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Impressions of Zimbabwe in August 2009

Posted by CM on October 25, 2009

Visitors to Zimbabwe who have been fed a BBC/CNN-type diet of news about ‘The Zimbabwe Crisis’ and how everything in the country has ‘collapsed’ will be surprised at how ‘normal’ Harare looks at first glance. Driving from the airport into town, there are certainly signs of decay since a few years ago, but no immediate or obvious signs of the ‘collapse’ that certain media have in recent years hysterically, lovingly and perhaps even hopefully talked about.

Looking out of the airplane’s windows as it circled to land and on the drive into town in early August, the most obvious change for me was how areas that had once been at least semi-savannah on the outskirts of Harare had been stripped of trees. One manifestation of ‘The Crisis’ in recent years has been the difficulty in accessing forms of modern energy that had once been taken for granted: petrol, diesel, paraffin, butane, coal, electricity, etc. Their availability had been erratic for many years and their cost prohibitive, forcing many people to resort to firewood for energy. Hence the massive deforestation, which I later found was widespread.

The still newish airport is clean and well maintained, though the number of vacant boutiques compared to, for instance, Nairobi airport’s full complement of seemingly thriving over-charging boutiques was one indicator that things were not quite ‘normal.’ On the drive home from the airport there was no dramatic evidence of ‘The Zimbabwe Crisis,’ though the buildings did look shabbier than before and there were definitely more potholes to dodge on the roads. But the over-riding impression for me was the powerful natural beauty and colour of Zimbabwe, not the indices of the difficult times the country has undergone in recent years.

Having had a few days to unwind at home, I began to gradually drive around and explore my home city Harare. There definitely seemed less traffic on the roads than I remembered from a few years ago. Finding a parking spot in the city center was surprisingly easy at any time of day and the roads there were generally in very good shape, as appeared to be most of the visible infrastructure.

In town and in many of the suburban shopping centers there were many more vacant shops than before, but I was also impressed by the number of businesses that had hung on during the difficult years. But almost all had ‘diversified’ in various ways, with all selling a much wider variety of goods and/or services to survive. I thought the general level of service in shops had declined noticeably. I didn’t encounter any outright rudeness but it seemed noticeably common to be met by disinterested, bored and sometimes almost sullen store personnel. Almost all stores I remembered from a few years ago had a much narrower range of goods than during ‘the good old days,’ but many people mentioned to me that what I thought was a limited range of goods was a vast improvement from the situation a few months ago, and that the availability of goods was improving dramatically by the day, one of the early benefits of the US-“dollarization” of the economy.

While the widespread shortages of all kinds of goods was rapidly receding into the past as price controls and currency restrictions fell away, most things seemed very expensive, sometimes absurdly so. In the weeks before my visit home I had visited Europe and the U.S., as well as having passed through Senegal’s capital city Dakar,  a city not known to be cheap, and so I particularly keenly felt the comparatively high cost of goods and services in Harare. It was easy to understand why many Zimbabweans are only grudging in their praise of the ‘normalization’ that has begun to take place. “We are happy the shops are full again but we can’t afford the goods” was a frequent complaint I heard. But even as people grumble about “we can’t afford anything” the shops are certainly not empty of customers, although many merchants and traders said the level of spending was still low and still limited mainly to necessities. Yet all I spoke to agreed that the situation was significantly better than before, and dramatically better than in 2008, the period everyone agreed was Zimbabwe’s low point, with hyperinflation, shortages, violence and political tension and so on at their worst.

As ridiculously expensive as almost everything seemed to be, even in just the one month I was there prices were creeping down to more realistic levels. And if one took the trouble to shop around, which many more people were doing than I remember from before, it was possible to find widely varying prices for the same thing. A big culture change was that even in ‘formal’ shops it was possible to negotiate for price reductions, common in many countries all over the world but previously almost unheard of in Zimbabwe’s stiff formal economy. So merchants are feeling the effects of consumer resistance and growing competition from the opening up of the economy and the greater availability of goods, and they are being forced to respond by lowering their prices. In the shortage economy that had prevailed for several years, the relatively few people who could raise the hard currency to import goods became accustomed to charging huge, arbitrary mark-ups. The merchant was king, not the customer.

One of the most disheartening remaining signs of how Zimbabwe has slid was in the complete absence of a daily media alternative to the state media. There are no daily independent newspapers and at US$2 an issue, the weekly private newspapers are way out of reach of most people. Of course there is no private TV or radio so there is a huge information deficit. But this is not to say the state media dominates the shaping of opinion. Despite its near monopoly, state newspapers, TV and radio are so dull and so blatantly pro-establishment that their credibility is extremely low. The public has largely learned to sense when they are being fed propaganda instead of news, which is rather often, and to dismiss and ridicule it even if they don’t know for sure what the other sides of the story are. Even more than before, the propaganda is so crudely done that I found myself often marveling that the government didn’t find it embarrassing and a negation of its attempt to win heart and minds. The stiffness, awkwardness and the over-the-top nature of much of the state media in the support of Mugabe and ZANU-PF and against Tsvangirai and the MDC had an almost surreal, self-defeating quality in its crudeness.

President Mugabe is still ass-licked by the state media as much as ever before, and in a way that I do not think does him any credit. One big change was that Reserve Bank of Zimbabwe Gideon Gono was no longer the swashbuckling public hero the media had tried to make him out to be when he was first appointed five or so years ago, promising to swiftly bring down hyper-inflation and perform all kinds of other miracles. Even in the slavish state media Gono’s gloss had long turned dull, with him now struggling to defend his controversial legacy to a tired-of-him, sceptical public. One would have to have been there in his early days in office and to experience what a dominant public presence he came to be to understand how far the man has fallen in public esteem.

Electricity and water cuts were frequent, although even in these regards many people said I had visited when the situation was getting much better than it once was. People are inconvenienced but out of necessity have had to adjust, and the down times are handled very matter of factly. Up until a few years ago I had never even seen a fuel-powered electricity generator but now many in the cities who can afford them have them and they are widely advertised in the Press. Those who have boreholes or wells can avoid the worst inconveniences of the periods without running water, but I was shocked by the number of people who calmly mentioned having gone for months without seeing a drop of municipal water in their taps, a major cause of last year’s cholera outbreak.

