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(NEWZIMBABWE) HIPC route not right course for Zimbabwe

COMMENT - HIPC is nothing but a debt for assets swap. Zambia was $7 billion in debt to the IMF, so the World Bank came along and demanded privatisation of the Zambian mining industry, worth at least hundreds of billions of dollars in copper, cobalt and gemstone deposits. HIPC is and was daylight robbery.

HIPC route not right course for Zimbabwe
29/02/2012 00:00:00
by Mafunga Dube

FINANCE Minister Tendai Biti recently made a recommendation to have Zimbabwe declared a Heavily Indebted Poor Country (HIPC). The major argument for this step is to have Zimbabwe qualify for the cancellation of a large bulk of the external debt which is an “albatross to the country’s economic progress,” we are told.

Ordinary Zimbabwean would be eager to know what really is a “heavily indebted poor country”? Who grants such status? Are the country’s debts the real major issue hampering economic recovery at the moment? What could be the major issues of concern negating economic recovery?

It is beyond doubt that the country is heavily indebted, with external debts hovering above US$10 billion as of 2011. However, having a debt is no proof of one’s poverty. Zimbabwe boasts of rich reserves of natural resources notably gold, platinum, chrome and diamonds. The correct question we should be asking as citizens is: “Are these resources appropriately exploited and proceeds optimally utilised for the benefit of the nation?”

A country that qualifies for HIPC status is one whose debts are more than one and a half times its exports. The country should also be on a World Bank or IMF programme for at least three years to qualify.

So far, 32 countries have gone through the process and in all cases, it has taken at least 10 years. This sounds like another ESAP: cutting down on government expenditure, public sector worker retrenchments and cuts on subsidies. It also entails unconditional “free market” policies, the type that allow for consumer exploitation without intervention from authorities.

Can Zimbabwe afford another ESAP-like era especially coming from a decade of de-industrialization, economic contraction, rising unemployment, skills flight and demise of its own currency?

The path chosen by Biti is one that will be controlled by foreign actors. But Zimbabwe still can chart its own economic path. Riding on the back of abundant natural resources, surely it is realistic to have a Zimbabwe with strong economic indicators by 2017? The country can leverage its natural resources to embark on massive infrastructural development notably dualisation of major roads; upgrading of communication infrastructure; construction of bridges; upgrading and construction of new power stations; rehabilitation of the railway network and dam construction.

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These massive projects will create employment, business opportunities to downstream industries and ensure availability of good infrastructure for a conducive and competitive business environment.

Another priority area is for the country to get off the election fever by whatever means necessary as this is holding back investment. Authorities need to put their foot down seriously to also rein-in rampant corruption.

Countries like Norway have successfully transformed their economies courtesy of utilising oil discoveries for national benefit since late 1960s. The authorities established what is now known as the Petroleum Fund, which receives inflows from surplus wealth made from exploitation of oil reserves to the benefit of the entire nation. This has seen Norway attaining a status of the best socialist democracy in Western Europe providing free health care, free university education, unemployment benefits and generous pension schemes.

Zimbabwe is now in a position to extract all its minerals and dispose of the same successfully. Surely, we have an antidote to cure our economic crisis. We only need to abandon our wailing culture and blame game for the challenges we encounter and possibly take a leaf from Angola, a former colony of Portugal, which has successfully thrown away its shackles and is now in a position to financially bail out the former colonial power.

Mafunga Dube is a trade consultant and business researcher

Labels: HIPC, NEOCOLONIALISM, NEOLIBERALISM

posted by MrK @ 6:31 PM