There are no basic principles of good economic management that Zimbabwe will not break
That, at least, is my understanding. Sadly, because I’m a naive tool, when I saw the headline, “Zimbabwe will grab foreign firms”, my response was positive. ‘Ooh, great’, I thought. ‘Zimbabwe is investing in foreign enterprises.’
I’m still a little sleepy, is my only excuse.
Zimbabwe’s parliament has passed a bill giving local owners majority control of foreign-owned companies including mines and banks, threatening to drive the fragile economy deeper into crisis.
President Robert Mugabe’s ZANU-PF party, which enjoys a majority in parliament, pushed through the legislation today after members of the main opposition Movement for Democratic Change (MDC) walked out in protest.
Mugabe’s government – which critics accuse of plunging Zimbabwe into turmoil by seizing white-owned farms and handing them to inexperienced black farmers – says the bill is part of its drive to empower the country’s poor majority.
“We cannot continue to have a skewed economic environment where our people are not able to fully participate,” Paul Mangwana, the Indigenisation and Economic Empowerment Minister told parliament during the debate.
A few things: first, Zimbabwean voters must be dumber than ours. Mugabe’s been in power (actually in power – not like Republicans are in power) for 27 years now. Who in the hell else ought to be considered responsible? I don’t think the IMF has even done that much damage to Zimbabwe.
Mugabe … has accused some foreign-owned firms of working with his Western opponents to topple his government by unfairly hiking prices and stashing foreign currency proceeds abroad.
That would, of course, also be known as doing business in a country with countless-digit inflation and a habit of the government’s of mandating prices for everything.
Third: fortunately at least one opposing spokesperson understood one of the key rules of developing economies.
MDC legislators argued the law was designed to enrich a few powerful individuals and win votes for ZANU-PF in parliamentary and presidential elections due next March.
“As far as we are concerned, this bill is cast in concrete but I want to urge the minister to reconsider because our economy needs foreign direct investment,” MDC MP Innocent Gonese said during heated debate in which an opposition member was ejected.
Stanbic Zimbabwe – a subsidiary of South Africa’s Standard Bank noted in a presentation to a parliament committee yesterday that only four of the 28 banking institutions in the country were foreign owned, proposing that “the current status be retained.”
Don’t get me wrong – I believe in people over profits, but understand that Mugabe’s policy is precisely the opposite. Poor developing countries, especially utter basket-cases like Zimbabwe, need to follow the few basic rules of stabilisation and attracting foreign capital:
- Increase savings and investment
- Increase investment in education and health
- Stop internal unrest
- Enforce the rule of law
Given that Zimbabweans can’t even afford food, these days, even inflation does not affect the absence of savings. Nor, it seems, can they manage investments in education and health. What remains? Attracting foreign capital that can do that for them. Which will not happen without recognition of property rights and enforcement of the rule of law.
Anyone who thinks my attitude equals colonial paternalism, drop me a line – I have a business in Zimbabwe in which I’d like you to invest.
Meanwhile, of course, the rest of us (Prime Minister Brown notwithstanding), just don’t give a shit. The President in this country cheerfully goes around talking about all the Mandela’s that Saddam Hussein killed (gassed them with all that US aid money and political cover, I suppose). God forbid we could do something about the 2008 Iraq War Budget of USD198bn (and that’s just what they’re admitting to) and start improving Africa. Hell, even the current administration’s criminal Trade Not Aid (they do prefer style over any substance whatsoever, don’t they?) bait-and-switch would still be an improvement.