Visits to some of Harare’s once-bustling industrial areas were depressing. A few years ago a quick drive through any of them would have been enough to show anybody why Zimbabwe’s economy was the sub-region’s most dynamic after South Africa’s. Now they are quiet, many companies still open but quite clearly operating at a low level. The areas do not have the bustle of before; buildings, roads and company premises are no longer maintained like they once proudly were. But from job-seekers to company owners, many people said whereas most companies were just treading water for several years, there are now signs of activity picking up as a result of the policy changes in the economy and the relative political calm.

With low productivity in agriculture and industry for several years, and given all the crises the country has undergone, it is startling to see the number and proportion of smart late-model luxury cars on the streets of Harare. There seemed a very bizarre disconnect between the economy under-performing as it has done for years and the number and types of expensive cars which would have turned one’s head even in a wealthy, ‘normal’ economy. While the signs of the lack of investment in many critical areas of the economy were everywhere, this certainly did not seem to extend to the cars many higher-ups in government and the private sector drive. I’m still trying to figure out what this says, and whether this is positive or not.

My impressions are of a tiny slice of life in Zimbabwe. For instance, I only made two one-day forays into rural areas to visit relatives, and only made one other one-day trip out of Harare during my one-month stay. There are obviously many parts of the traumatic economic and political period Zimbabwe is just coming out of that will only be fully understood by those who were there during it. But the instinctive adaptation that one “who was there” undergoes to the rapidly changing situation is also precisely why it can be hard for them to pin down and catalogue the changes, even though they will have an insider’s deeper understanding of events they were a part of. On the other hand an inside-outsider like me, visiting for the first time in about three years, can much more quickly see what is different even if he has no first-hand knowledge and experience of the factors and events that drove the change.

When I ended my previously visit to Zimbabwe, in early 2007, it was with a very heavy heart. The economy was very steadily declining and the tensions between the rival political parties escalating. That state of affairs had been on-going for close to 10 years. There was a widespread sense that the country was still going down, with no one able to guess when we would hit bottom or how bad things would be then. I left home then worried and depressed.

My feelings were quite different this time. There remain many political and economic problems but there is now a widespread feeling that the worst is behind the country. There is not the same feeling of widespread political dread and economic desperation, even though things are far from easy or back to any definition of ‘normal.’  Everybody grumbles about how high the cost of living still is, but unlike before, prices are stable and in many cases even declining, and goods are widely available, which is a very different scenario from early 2007!

I found widespread relief at the existence of the inclusive government of the major political parties, and I thought that most people were generally much less passionately partisan than I remembered. I also think cynicism about all politicians was higher and more widespread than before, which may be a good sign!

The last ten years or so have been a lost decade for Zimbabwe in many ways. And there is no guarantee that the beginnings of stabilization that are being experienced will take hold or that the country will organize itself to get close to meeting its great potential. The possibility of the political parties going back to the bitter fighting that has contributed so greatly to Zimbabwe’s misery remains very real. But when I left Harare in early September after a month at home, for the first time in many years I felt the stirrings of hope about the country’s prospects.

Posted in business, Economy, People | Tagged: , , , , , , , , , , , | 1 Comment »

Gono: If one man cannot “kill” an economy, neither can one man “save” it

Posted by CM on October 15, 2009

Reserve Bank Of Zimbabwe Gideon Gono’s power and influence have waned in the wake of the inclusive government that has brought in MDC officials into important economic portfolios. Gono may still hold on to his title and position, but there is little doubt that his power has diminished considerably.

The once unchallengeable Gono has now found himself in the new and unfamiliar role of having all his decisions and opinions second-guessed and often derided. The man who the Zimbabwean media once portrayed as a miracle worker who could walk on water now struggles to defend the legacy of his bygone hey days.

Gono’s defence of his many controversial actions of recent years as central banker during the country’s worst period of hyper-inflation is essentially that no matter how bad things were, if it were not for his efforts they would have been far worse. He feels hurt and disappointed that Zimbabweans are not grateful to him for saving them from a much worse fate then they experienced during the tough times whose worst months were in 2008.

Here is an interesting example of his thinking about this, from a recent interview:

…Gono, who presided over the collapse of the local currency, insisted he was not to blame for “killing” the nation’s economy…He again rejected calls for his resignation after President Robert Mugabe’s unilateral decision to appoint him to a new five-year term last year — one of the major disputes facing the eight-month-old unity government.

“The immorality and irrationality of the whole argument is that ‘Gono must go because he printed money and he killed this economy. That’s a white lie because no single individual can harm or kill an economy,” he said.

Gono also stands accused of siphoning off state money into secret accounts in Asia and Europe, a charge he denies.

“Whatever I did had authorisation from the government of the day,” said Gono, a former commercial banker. He described his job as “a plumber mending burst pipes. I prevented this country from descending into chaos like Somalia.

No doubt Gono has been misunderstood in many ways, although it is far from clear in which ones. But  it is also probably true that by haughtily and flauntingly wielding as much power over the economy as he was clearly allowed to do for a while, as well as through the media over-exposure he seemed to so love, he may well have brought on to himself the genesis of his present public relations troubles.

Poor embattled Gono is no doubt quite correct to argue that he could not have single-handedly “killed” the Zimbabwean economy. Whether he indeed prevented it from desceding into the chaos of Somalia is subject to debate and will likely never be resolved.

But I found an interesting insight into Gono’s mindset. It is that he denies an individual can kill an economy, but then seems to go on to claim that an individual can save it, and that this heroic one-man deed is his real legacy to Zimbabwe. There seems a contradiction in Gono’s words in what it is possible for one man to do to/for an economy then!

I wonder if this mix of immodesty and refusal to take responsibility for anything that went wrong under one’s watch while ascribing to oneself superhuman positive achievements are not part of the attitude that have contributed both to Gono’s meteoric rise as well as his dramatic fall. I think there are lots of lessons in there about the deadly cocktail of overarching ego mixed with almost unfettered power. They can quickly take you up, but they can just as quickly bring you down.

