Fool's Gold and ZimAsset

Gold or diamonds its all there as promised in Zimbabwe's super economy

If it sounds too good to be true-it is too good to be . The Zimbabwean government is promising economic salvation on the back of Zim Asset. Zim Asset reminds old Zimbabweans of the early 1900s, history surely does repeat itself.

In those olden days, The Chartered Company, or  British South Africa And Company (BSAC), promised everyone Zimbabwe had very large deposits of easily accessible, high quality gold. By 1920, it became obvious Zimbabwe did not have this promised gold. The Chartered Company had over-promised and to preserve its investments BSAC had to move heaven and earth to create a 'bread basket' of Southern Africa.

The so called mineral holdings backing Zim Asset, like the mythical King Solomon's mines also supposedly located in Zimbabwe, do not exist in the promised quantity and quality. Zim Asset is a dream built on the myth of 'mineral wealth'. Such fool's gold economics will not deliver development. As demonstrated in the 1920's, no amount of mineral marketing can save a poorly designed economic strategy.

Promising Zimbabwe Economic Budget

Zimbabwe's budget looks promising. It remains the only credible economic planning tool: as it changes tariffs and indicates sectors of the economy favoured for growth by the state. This budget is linked to Zim Asset and takes some stakeholder views into consideration.

Zim government will have a budget of US$4 Billion, out of a GDP of US$15 Billion. In terms of resourcing, this budget shows how the Zim economy is heavilly reliant on the centralised role of the government. Of all the risks indentified in the budget, a risk of  government again failing to deliver is not identified. Markets have no faith in Zimbabwe, as the result of the state itself and its past repeated economic fumbles.

The budget is a sincerely written document, full of commendable aspiration. If the government again fails to deliver, its side of the bargain, Zimbabwe will return to full on economic crisis. Zim Asset seems to be the only tool in this budget; Zim Asset on the other hand will not solve the crisis if bureaucracy, corruption and a lack of transparency re-haunt Zim plc in 2014. The articulate Minister has a battle on his hands, as even he fights to demonstrate his credibility.

Old Systems Die Hard

Rhodesia's economy was based on import-substitution and intense state intervention. On the surface the Rhodesian economy appeared strong, however, below was a clandestine engineered economic ponzi mechanism. Apartheid South Africa subsidized Rhodesia by working with inefficient Rhodesian enterprises as part of their political solidarity. Solidarity between two countries running racial discrimination programs ensured Rhodesia could bust sanctions.

The Rhodesian system guaranteed success for the 3% minority, as the majority earned slave wages and lived in rural poverty. Such an economic system inflated economic outcomes for the 3% minority, this deliberate inequitable infrastructure development system sacrificed future development. As war raged it became apparent Rhodesia's so called 'economic success' exemplified a precarious prosperity.

Zimbabwe has totally ridden itself of Rhodesian style economic policy and practice. It has not engaged import substitution, but a small minority is heavily favored by state sanctioned corruption, patronage and incompetence. Zimbabwe's system is yielding the same outcomes as Rhodesia's: infrastructure is not being developed for the majority and sanctions are in place. With business optimism at Rhodesian lows, only moral force can bring back the confidence required to reignite economic performance.

When The Educated Fail To Write

Films need scripts to stay on course. Plays need scripts so actors know their roles, characters and dialogue. When the script lacks clarity confusion ensues.

Managers depend on the scripting of operational guidelines. The sturdiest organisations have bulky operational guides for everything. One single service operation, in competent banking institutions, has various manuals many pages long to specify: product delivery, service roles and working standards.

Our organisations are depleted as they lack comprehensive practical operational guides. Walking into ZIM corporate and government offices one is aware of the total lack of accountability. Things were different 34 years ago when all organisations had comprehensive written, and applied, practical policy guides. The biggest victim of lacking practical policy guide is the economy. As the policy manuals disappeared, so did Zimbabwe’s economic efficiency.

Jobs, Jobs,Jobs

 Zimbabwe economics Image From Bulawayo24.com

Over 10 000 graduates are capped by President Mugabe every year.

Worse than Shakespearean tragedy, these graduands have no chance of securing formal employment. To be self employed or full time unemployed that is the question.

Unemployment in Zimbabwe is over 75%; without formal experience and opportunity, these 10 000 will be stuck in the inflationary increasing poverty stricken.

