Zimbabwe Review

Reflections on Zimbabwe

Posts Tagged ‘productivity’

What the African experience should teach us about economic ‘transformation’

Posted by CM on January 8, 2008

This article was featured on South Africa’s Moneyweb almost a year ago now, but it is timeless:

James Myburgh
07 March 2007

In Business Day Professor Sipho Seepe began an article on Black Economic Empowerment with the claim that: Postcolonial experience indicates that political transformation is meaningless unless it is underpinned by economic transformation.” One does rather wonder which particular African country’s experience Seepe was thinking of when he made this peculiar observation:

Was it, for instance, Tanzania where Julius Nyerere transformed the economy by nationalising the whole thing in 1967?

Or was it Kenya where the economy was gradually transformed, from 1967 onwards, by slowly squeezing the Asian (Indian) population out of the economy (and the country) through the application of restrictive trade-licensing and citizenship laws?

Was it Uganda where Idi Amin suddenly transformed the economy through the simple expedient of expelling the entire Asian population? In August 1972 Amin simply announced that they all had to leave the country within ninety days. This action had been precipitated by a dream, he said, “that the Asian problem was becoming extremely explosive and that God was directing me to act immediately to save the situation.”

Was it Zambia where Kenneth Kaunda’s “Zambian Economic Revolution” saw the takeover of smaller outsider-owned firms and businesses in 1968, the nationalization of fifty-one percent of the big mining companies in 1969, and the expropriation of the other forty-nine percent in 1973?

Was it Zaire where Mobutu transformed the economy in 1973 by ‘Zaireanising’ it? According to Michela Wrong he simply declared that all “foreign-owned farms, plantations, commercial enterprises – mostly in the hands of Portuguese, Greek, Italian and Pakistani traders – should be turned over ‘to sons of the country’.” This was followed by the confiscation of largely Belgian-controlled industrial sector.

Or was it Zimbabwe where the economy was finally transformed through the dispossession of the (largely white) commercial farming class?

(One of the few countries in post-colonial Africa which did not try and ‘transform’ its economy, but grew and nurtured it instead, was Botswana.)

“Experience” is defined by the Shorter /Oxford English Dictionary/ as “the observation of facts or events, considered as the source of knowledge.” And, if the facts and events of the last fifty years indicate anything, it is that the pursuit of complete economic ‘transformation’ has brought severe decline to the African continent.

It is worth remembering that many post-colonial African countries were doing pretty well, kind of like South Africa is doing today, up until the point at which expropriation took effect. As Wrong writes of Zaire: “Until Zaireanisation, the economy had grown by an average of 7 per cent a year. Look at a graph of just about any indicator and there, in 1974, is the sharp peak, followed by a long, slow, unstoppable swoop that continues to this day… Before Zaireanisation, corruption, while a problem, had seemed to observers on a par with that witnessed in many other emerging African states. But in the generalised climate of impunity created by this botched economic experiment, sleaze…was about to become the most striking characteristic of Zairean society.”

The reasons why these acts have been so uniformly destructive to Africa were set out by the economist P.T. Bauer a couple of decades ago. Bauer’s argument, as summarised by Amartya Sen, was that the extensive politicization brought about by this kind of large-scale redistribution “diverts people’s energies and ambitions from productive economic activity to politics and public administration. It also encourages attempts to benefit from politically-organised redistribution, or to escape its consequences. An even more evident result is that these policies systematically transfer resources from people who are economically productive to others who are less so.”

This kind of crude redistribution also requires the rulers to abrogate for themselves extensive coercive powers, and to dilute constraints on their actions such as property rights and the rule of law. Thus, although the original intention is to create a more equal society, the actual effect is to exacerbate the “inequality of power between rulers and subjects.”

The article speaks so eloquently to the current Zimbabwe situation that it really needs no commentary.

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Zimbabwe among world’s least competitive economies

Posted by CM on December 12, 2007

Zimbabwe has been named among the worst competitive countries in a survey of economic competitiveness across the world.

The troubled country, which showed so much promise until just a few years ago came out close to near bottom – with a ranking of 129 out of 131 surveyed economies under the World Economic Forum (WEF)’s Global Competitiveness Index (GCI) for the period 2007-2008.

The dismal rating shows a sustained slide in the economic competitiveness stakes for Zimbabwe, which ranked 112 in the last GCI index for 2006-2007.

Also competing for stakes at the bottom of the index were countries primarily in sub-Saharan Africa, such as Mozambique, which ranked 128, Burundi, a point behind Zimbabwe and Chad, which anchored the index at 131.

In Africa Tunisia topped the rankings followed by South Africa, which despite showing strong economic growth lost out to rivals from 36th position last year to 44th this year. Morocco followed up at 64 and Botswana at 76.

The US regained its status as the world’s most competitive economy rebounding from sixth place last year and knocking off Switzerland from the top spot owing to strong innovation and excellent universities. The Swiss were second this year, followed by Denmark, Sweden, Germany and Finland.

Zimbabwe, which is grappling with an agonising eight-year economic catastrophe, has been scoring poor marks on all recent global economic indices. In September the country ranked 31st out of 48 countries surveyed in the inaugural annual Ibrahim Index of African Governance, published by the Mo Ibrahim Foundation.

Financial Gazette_Nov7_2007


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