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The price and the promise of Zimbabwean recovery

Posted by CM on February 27, 2009

A lot of loose figures are beginning to fly around about what it will cost to revive various sectors of Zimbabwe’s economy. I recognise one must have working figures and estimates, but a lot of the throwing around of figures strikes me as being pretentious. One reason is that they are efforts to quantify the unquantifiable.

What does a statement like, “It will cost US$300m million to revive education, the health sector, agriculture, etc” really mean? You can cost the repair of physical infrastructure, the paying of salaries and so forth, but it is impossible to put a cost on work culture, business confidence,  motivation and so on, which are all integral part of functioning systems.  These attitude-linked traits take a long time to build up where they don’t exist or where they have been severely damaged, as in Zimbabwe.

A danger of quantifying recovery in purely monetary terms is what we have seen with the racket of so-called ”development aid” all over Africa over the last 50 years or so: billions of dollars expended, but no abiding change in the fortunes of the continent.  A few thousand “development experts” from the aid-giving countries do rather well for themselves but the overall condition of the claimed target groups is continuation of wallowing in poverty.

It could be the same with the feeding frenzy that Zimbabwean recovery efforts are likely to be. Millions of dollars will be donated and borrowed, NGOs will spring up at every corner, those with the right connections will suddenly get a new line of access to easy money for conspicuous consumption while the systems the money is supposed to fix continue to flounder. We have seen it all many times before, in Zimbabwe and countless other places in Africa.

This is not an argument against making budgets or against raising money for Zimbabwe’s recovery efforts. It is instead to say that our problems go deeper than can be fixed by merely spending money on them. They also require fundamental attitude change and unusual  leadership commitment to rebuilding the whole national ethos. I am not optimistic that there is any sign of this kind of spirit amongst either the old or the new politicians who have come together in the new unity government.

As a related aside, it has become deeply ingrained in the African mind that “we cannot do without aid from the West.” So you have contradictions such as a country claiming to need aid for inexpensive cholera medication because it is broke, but that same country has no problem at all somehow finding the money for expenses such as luxury vehicles for its top few hundred governing elite! When the things we think we ‘need’ in order to run our affairs include lifestyles that some even in rich Western countries that became so in a different age are questioning, of course we will find our low productivity cannot fund them and we have to resort to debt and being beggars. The idea of lean and mean cabinets or business management units who have to work their way up to whatever perks they enjoy by performance is unfortunately foreign in an Africa where we desperately need ruthlessly-evaluated, results-based politicians and businesspeople. But no, some members of the bloated new cabinet are already receiving their new Mercedes Benz sedan (the most prized perk in all of Africa) before they even have offices to operate from! If this is the sort of way that recovery costs are being calculated, any recovery will not match the extent of the money spent on it.

It is interesting that new prime minister Morgan Tsvangirai’s first ports  of call to seek financial assistance were South and SADC, rather than the Western capitals to which he has long been considered beholden. This surprising development is no doubt partly out of the criticism Tsvangirai and his MDC faction have received, of being “stooges” of the West.

There is an interesting dichotomy in Western attitudes about aid. One the one hand there is discussion about how ineffective and wasteful it often is, and as well as about donor dependency and corruption on the recipient end. And yet a unpopular as the idea of aid sometimes is amongst ordinary Westerners for these reasons, their governments have reasons to continue it, and those reasons are not always humanitarian or development considerations.

Aid is quite clearly also a powerful means to exercise influence on the recipient country. Given how Robert Mugabe has framed The Zimbabwe Crisis is being essentially a result of the West preferring a dispensation in Zimbabwe which favored the white minority, especially the farmers, Tsvangirai’s perceived closeness to the West remains a hot potato for him, even as it also provides him with at least the potential to get various kinds of support.

But what if Zimbabwe sought and got most or all of its recovery costs from the southern Africa region; from SADC? Early intimations are that Zimbabwe might well get significant such support, in what would be an unprecedented case of African countries pulling their own resources to help one of their own. In this case if Zimbabwe was indeed economically and politically stabilised this would be money very well spent for the region. The significant regional “contagion cost ” of Zimbabwe’s  troubles would be eliminated, and a once-again strong Zimbabwe would have many other benefits to the region as well.

But how would the Western “donors” take such unusual fledgling efforts at African self-sufficiency? Surely they would be relieved and happy to not be expected to exclusively or even mainly fund Zimbabwe’s recovery? Not necessarily! I suspect some would like to be asked, to then loudly grumble about those troublesome, always-begging Africans but then be seen to be oh-so-reluctantly but generously giving in to the requests (purely out of humanitarian concerns for the oppressed, impoverished Zimbabweans, you understand.)

“Ah, but in return for this generous aid we are giving you, what are you going to do about that little matter of the white farms that were taken? What about your too-aggressive indigenization laws that we are worried will affect the operations of our nationals’ companies? What are you going to do about all those mining and other concessions that have recently been going to the Chinese in a country that we have always considered to be under our sphere of influence?” And so on and so forth.

You get my drift. So don’t expect that our Western friends will necessarily be happy if SADC or others prove to be the main source of ‘recovery funds!’

Such a development also has the potential to radically alter African thinking about what it can or cannot do for itself. When the current economic and political dust has settled, the lessons of Zimbabwe, not just the obvious negatives but the positives that will become more apparent with time, will reverberate far and wide on the continent and beyond. Ironically, that may be precisely why the very possibility of an eventually powerful, successful and independently-acting and speaking Zimbabwe causes such hysteria in some circles!

It is to present the image of an African country that breaks the mould of the continent’s mostly pathetically weak, donor-dependent and donor-compliant banana republics. It is to begin to no less than re-shape the African psyche against economic and psychological domination and control by The Other, and to positively and fruitfully, profitably take control over one’s resources and destiny. Unfortunately we simply have not seen this yet in Africa, and for some such a prospect is frightening.

Posted in Economy, Mind set | 1 Comment »

Biti risks falling into Gono trap of claiming mantle of latest Zimbabwean economic ‘miracle man’

Posted by CM on February 15, 2009

Just – appointed MDC minister of finance Tendai Biti has started  his tenure with a bang. He is seemingly everywhere in the media, with admiring, sympathetic and sometimes even heroic portrayals.