I did not get capped by President Mugabe. This for me is a badge of honor, given I could see the economy was headed for colossal failure.Seeing  thousands cheering for cemented policy failure, at graduation ceremonies, reminds me- those who abuse their power and the abused are just as bad as each other. When the oppressed cheer their oppressor, you fear for the country's destiny.

Its all about jobs.Strive Masiyiwa, Zimbabwe's technology mogul, declares job creation is the main indicator of political effectiveness. Mugabe and the current leadership have failed to create real jobs, since 1980.

 The false 'socialist' Zimbabwean economy of the 1980s created 'jobs', by inflating the size of the civil sector. This unsustainable process precipitated macro-economic instability. Mugabe and associates should have encouraged growth in private industry, not nationalization, aka indigenization,which  induces rapid decline of all industrial sectors.

 The Zimbabwe theater continues with a recycling of policies that diminish the country's potential-let all the graduands get capped and keep the cheer up for that!

Bread Alone

People shun religious concepts. In the beginning of modern classical economic theory, morality was the foundation of economic edict. Economics and morality are two sides of the same coin. Economics came from the study of moral economy.

Here in Zimbabwe corruption rules. Being corrupt, and or corrupted, is indicative of immorality. The indispensable correlation between economy and moral state works both ways. Morality facilitates honesty in government and business, inducing a better economy.

You cannot live on bread alone. The economy cannot function well with just farms, machines, workers, factories and inputs. Human character defines the nature of outputs. Criminal tendencies in state and wider society diminish wealth created.

Morality has infinite degrees. Immorality also has its different levels. When the politician, and or businessman, sends stolen/swindled money abroad the economy contracts. This is the worst sort of corruption as it destroys jobs and future productivity. A lesser corrupt individual might keep money within and use it for productive purposes, this is not as bad. Money can be sent abroad through tax havens or the purchase of expensive imported luxury items. At another degree; when proceeds of corruption fuel speculation in financial assets, and or property, this is worse than using proceeds to create jobs and a sustainable economy.

False revolutions

The MDCs dodged a bullet. Zimbabwe’s economy is a minefield. Zimbabweans had unrealistically high economic expectations for MDC T, had it won the election. Like The Moslem Brotherhood and Egypt, had MDC T failed to deliver  jobs, unrest would have ensued.

Imagine 2016, had MDC T won., Zanu agitators and crony security elements would have created havoc. An army with Zanu would have recaptured Zimbabwe. Just like Egypt today, they would be a state of emergency and fighting in the streets. That is not so, Zanu sits on the throne of Zimbabwean economic failure. They are lording over a social time-bomb.

Egypt has released Mubarak. The elected, Morsi, has been detained. Given the security forces had power and Morsi had no leverage over the army, secret police and police, Morsi's removal  was predetermined. MDCs have no leverage over Zimbabwe's military-security complex, economic challenges would have left them exposed. Watching The Muslim Brotherhood dodging bullets helps all people realise they was no revolution in Egypt.

3 Fronts Of Chimurenga 3

Zanu talk of a ‘Third Chimurenga’. This new battle is the Zimbabwean economic and agrarian revolution. However, only Zanu can define the terms of the Third Chimurenga. Only the connected, to Zanu, and Zanu bigwigs are living on milk and honey. The people live in poverty which has been worsened by 33 years of Zanu’s economic misleadership. The Zimbabwean is excluded from open political discourse and the free vote by a repressive state. Apart from hunger and being muzzled, the security forces are bent on using violence to repress dissent.

Chimurenga 1 and 2 were bloody affairs. Tragically all the gains from these two struggles have been negated by state sponsored repression. The vote won after Chimurenga 2 is gone. Repressive institutions from Chimurenga 1 are back, and the new oppressor is african. Chimurenga 3 has become a three pronged attack against the people. The weapons are the state, security force and repressive institutions. Worst of all, economic reform is not won by Chimurenga style etiquette.

'Growth' At The Gates

The economy  is drastically slowing down. This short- term slow down is being compounded by election anxiety. Aid money and soft foreign loans, the country's main sources of funding, have been temporarily suspended pending elections.

Foreign financial markets are in chaos. Other developing countries are seeing investors flee local exchanges. This has caused instabilities and even riots in Brazil. The hard lesson is-you cannot depend on so called short term foreign investment.

Zimbabwe needs real, long-term,  foreign investment to finance working capital, technology and infrastructure. Unfortunately, the sort of investors eyeing Zimbabwe's resources are  for short term gain. They want high 'growth' Zim shares and not long term developmental commitment. Zimbabwe needs real growth in employment, sustainable resource use and local re-development.

