and the holding of an election as soon as possible.
Bulawayo, 13th November 2010