The understandably Mugabe-reviling BBC particularly likes the fact that Biti sometimes wears a British-style bowler hat and is apparently a fanatical supporter of a British soccer team! “Phew,” you can almost hear the BBC sigh with relief, “finally we get some Zimbabwean officials who are openly favourably-disposed to things British!” Mugabe and Co. have been merciless in their rhetoric against the British media and political establishments.

The excitement is understandable. It is incredible that the day has come in Zimbabwe when an ‘opposition’ politician occupies such a key portfolio, and under Mugabe! (Never mind that with the new unity government, Zimbabwe technically has no opposition for the moment.) It is indeed a historical development in Zimbabwe’s politics.

Apart from the political significance of the appointment, many are pinning their hopes of an arrest and reversal of the country’s economic decline on the MDC occupying this key portfolio. Their hope is that the party has access to the tap of Western largesse, both in terms of the lifting of sanctions and in terms of attracting aid and investment. We shall see.

Biti is clearly is enjoying his moment in the sun, and appears to have as much of a penchant for publicity as central bank governor Gideon Gono, who just  five years ago was hailed by some (and by himself!) as the Zimbabwean economy’s Mr. Fix- It. “Failure is not an option” boasted Gono at the time, with the local media eating up his every word for months to come, until disillusionment with him begun to set in as the economy continued its free fall, and inflation to skyrocket.

Gono over-sold himself as a ‘turn-around expert’ with a miracle cure and he under-estimated the importance of accompanying political and diplomatic reform for the success of his many attempted schemes to “save” the economy. The reform that was required of the politicians simply didn’t happen. Gono has gone from popular Mr. Fix-It to being one of the most reviled public officials in those five years.  The messianic media portrayals have long been forgotten, even in the obedient state media.

The early signs are that there is a high risk of Biti falling into a Gono-like ego-trap. There is the similar basking in media attention, when a more low-key profile might be more prudent. There are the many too-early pronouncements about what he is going to do, when it would be better to speak in generalities until he gets his feet wet and has a more realistic idea of what is possible. He has continued to issue hot-headed statements against the MDC’s governing partners ZANU-PF as still being ‘unwilling to share power.’ That may well be true, but that line now sounds odd coming from someone so firmly embedded in the government. That is the type of  statement that should now come from another MDC official, not Biti. It is simply not to his advantage in his new position to be creating even more enemies than he has now amongst jittery, resentful ZANU-PF officials who are likely to be doing all they can to trip him up personally and politically.

There are the boastful failure-is-not-an-option-style statements, at the very least prematurely raising hopes of economic recovery amongst some long-suffering Zimbabweans willing to grasp at any straw of quick relief. Yet the fact of the matter is that there are still many factors completely outside Biti’s control that could result in failure for him that could be every bit as spectacular as that which the once-lionised Gono is now blamed for.

For the sake of Zimbabwe I hope to be proven wrong in my concern about what appears to be a certain rashness on Biti’s part that is unbecoming of a finance minister, and I wish him well in his difficult portfolio.  Perhaps he will quickly get over his youthful excitement and avoid the ego-and-publicity-before-results trap that was partly Gono’s undoing in terms of public esteem.

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Government media praises Gono for merely playing catch-up with economic trends

Posted by CM on February 4, 2009

From The Herald:

New policy measures hailed

By Victoria Ruzvidzo and Joseph Madzimure

STAKEHOLDERS across the economic spectrum have commended Reserve Bank of Zimbabwe Governor Dr Gideon Gono for crafting policies that could ignite rapid economic transformation. Measures that included the deregulation of exchange control regulations, local currency reforms and the enhanced foreign currency licensing framework would stimulate production and take the economy back on a growth path.

Confederation of Zimbabwe Industries president Mr Kumbirai Katsande said the central bank chief had exceeded industry’s expectations. “The governor went further than we expected. This presents an excellent platform . . . We needed a statement with hope and this is what we got,” he said.

The Herald report goes on to quote various other big names from commerce and industry, all of them apparently (with The  Herald, one is never sure whether what is reported is what was actually said) lavishing praise on the heroic Gono.

If the policies Gono announced eventually help to “ignite economic transformation” as The Herald so poetically puts it, Gono can hardly be credited with ‘crafting’ anything new or particularly innovative in them.

The US-dollarisation of the economy Gono and the acting finance minister  have now formalised had been happening for quite some time as the Zim-dollar became ever more worthless.

Zimbabwe’s recent example with its fuel supply industry is instructive in this regard. Throughout the first several years of severe fuel shortages that began about the year 2000, the government insisted this was a “strategic” sector that it had to tightly control. That control became increasingly irrelevant as more motorists and industry had to resort to ‘the black market’ for their fuel as the official market could not work with the restrictions government put on it, mainly that of being expected to retail the fuel at less than the cost of sourcing it.

For years government resisted calls to liberalise the fuel sector.  But liberalisation happened by default anyway, because the ‘black market’ became a more significant and reliable source than the ‘official’ market! Eventually government came around to changing its stupid and outdated laws to acknowledge the reality that had been dictated by the market. That is all Gono has done with his ‘currency’ reforms and other measures: accept the reality he has been refusing to do for so long, that whether you like it or not, the market rules!

The US-dollarisation of the economy Gono and the acting finance minister  have now formalised had been happening for quite some time as the Zim-dollar became ever more worthless.

The policy measures The Herald refers to in the first paragraph of its story  merely indicate Gono’s realisation of and capitulation to what has already been going on in the economy, and which he had no power to stop. They were simply inevitable and inexorable trends given the reality that had been brought about by the earlier efforts to deal with economic symptoms instead of causes, and of trying to control the economically uncontrollable.

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The futility of trying to put a number to Zimbabwe’s hyper-inflation

Posted by CM on December 10, 2008

Zimbabwe’s current astronomical and rising inflation rate will provide years, decades worth of study for scholars. But the over-riding concern now is the way an inflation rate said to be in the millions percent makes hour-to-hour survival a huge struggle for ordinary Zimbabweans.

But it can also be examined as a sort of sad but fascinating, incomprehensible game. And The Zimbabwe Crisis provides all sorts of opportunities for people of all types to sell their ‘expertise.’