Financial calamities in Europe, instability in developing markets and the threat of a US$70 Trillion derivatives market, all  indicate when E.S.A.P 2.0  is offered as a development strategy, this should be seen as garbage at the gates. E.S.A.P part 2 will not be the new 'developmental' program's name, but at its heart will be financial liberalization.

David and Goliath-brawl for Zimbabwe

Elections in Zimbabwe are nearing. Potential violence which typified all past elections is closing in. Apathy and anxiety rule the roost.

Citizens could learn from the story of David and Goliath. This story is about leveraging the qualities of wisdom and courage to overcome barbarous mighty oppression. On the one hand, you have highly geared oppressive forces going against a quest for fairness. If the fighters for fairness leverage their capacity, they will overcome.

After elections the economy will see battle. Industry is devolving and infrastructure is decaying. Debt still remains massive, while taxes are inadequate. Like David, will the citizenry see this as an opportunity rather than threat. David saw Goliath as a big target.

In living we all endure Goliath challenges. Big challenges can be seen either as terrors, or opportunities for courage and ingenuity. In being thoughtful and  fair, we are getting close to living our potential.

Why Zimbabwe Fails.

Why Nations Fail, analyses economic failures. Like every other  modern economics text, it analyses Zimbabwe's economic failure. According to the authors, Zimbabwe fails because the corrupt ruling elite is extracting, or taking, all the wealth and value.

Extractive forces fuel economic underdevelopment. The book is pretty convincing, however, it is overly biased in its analyses of 'underdeveloped countries'. On the other hand, it fails to identify and condemn extractive forces in the USA economy. The alliance of big finance and government is totally pushed to the side. The authors don't see the drag, and negative impact, big USA financial interest has on the US economy, the developed, even developing world.
The authors fail to call out the elephant in the room. Economics impacts politics and vice versa. Every developing country is at the mercy of US coordinated  international finance markets. Rhodesia was sanctioned,  so was Zimbabwe; sanctions facilitate poverty, creating an environment where corruption creates more poverty.

Developing countries are poor, but still pay higher interest rates than everyone else. Debt thus becomes more unsustainable  Not to mention white elephants, studied in the book, are the result of dubious contractors lobbying poor politicians and enticing them with kickbacks. It is no secret; no financier wants developing countries to realize industrial autonomy. International economic strategy ensures countries like Zimbabwe do not realize their potential.

Zimbabwe has corruption. The authors clearly identify Zimbabwe inherited corrupt structures favoring only the 'five percent'. The authors ideas on inclusion leading institutional progression fail to identify the power of policy, and a government determined to deliver industrial development. Historically, these are governments that refuse to depend on aid but facilitate industrial self-sufficiency. Nations fail when they do not industrialize enough and have to depend on other nations. Nations fail when international loans become the only source of income. These failures are part and parcel of a corrupt multinational finance system. It is this system that allows corrupt leaders to squirrel stolen aid abroad. This book completely overlooks the whole financially corrupt international finance system.

Both domestic and international corruption have played a part in Zimbabwe's economic failure. The local elites are doing their bit for the international elites who benefit most  from Zimbabwe's failure.

Zimbabwe Unchained

Broomhilda

Django Unchained has lessons for all. 
Broomhilda, the heroine in distress, is stuck in a world of oppression and exploitation. Like Zimbabwe, she is under perpetual threat.
 All around her are exploiters, money makers and manipulators of all kinds.
 Django, The 'D',  our hero, is on a mission to save her. He learns the ways of the world from a more worldly mentor, and uses his new found skills to save Broomhilda.

The D goes through his training and gets into a violent final confrontation with his darling's oppressors. The moral of the lesson is: it is never easy to change the order of things. Zimbabwe's economic struggle is going to be long and hard. This lesson was repeated in  past chimurengas.
To bring about change in Zimbabwe will require Django's sublimity and guile. Fortunately, it does not require The D's violent heroics. The solution is to stop supporting the oppressive forces economically, politically and ideologically-we learnt that lesson from Gandhi.

