Saturday, April 25, 2009
Posted By Joram Nyathi on 25 Apr, 2009 at 6:52 am
“IF we increase our production capacity from the current 7% to about 25% or increase direct revenue to US$60 million from the current US$20 million, our workers would receive proper salaries.”
Finance Minister Tendai Biti made these comments ahead of a meeting with the IMF and the World Bank in Washington this week. The government is seeking lines of credit to finance its Short-Term Emergency Recovery Programme.
Each time the IMF is mentioned, I recall the old Zimbabwe Congress of Trade Unions (ZCTU) led by Morgan Tsvangirai before it was swallowed up by the MDC. Tsvangirai didn’t stop ESAP, but he tried.
Faced with the prospect of a repeat, you would expect workers to unite and ignite. Not in Zimbabwe, where all civil authority has been ceded to a venal civic society!
The IMF and the World Bank use a template on free markets and are controlled by the same nations which have imposed sanctions on Zimbabwe. The ZCTU should know the implications of IMF prescriptions, so should the CZI, but they opt to hold down their nation for rape.
The IMF/World Bank prescription is simple but it is a fatal dose. To create a conducive environment for investment, beneficiary countries are told: privatise parastatals, remove all price controls and subsidies, devalue the currency, remove trade barriers and cut tax on profits, allow wholesale remittances and free movement of capital, relax labour laws, reverse land reform, stop empowerment policies and forget environmental protection.
After this, the government is supposed to retreat to the national border and leave business alone at the temple of laissez faire — the same capricious goddess currently raining economic fire and brimstone on her worshipping believers in Europe and the US.
For Zimbabwe, it is a full-spectrum surrender of the state to the omnipotent emperor of market forces. This is part of the Washington Consensus. Foreign and domestic firms should be allowed to compete on equal terms.
These are replica demands made of Zimbabwe under the ongoing negotiations between Europe and ACP countries for Economic Partnership Agreements (EPA) beneath the overarching regime of the World Trade Organisation.
EPAs hinge on three principles: reciprocity, rules of origin and most favoured nation status. On the surface, they are aimed at fair, reciprocal trade between the European Union and African, Caribbean and Pacific nations. Under the “rules of origin”, once imported goods enter a country, they can’t be discriminated against to protect local industry, and the “most favoured nation” principle means Zimbabwe does for Germany what it does for Brazil.
The reality of EPAs is, however, different and this is where I thought our labour movement would define its calling. It means if Zimbabwe signs a preferential trade deal on chickens with Brazil because we buy reasonably priced tractors from them, the terms must apply to all WTO members.
Biti says production capacity is at 7%. That means Zimbabwe’s industry cannot compete with Europe which already enjoys technological advances and economies of scale while Zimbabwe has been in reverse gear for the past 20 years and is saddled with obsolete equipment. How do you then raise industrial capacity utilisation to 60% by year-end under STERP when retail shops are flooded with cheaply produced merchandise from Europe? This reduces Zimbabwe to an import economy without generating the foreign currency to do so.
For industry and labour, this means de-industrialisation and loss of jobs on a massive scale. Employment rate is estimated at 10%. What market do you produce for? Why should an industrialist keep paying people who produce goods which he can’t sell? It is a travesty for anybody to pretend that Zimbabwe can achieve a sustainable economic turnaround under IMF terms.
In the blinding euphoria of reengagement with the “international community”, there are already calls for privatisation of public entities. Zimbabwe, it is claimed, would benefit.
Given the current state of most of the parastatals, how does one evaluate them for disposal? I am not even talking about ridiculously-low share prices of most listed firms. How many Zimbabweans have resources at their disposal to bid for any of the companies which the government might offer for sale? Not even the government has resources to purchase shares to warehouse for the poor. This is the equivalent of giving away the family silver for a meal.
An ill-executed disposal of national assets in the name of STERP would be worse than the land reform programme and will benefit only foreign bargain hunters.
There is need for caution and less haste to meet unrealistic election pledges or agenda-driven timelines as is already evident in the new constitutional debate. Deadlines have become of the essence, more important than content.
They say possession is 9/10 of the law. That is what the coalition government should be to Zimbabwe. This is the darkest hour before the dawn. This should be, to quote Winston Churchill at England’s darkest hour in 1940, be our “finest hour” in terms of national redefinition. Zimbabwe needs to speak loudly — it needs fair trade. What it doesn’t need are sanctions or IMF and World Bank enslavement.
To unthinking believers in the god of free markets, George Soros has a sobering caveat. He observed prophetically in a 1997 paper: “Although I have made a fortune in the financial markets, I now fear that the untrammelled intensification of laissez-faire capitalism and the spread of market values into all areas of life is endangering our open and democratic society.”
To those who expect a Utopian Zimbabwe before the lifting of sanctions, Soros warns from the experience of his own “open society” movements in Eastern Europe, set up to undermine the Soviet Union.
With the collapse of communist rule in 1989, says Soros, the “foundations (of civic society) shifted from a subversive task to a constructive one — not an easy thing to do when the believers in an open society are accustomed to subversive activity”.
I fear there are still too many forces against the coalition government crying “wolf!” everyday. Fortunately, some nations have begun to see through this wolf.