A case in point is the silly game of trying to pin down what exactly Zimbabwe’s rate of inflation is. Obviously if an ‘expert’ is asked, s/he can not give the most honest answer and say, “Prices are changing so rapidly, so variably and so unpredictably it is impossible to say what Zimbabwe’s inflation rate is with any certitude.” Or even merely reliably, even with a very large standard deviation. I might add that it is a mostly meaningless exercise anyway.

But that doesn’t stop some people from trying. Newspapers need copy every day and today’s Zimbabwe provides some of the most colourful. And there is no shortage of “experts” who are happy to be quoted by the media. Builds up the consulting CV.

The Guardian (UK) had a story recently about the present cholera epidemic. The report wandered over from discussing hospitals and disease to tackling inflation.

Excerpts:

Money is a complicated business in Zimbabwe even if most people do not have much. Cash has been in desperately short supply because the government cannot print fast enough to keep up with hyperinflation. Officially inflation stands at 231m percent, but that was in July. Since then the central bank has regarded economic statistics as a state secret.

John Robertson, one of Zimbabwe’s most respected economists, has accurately estimated the rate of inflation in the past. He says it shot through the billions, trillions and quadrillions between August and October until it reached 1.6 sextillion percent last month. A sextillion has 21 noughts.

Robertson says the number is almost meaningless. “Inflation at the present rate is academic. Nobody says they’ll increase salaries on this figure. It’s impossible to work with it.”

An interesting piece of  diversion from the reality of what the levels of hyper-inflation mean for Zimbabweans just trying to get by from day to day.

I grinned at the reporter’s judgment that his quoted source had “accurately estimated the rate of inflation in the past.” If it was an estimate, how then could it also be accurate? Besides that nit-picking detail, who adjudged the ‘accuracy’ of the source’s previous guess? On what basis?

Despite the reporters awkward attempt to put a plug in for his source’s reliability, at least the source was honest enough to admit that Zimbabwe’s rate of inflation is so high that the numbers being bandied about, likely including his, are completely meaningless.

Besides knowing that price increases have astonishingly got out of control in Zimbabwe, no one has the slightest clue what the rate of the change is. People like John Robertson might just protect their reputations if they learned that sometimes when reporters come calling it is better to just say, “no comment.”  


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Eric Bloch’s revisionist version of the origins of Zimbabwe’s land problem

Posted by CM on December 10, 2008

Zimbabwe Independent columnist Eric Bloch recently wrote an article on what he considers to be the changes necessary to get Zimbabwe’s land reform back on track to revive agriculture.

Bloch was responding to the ruling of the SADC Tribunal based in Namibia in favour of a number of evicted white Zimbabwean farmers who petitioned it for relief.  The farmers went to the recently established regional court for redress after unfavorable rulings in Zimbabwe’s own court system.

The SADC court ruled that the farm seizures were racially discriminatory and violated international law. It ordered the Zimbabwean government to stop further farm takeovers, as well as to pay compensation for those already taken. Predictably, the Mugabe government scoffed at the court’s ruling and has made it clear it has no intention to abide by it.

Bloch’s overall conclusion is hard to fault. He ends his article with, “It (the government) should work vigorously towards the creation of harmonious inter-racial relationships and support to bring about the revival of the agricultural sector. If it would constructively reform its land reform, Zimbabwe would again become the region’s breadbasket, and its economy would be positively set upon the path to real recovery and growth.

It is how Bloch leads up to his conclusion that is preposterous. He goes out of his way to admit that Zimbabwe has had a long pre-independence history of aggressive laws to make the African majority population occupiers of only the most marginal lands. And he is careful to say that he accepts that the legacy of racially-based wealth and land-holding patterns had to be corrected.

He writes: At the time of government initiating its programme of land reform, resettlement and redistribution, it justified doing so upon the fact that for a prolonged period of time the black population had been legislatively barred from ownership of agricultural lands, and upon a specious contention that such lands had been “stolen” from the black population by the British colonialists of more than a century ago.

Bloch then embarks on an ingenious but utterly dishonest argument, one he has made many times before in his Zimbabwe Independent column, about how the widely-held view that the land was indeed stolen from the natives by British settlers is actually wrong.

No, you see, says Bloch, the natives’ population density was extremely low at the time of the arrival of the British visitors who then invited themselves to stay and dominate the natives. Citing population statistics of that late 19th century period, Bloch says, “Based upon the 1880s/1890s population of 250 000, if the entirety of the lands were stolen from that population, each member of the population, be they adult or child, male or female, elderly or young would, on average, have been  possessed of 156 28 acres! That could not possibly have been the case.”

There you have it, the masterful exoneration of the early British settlers’ reputation as usurpers of African land by Eric Bloch! They could not have stolen the land because at the time (1890s) there were just a handful of natives roaming around mostly vastly empty space that belonged to nobody. Oh sure, admits Bloch, the settlers may have then gone on to mistreat the Africans in all sorts of ways, but at the beginning they just helped themselves to all the vast open spaces that had just been sitting there waiting for somebody clever to come along and stake Western-legal claim to it. It was not the settlers’ fault that the natives couldn’t produce title deeds, effectively says the intrepid columnist Bloch.

If I sound sarcastic and contemptuous of Bloch’s argument, it’s because I am. It is not only a historically and intellectually dishonest argument, it borders on meeting the standards of that oft-abused,over-used concept; racist.

As Bloch damn well knows, the concepts of ownership of the two clashing cultures were completely different. In the African setting land was communally held. There was no personal ‘title’ to land, but there was a consensual understanding of territories belonging to different levels of groups. This is why when what was understood to be an ‘outgroup’ invaded an area, the result was war. It was not, “Fine, help yourself to that vast open space over there, we don’t have title deeds to it so we can’t prove it is ours.”

Bloch is valiantly fighting an ideas war with an argument that is not just culturally, historically and intellectually dishonest. On a purely practical level he is continuing to fight a battle that in Zimbabwe has clearly been lost. The almost universal feeling amongst black Zimbabweans about the “stealing” of their land is one major why they pretty much unanimously agreed with the idea of waging a long and brutal war against the colonial system. It is also why the idea of radical land reform was quite popular even as some warned about the consequences of doing it the way it was done. It is also why even as many Zimbabweans today would like to see the back of Robert Mugabe for being a repressive despot and for the overall mess he has presided over, the idea of land reform remains widely popular, even if many would agree with Bloch’s broad idea that the reform itself now needs to be reformed.