The Economics of Transition

Zimbabwe is in crisis. The elections keep throwing up false hope for Zimbabweans.
After every soap-opera election citizens realize ' they is no such thing as a national economy. Neo-colonialism is real'. African greats, from Nkrumah to Nyerere, learnt foreign financial markets hold sway over local development. Zimbabwe's history demonstrates a  legacy of dependence on foreign  debt markets.
Inspired economic historians, like Ibbo Mandaza, dissected the Zimbabwe economy,  post independence. Some honest politicians lived in accord with the Leadership Code(1985); which was an attempt, by ZANU PF,  to build morality and non-corruption among its ranks. All the good presented by scholars, and honest thinkers, was not accepted by greedy government leaders. Instead, foreign influences corrupted decision makers. Policy was built upon preserving old colonial wealth, so as to extract it one day. No creative decisions were implemented, so as  to build for tomorrow.
To realize transition, Zimbabwe needs to move away from its historical aid dependence.

Escaping the pharoahs

Nations need direction. When the Egyptians crossed the Red Sea they had the inspired leadership of Moses.

Debt is a national burden. It enslaves a society and strangles productivity. Zimbabwe owes more than it produces, it is beholden to foreign lenders. Unbridled consumerism keeps the country importing more than it produces. This imbalance worsens the country's burdened  financial position.

No national debt exit strategy has been defined. National leaders are not providing a sustainable economic development platform. No plan has been developed to escape the pharaohs and cross the Red Sea. Worse, politicians are not moral, or inspired enough, to bring about the systemic change the country needs. Instead of developing a  growth plan, the country is driven further into bondage by the misleadership elite.

Defining economics

Economics is broadly defined as being the study of scarce resource allocation by society. Various theorists have various definitions. Practically economics involves choice in the use of resources, and all these choices have consequences.

Everybody is an economist. We all make choices with regards to how we use time, consume, expend mental energy and transact with our fellow man plus environment. Economics has a problem in that it involves everything. Researchers therefore pick and choose what to study.

These 'schooled' economists follow different schools. No school can explain everything-all schools have limitation- schools related to finance make the most money as they serve financial services. This leaves other schools, with valuable lessons to teach, out in the cold.

The Zimbabwe economy suffered hyperinflation as a sequence of following various schools. The Zimbabwe dollar was removed to reduce inflationary pressures that had worsened the availability of resources. Zimbabwe needs to find more applicable schools of economics to suit its unique institutional setting.

As economics involves institutions, cultural beliefs, complex human behavior, historical influences, political forces, human desires and fears, its scope of study is unlimited. What works in one place, like a Structural Adjustment or Austerity Program, will not work in a different socio political setting. Resources might be limited, but ideas are not. Economic schools need to unlimit economic thought in accord with the laws of nature. They is no limit on thought and creativity which fuel human progress and enterprise.

Read widely-they is no limit to understanding the economy. We are all economists.

Development Potential

Zimbabwe's economy has developmental potential. To realize its capacity the state has to encourage manufacture, rebuild the infrastructure and facilitate Zimbabwean enterprise.

  Zimbabwe has resources. Zimbabweans, at home and abroad, have developed a diversity of core skills. Land, minerals, water and other natural resources are in  sustainable viability. They is spare capacity to build markets, industry and essential manufacturing.

Immense challenges confound Zimbabwe. Debt dependency is the biggest impediment to progress. According to the IMF and other commentators if aid or grant flows stopped, Zimbabwe would virtually collapse.

Having no financial resources creates creates a developmental cul-de-sac. Government has failed to deliver sustainable development, as it has become forced into continual short-term budget balancing. To realize manufacturing and real economic growth, debt has to be overcome. Debt addiction and dependency have halted real economic progress.

33 hard years

Something was achieved. 33 years of sheer survival drive is being demonstrated by Zimbabwe's economically repressed masses.
Without a comprehensive Zimbabwean developed policy agenda, the Zimbabwean will continue to achieve less economically.
Corruption, which is linked to poor policy, also needs to be dealt with.
Corruption worsens the economy. As the Zimbabwe economy declines, the corruption grows and festers.
Corruption and poor economy are the result of economic repression.
Zanu PF has run this 33 year house of Zimbabwe hunger.
Without firm action on corruption, the next ten years will be as bleak as the last 33 corrupted years.

Zimbabwe Economics-Missing Link

Industrialization is evolutionary. Economic models will not help the Zimbabwe economy transition from its current supermarket subsistence state. As shown by the USA, UK, Japan, Germany China and Brazil, heavy duty state support in technological development, on top of state financing of core industry, is needed to seed the development of a reasonable industrial state.