Each time Bloch has argued the way he has done again in this article, after getting over my initial astonishment, I have often wondered if e could be really naive enough to believe it could have any currency beyond perhaps a handful of people in his circles. Bloch has every right to repeat this argument, but he stands approximately zero chance of convincing either any Zimbabwean government or a significant proportion of the Zimbabwean public of his fantastically revisionist view of the country’s colonial history.

In different contexts, I have heard people fighting the fight that Bloch does so poorly here argue the following: The Africans (Indians, Aborigines, Native Americans, whatever) were indeed dispossessed of what was rightfully theirs by subterfuge and force of arms, but hey, every people has gone through such unhappy experiences. Get over it and move on.

Many would find even this argument a provocative and controversial white-washing of history and of peoples’ legitimate grievances and rights to the same kind of redress today’s white farmers are seeking. Yet I believe this argument  has more validity than Bloch’s crude attempt to re-write history to absolve the early white settlers of their many pretexts for dispossessing Africans. Bloch’s one century-later public relations effort on their behalf is a lost cause in modern day Zimbabwe.

To frankly admit the messy and painful events that have helped bring the society to its present pass is to respect the full historical record and its effects on people in the past and the present, rather than attempt a reductionist resort to misuse of statistics. Zimbabwe has continued under its present post-independence dispensation to be in denial about the ugliest parts of its violent present, the same way people like Bloch are in denial about the reality of its ugly, violent past. Part of our moving forward as a society is to learn to look at ourselves, past and present, with brutal honesty so that the many aggrieved can feel the validity of their grievances have at least been recognised in a way that allows forgiviness and moving on. Blochs’s crude article reminds us how far we have to still go in this regard by its virtual mocking of a central cause of African pain and anger about the colonial past.

It is not just a waste of time of an argument, it also illustrates the huge gap in how blacks and whites in southern Africa in general explain how they arrived at the tense multi-layered adjustments their societies are undergoing to get over a past that was certainly painful for the natives, if not for the likes of Eric Bloch.

Bloch’s ‘clever’ attempts at historical revision also work against his expressed noble desire for the society to work “vigorously towards the creation of harmonious inter-racial relationships.” His regular recycling of this crooked attempt at colonial absolution does not help to achieve his expressed aim.

*******************

This article was also published in the Zimbabwe  Independent, on December 11 2008.

Bloch responded to it on December 18 with:

Many  have urged me to respond to Chido Makunike’s attack in last week’s issue of the Zimbabwe Independent,  upon me and my prior week’s  article  on land reform.

Makunike is entitled to his opinion (even if a wrong one), but is neither entitled to misrepresent, distort or misconstrue that which I have written, nor to libelously accuse me of dishonesty and racism.

If Makunike would remove the chip from his shoulder, he would have a more balanced perception. Accordingly, I dismiss his attack upon me with the contempt it deserves, and will not belittle myself to replying to his spurious contentions.

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Gono again blames inflation symptoms; causes, solutions remain beyond his control

Posted by CM on December 6, 2008

For the five years that Gideon Gono has been governor of the Reserve Bank of Zimbabwe he has tried all kinds of things to try to prevent inflation from shooting way out of control. All have failed.

But the economic, social and political pressures of hyper-inflation are so strong that he must be seen to continue to be trying to control it, even though its ultimate causes are way beyond his purview.

One does not need to be an economist to understand how falling productivity in agriculture, mining and other sectors caused the currency to lose its value. And how then continually printing more currency over the years for all sorts of needs without linking it to to increased economic productivity simply devalued the Zim dollar even further. That inflation has now reached the unprecedented, unfathomable level of millions of percent!

In normal times we would expect Gono’s RBZ to control inflation by adjusting the quantities of currency in circulation and putting in place various monetary policy measures to try to control production and spending in one direction or another. But Zimbabwe’s inflation situation has gone way beyond the ability of the central bank to do that.

The currency is not going to be suddenly stabilised and then strengthened by increased economic activity. There is absolutely no reason to believe there is going to be any sudden increase in earnings from agriculture, tourism, mining or manufacturing in the short term. Foreign credit that would also help to artificially shore up the Zim dollar is no longer available to the country in any meaningful amounts.

Given these basics, there seems no other realistic currency/inflation-stabilising pressure to look forward to other than a large hard-currency injection of some sort. And that is impossible to imagine in the absence of an implemented political settlement between Robert Mugabe’s MDC and Morgan Tsvangirai’s MDC. Even with it, there is no guarantee that aid and loans would come in the quantities required and soon enough to lower inflation to the levels pertaining in the rest of the world in a hurry.

Obviously Gono and the RBZ have no influence on the successful  implementation of power-sharing between ZANU-PF and the MDC. And not only does the RBZ no longer have the ability to control inflation by controlling money supply, the hyper-inflationary pressures have forced it to do the exact opposite: print cash like crazy so that the public can try to keep up with prices that escalate by the minute, but in the process further “fuelling” hyper-inflation.

Gono is criticised by economists for worsening inflation by churning out more currency every week despite falling production, making the currency ever more worthless. But if he tried to “rein in” inflation by reducing circulating currency, there would be an outcry from the public who would not be able to access the amounts of currency required to keep up with skyrocketing prices. What you need a bag of cash for this week you may need a suitcase’s worth next week.   It is hardly surprising that after years of this  situation that simply could not continue indefinitely, foreign currencies like the US dollar, South African rand and Botswana pula have become the preferred media of change, causing other problems.

Mr. Gono is on a treadmill and cannot get off: he is fully aware of these inter-linked imperatives of a capitalist economy like Zimbabwe’s, but he is in a position where he simply has no choice but to try to reconcile the un-reconcilable. The effect is that all his efforts are to merely run around in endless circles. Only a political settlement and emergency external hard-currency injection of some sort can now break the circle enough to eventually make it possible for him to eventually play a traditional central banker role in any positive, meaningful way.