Zimbabwe needs to manufacture. Growing industrial output will:

• Reduce the 100% dependence on foreign manufactured goods.
• Improve employment chances for millions who are unemployed.
• Relieve poverty for 90% of the population currently living in absolute poverty.
• Help reduce corruption, crime and rampant poverty-induced immorality.

Even Ian Smith protected industrial capacity, in the midst of sanctions. Smith ensured Rhodesia protected its core industry.

Government needs to rebuild industry. Policy, made by government, should support industry. As productive capital graduates through subsistence, cottage industry, infant industry, core industry and finally heavy industry- the invisible hand of government is needed. Government plays its hand at every stage of industrial evolution. So far, government has seen industry devolve from core infant industry to supermarket: sub- subsistence levels.

Lets work smart. The Zimbabwe economy cannot live on piss poor planning. Zimbabwe economics should engender smart strategies that deliver employment for the masses of Zimbabwe. Zim economics should not be hijacked by populist, pseudo-socialist,  mantras that do not deliver industry and employment . No more half-baked models, the Zimbabwe economy should see results.

Maggie's Legacy

Thatcher is gone. Former UK industrial towns are celebrating. Zimbabweans remember cordial relations that established links between Thatcher's regime and the Zimbabwe government.

Appearances are deceptive. Beneath the facade of Commonwealth lies a web of deception, treachery and theft. The Lancaster House Constitution was the first significant contract signed by Zimbabwe, at independence. This constitution, overseen by Thatcher’s government, deliberately sidetracked land redistribution which was Zimbabwe’s reason for going to war. Stolen land could only be purchased from farming elites at exorbitant, ‘willing buyer willing seller',  rates. All this laid the first roots for future fast-track redistribution and consequent hyperinflations.

Thatcher unleashed UK Banks. Her financial deregulation and cheap state asset auctions, masquerading as neo-liberalism, destroyed UK industry plus mines on an industrial scale. As 1980s, UK, oil revenues increased, the IMF claimed its programs were a success. Zimbabwe was coerced into ESAP related privatisations which drove back industrial development by over a century. On the other hand, UK ‘big bang’ ‘financial neo-liberalism’ has driven Cyprus, Greece, Italy, Ireland, Portugal, Latvia, Slovenia and other nations to deindustrialisation. These countries are at the edge of total financial ruin. Thatcher played a part in the near ruin of Zimbabwe and Southern Europe is at the brink.  Industrial towns in England were totally destroyed and England is mired in recession. For Zimbabwe and Africa, the stage is set for the next scramble for Africa. Sir Mark Thatcher, Margaret Thatcher’s son, will be waddling back to arrange more coups in the continent.

Where is that state, Zimbabwe?

Zimbabwe has the potential. IMF, the World Bank, western and eastern investors are aware of this fact. Plentiful labour and resources mean growth potential, plus profit, can be reaped in future. This makes it doubly tragic that The State has consistently failed to harness real economic growth, over the past two decades. Even the colonial government could facilitate growth, during years of war and economic sanction.

70s growth was enigmatic. After 1973, the whole of Africa started losing industry due to neo-imperial policy and the role of IMF. Rhodesia, former colonial Zimbabwe, had seen years of economic sanction. The repressive regime was, however, able to attract agro and mineral processing industrial investment from South Africa.  Today's repressive regime has even failed to attract productive South African industrial capital. On coming into power, today's state, induced rapid de-industrialization worsened by hyperinflation. The opportunity to reap the country's milk and honey has been squandered, as the ruling regime has failed to come up with effective industrial development programs.

Corruption is a major problem. Poor planning and implementation make a terrible situation worse. Botched indigenisations, five year plans and E.S.A.P, all represent progroms of extermination against the suffering masses. To regain the 70s level of industry, state transparency is needed. The market will not invest productively in an environment of opacity, and corruption, even if that place is the rapid return economy of tomorrow. Only clear win-win contracts with foreign capital, South African businesses especially, can bring about firms that process Zimbabwe's  agro and mineral potential. Regaining our 70's capacity is the first step. Heavy industry will only be attracted when investors see the success of primary processing. Bringing back the rule of law is a responsibility of the ruling regime. The state  has to act and express transparency, in its fulfillment of mandated responsibility. Action speaks louder than words, anything less is treasonous, and the children of Zimbabwe shall have their day in judging the misdeeds of today. Zimbabweans will not remain underclass immigrants, poor peasants and precariat proletariat forever-all because of an incompetent state.