Three days ago Gono released the country’s first ever $100 million note to try to reduce the daily bank queues as people struggle to withdraw amounts of currency sufficient to keep up with galloping prices (not just of goods, but of the forex that is now very necessary to buy all sorts of goods and services at all). The system struggles and fails to keep enough of that currency because of the extent of the hyper-inflation, and despite the currency printing presses working overtime to keep pace. And it is  necessary to print currency of ever outrageously higher numerical value. It has already been announced that next week a $200 million note will be released. A billion dollar note cannot be far into the future at this rate, but this can’t go on forever, or even for very much longer.

So Gono releases trillions of Zim-dollars’ worth of his new $100 million note to the banks the day before it is to become legal tender. The next day he has a temper tantrum against some of these banks for releasing the notes into circulation a few hours before they technically became official currency. Gono goes to town, accusing the banks of being responsible for many of the sins for which he and the RBZ are often blamed, such as buying foreign currency from the street, making nonsense of the official exchange rate(s).

All of Mr. Gono’s many pent-up frustrations seemed to find an outlet on the discovery of this infraction by the banks. We are told of how the managers at several banks “have been relieved of their duties after vast sums in new notes issued to them by the Reserve Bank of Zimbabwe found their way onto the illegal parallel market on Wednesday evening (i.e. night of release to the banks by the RBZ and eve of becoming official tender). Several top bankers found themselves “banned” from their profession for five years.

Gono makes  a very big deal about the notes hitting the streets a few hours “early.” He insinuates that this is proof that the banks have a big role to play in ‘economic sabotage’ activities like driving the ‘illegal’ foreign currency market.

“We are sick and tired of being labelled crooks,” said Gono in regards to himself and the RBZ (said to be the biggest buyer of ‘illegal’  forex, not an unreasonable suspicion given that none is easily available ‘legally.’) His over-dramatic out-burst seemed designed to say to the public and what he as called his ‘principals, ‘ “Aha, you see? You have been accusing/suspecting me of being the bad guy all along, but here are the real culprits; we have caught them red-handed, I have been innocent all along.”

Technically and legally Gono has a point about the impropriety of the notes being released a few hours before they should have been. But the technical, legal correctness of his position has been far superceded by the economic realities. In the circumstances, it is petty in the extreme of Gono to make a big deal about this.

The banks acted exactly as you would expect based on the economic survival imperatives that have come to over-rule any law in the Zimbabwe of today. It is now overwhelmingly about survival, not a relatively little thing like legality. The “early” release of the notes, whether to buyso-called  illegal foreign currency or to just pay account holders writing cheques, was simply to try to use the currency before it lost a big chunk of its value, which it is doing by the millisecond. A deal negotiated the afternoon of the RBZ’s release of the new note to the banks, but only paid for the next morning when the note was legal would have been worth considerably less for the cash recipient. That is how fast the currency is losing its value.

So yes, banks that are supposed to be outstanding upholders of propriety can be accused of acting willfully illegally in this case, but my point is that the overall economic environment is such that this is a petty point: almost everybody is always technically flouting one law or another in the course of just trying to stay one tiny step ahead of hyper-inflation and all the other things that have gone wrong in the economy.

So the banks may have acted technically illegally, but they behaved entirely rationally for the situation. It is fooling no one for Gono to mainly focus on what in the circumstances is the really minor ecnicallegal, legal point of the ‘early’ release of the new notes.

Far more important are the bigger, more significant factors that account for that behaviour being entirely expected and rational in the present situation. Unless and until those factors are dealt with by Gono’s principals, then his little temper tantrum was simply an irrelevance of a side-show. Banks, their clients and everyone else will keep trying to find ways, legal or otherwise, in the ultimately futile exercise of trying to avoid, reduce  or delay the effects of hyper-inflation.

Gono famously said “failure is not an option” in regards to lowering inflation when he began his first RBZ term with much fanfare five years ago. What Gono’s little performance in regards to the release of the latest note shows is that for now, failure is a reality, and not necessarily for reasons within his control.

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After deal-signing, forwards or backwards for Zimbabwe?

Posted by CM on September 20, 2008

Normality and stability in their broad sense are obvious outcomes all Zimbabweans hope for after the recently signed political deal between the country’s political parties brokered by South African president Thabo Mbeki.

But there seems to be no unanimity about the details of the nation Zimbabwe seeks to now become, beyond obvious things like goods in the shops at reasonable prices, low inflation, more employment opportunities and so forth. None of these are minor goals to aim for, and a government that is able to deliver any of these in  the next few years would have done very well.

Prime minister-designate Morgan Tsvangrai began his term of office by pleading for international aid. No doubt a lot of assistance from the world will be needed for years to come. But by making this his first serious indication of what his orientation is to problem-solving, he suggests that he has no vision of Zimbabwe as anything other than a donor-dependent banana republic, on a continent already full of such weak, under-achieving states.

There are many examples in Africa of countries that are darlings of ‘the donors’ for one reason or another, but that are not substanitally ‘developing.’ That requires hard and smart work by the public and private sectors working together, as we have seen from the many examples of real ‘development’ in Asia.

Africa has become so donor-dependent structurally and psychologically that aid has become one of the most insidious ways of preventing African progress, rather than of promoting it. The continent’s best and brightest and its most powerful, people like Tsvangirai, spend more time and energy trying to figure out how to get ‘aid’ from Europe and the U.S. than they do on how to make their economies more productive.

Robert Mugabe’s many sins and errors are well known and do not need repeating here. But one of his legacies will be daring to try to effect the idea that Africans must be masters of their economic destiny, and that they need to contemplate possibly enduring hardship to overcome the interests who would rather keep them dependent and weak. That ideal was soon over-run by cronyism, cynicism and the sheer failure to achieve the noble goals that stirred the hearts of many Africans (and enraged many Westerners for all sorts of reasons.)

But if Mugabe the man is now fading into political oblivion, rejected as a despot, a failure and an anachronism, his original focus on genuine African economic empowerment still rings as true as ever. Due in large part to his own excesses, it will take a long time for the positive parts of his legacy to be separated from the negatives and the failures, but it will happen eventually.

Tsvangirai’s conventional, dull vision of aid-dependent recovery may bring relatively quick relief from the deep economic pain being suffered by Zimbabweans. If so, he will receive the accolades of grateful Zimbabweans who have been reeling from a rapidly imploding economy for a decade. And he will be a hero to Westerners uncomfortable with Mugabe’s sharp, continuous recantations of the need to address the many lingering aspects of the unfinished business of colonial exploitation and oppression, which is ‘ancient history’ to Westerners but very much a part of their present-day reality for Africans.

A West relieved at the exit or (hoped for) sidelining of Mugabe will certainly back up its gratitude to Tsvangirai with all sorts of aid. It will be partly humanitarian, partly ‘thank you Tsvangirai for getting rid of or weakening Mugabe,’ and also a way of making sure the new government is malleable.

But this route to ‘normality’ will not and cannot address the underlying structural economic and developmental issues of countries like Zimbabwe. Who really owns the wealth of the land? From what date in the past do we effect ‘the rule of law’ (such as who owns what land?). What is an ‘equitable’ sharing of riskand profit between citizens and foreign investors? And so on and so forth.

Mugabe made his answers to these sorts of questions very clear. His answers and the way he tried to effect them delighted many Zimbabweans and Africans, as much as they frightened and enraged many Britons and other Westerners. For a whole host of reasons, Mugabe’s populist answers to the deep questions of the post-colonial era have not in the short term translated to the hoped-for results.

This makes it easy for Tsvangirai to come in with ‘I hold the keys to Western aid’ as his main trump card. Even among those who recognise the dangers of this approach, disgust with Mugabe and despair at the hardships of recent years has meant many Zimbabweans look to Tsvangirai’s implied promise of aid-funded relief and ‘recovery’ with anticipation.

This is quite understandable, but it does not in any way solve or remove the underlying difficult issues that contributed to Zimbabwe finding itself where it is now. After the euphoria of achieving a kind of ‘normality’ has abated, these questions will arise again, along with the ghost of Mugabe.

We have the strange situation where in the short recent term Zimbabwe has been very rapidly sliding backwards. Yet in forcing the society to ask difficult questions that go far back into the past with a view to finding answers for the future, the society was setting a stronger foundation for that future. A strong economic foundation partly rests on more risk-taking and wealth-creation by Zimbabweans; more ‘ownership’ of the process of ‘development’ by the locals than we have generally seen in a weak, donor-dependent Africa.

Mugabe largely failed to back up his empowerment rhetoric with practical, successful examples of it. But it is to take the wrong lesson to abandon the dream, rather than to pick it apart for where it went wrong and try to fix it. Tsvangirai would be relieving the immediate problems by attracting a lot of ‘donor aid,’ but not addressing the long-term issues of how to overcome the complex legacies of colonialism (land ownership patterns being just the most obvious one), and how to spur true ‘development’ and empowerment based on production-led economic growth.

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Nothing learned about price controls in many years

Posted by CM on September 2, 2008

The Financial Gazette in a recent issue had an article with the heading Cement firms on brink of closure.

There have been so many of these ‘collapse’ speculations about various sectors  of the Zimbabwean economy over the last ten years that I tend to take them with a grain of salt. Which is not to deny that things are extremely difficult for companies as well as for individuals trying to stay afloat. But the cement industry, and countless others, have been ‘on brink of collapse’ for years now but somehow keep going, holding on for better times.

The immediate cause of this ‘collapse’ story is a familiar one: price controls. For political reasons, government insists on dictating the costs that companies should charge for various goods and services, even if those mandated prices are below the cost of production. It is essentially an order for companies to operate at a loss.

The argument argues that the price caps would have been reasonably imposed to prevent exploitation by businesses able to charge as they like in a hyper-inflationary environment compounded by shortages of many goods.

Of course the arguments on both sides are much more involved than this, but the details of those contrasting arguments are not the subject of this post.

Excerpts:

The selling price of cement is set by the government-run National Incomes and Pricing Commission (NIPC), which accuses companies of hiking prices to foment public anger against President Robert Mugabe’s administration, charges denied by industrialists.

Despite the hyperinflation and a rapidly deteriorating exchange rate, there have been inordinate delays by the Commission in reviewing the price of cement, resulting in the cement price falling well below cost.

The industry, dominated by Pretoria Portland Cement (PPC), Circle Cement and Sino, has been pushed into a situation where it is no longer viable to manufacture cement. Currently, the selling price of cement is less than 10 percent of the cost of production.
The industry, which is the lifeblood of the construction industry, has in the past, and is again, being forced into considerable borrowings from the banks, at punitive interest rates to settle creditors accounts, while the NIPC debates the setting of a revised cement price. These increased borrowing costs will have to be recovered from the new price — thus pushing up the price of cement in the long run, according to industry sources.

“This is not to the benefit of the producers or the consumers,” said PPC finance director Gavin Stephens when contacted for comment this week. “Furthermore, when the NIPC does finally grant an increase, the hike in the selling price is considerable, causing major hardship to consumers. Small regular increments would be of benefit to both the consumer and the producer,” he added.

Investigations by The Financial Gazette revealed that the Commission has in the past approved increases in the prices of power (15, 419 percent), coal (12,700 percent), slag (8,630 percent), rail transport (18,000 percent), gypsum (5,064 percent), which are critical inputs in the production of cement. During the period of these input price hikes, cement price was only let up from $500 a bag to $1 000 a bag.

Industry sources said at the current price, manufacturers couldn’t produce because they cannot afford the input costs.

A property magnate alleged that cement manufacturers were ex-porting clinker, a critical raw material in the production of cement, he-nce the current shortages. Cement producers, it is further alleged, were exporting cliner to earn foreign currency required to import spares and replace antiquated machinery. It is also alleged that cement manufacturers had resorted to charging in foreign currency in order to circumvent the price controls and remain viable.

A bag of cement, which is only found on the illegal parallel market, ranges between US$10 and US$15.

Except for the figures, almost every detail  of this story could have been recycled from 10 years ago. Cement has been available on the regular market only in fits and starts for at least that long, with some combination of all the reasons given in this story blamed for the shortages and the regular, huge price increases.

What is depressing about the situation is its dull same-ness. Seemingly very little has been learned about the most effective ways to do so if government feels compelled to interfere with supply and demand.

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