Speech given to Open Forum at Bulawayo
The phrase Structural Adjustment is being bandied about so much these days that it seems that it has always been with us. Whilst it is in vogues phrase it is in fact a new one in Zimbabwe at least. The same does not apply to the rest of Africa where many countries implemented structural adjustment programmes years ago. On a recent business trip to Tanzania I learnt from Ghanaian colleagues that the structural adjustment programme was initiated in Ghana some ten years ago and it has not been the panacea everyone hoped it would be. The fact is that some 38 developing countries have in the past few years attempted structural adjustment programmes and the failure rate has been extremely high. Professor Tony Hawkins, a Professor of Business Studies at the University of Zimbabwe recently wrote that “the hard truth is that nowhere in Africa – with the exception of Mauritius – has structural adjustment worked”. In fact in a book published by an Ethiopian author, Fantu Cheru, called The Silent Revolution in Africa, a rather depressing picture emerges about the failures of structural adjustment programmes in Africa. The title of the book describes the silent revolution of lower paid people who have been forced into the informal sector of the economy (including corrupt activities) because they have not been able to survive in the formal sector. All of this does not bode well for Zimbabwe and it is important that we learn from the failures of the rest of Africa as we seek to implement structural adjustment.
But what exactly is structural adjustment? No one to my knowledge in Government has given a precise definition of the term, and I am sure that it means many different things to many different people. We seem to be moving away from a centrally controlled economy towards capitalism and a free market economy. We are seeing a drift from State ownership to African styled privatisation in which the key players are well connected men and women not too far from the seats of power. Government has not actually admitted yet that structural adjustment actually denotes a shift from socialism to capitalism and a freemarket economy. Indeed Government, or rather the ruling party, recently stated that they still believe in Marxist-Leninism which seems to fly in the face of what is actually happening in the country. In my view the term structural adjustment in Zimbabwe is simply a euphemism; it is a convenient phrase to describe the “U” turn that Government is doing. It is just too embarrassing for Government to admit that it has formerly abandoned socialism to embrace this elitist tribally based capitalism.
The next question which needs to be asked as one shuffles through the minefield of political doublespeak is why has structural adjustment been introduced? As I have stated above the term and the policy is relatively new in Zimbabwe. As Jonathan Moyo pointed out in last week’s Financial Gazette ZANU PF ran its l990 election campaign on the ticket of socialism. Its manifesto did not make any mention, as far as I am aware, of structural adjustment and trade liberalisation. I believe that structural adjustment can however be traced back to the l990 elections. Despite all Government’s bluster after the elections that it was a landslide victory etc the fact is that in their terms they took a hammering. The facts of the election are that there were some 4,6 million people registered to vote, less than half the people eligible to vote went to the polls, and Government was forced to add one day to the voting and throw the voting open to anyone who could prove identity in place of residence. Furthermore of the votes cast there were l38 865 spoilt ballot papers and 396 l08 votes for opposition parties. When you add the spoilt ballot papers to the votes for opposition parties and the two million or so people who did not vote at all it is clear that it was Pyrrhic victory.
Added to this is the fact that Zimbabwe’s post independence economic performance has been unimpressive. Per capita incomes today are only fractionally higher than in l980. Unemployment has risen fivefold. Inflation currently exceeds 20%, the balance of payments deficit is closer to 6% of gross domestic product, and the budget deficit l0% of gross domestic product. Foreign capital inflows have been negligible and in l989, investment at less than ll% of gross domestic product was at its lowest level since World War Two.
Given the slide in its popularity and the relatively disastrous state that the economy is in Government has realised that it had to do something urgently and it has latched onto structural adjustment as its saviour. The adoption of the policy of South Africa does not appear to be the result of deeply felt ideological convictions or a change of political heart on the part of Government. It is more an act of expediency and this is an important fact to grasp. The $64 000 question is whether structural adjustment can in fact save Zimbabwe and therefore ZANU PF’s skin.
Recently there has been much talk about the pros and cons of structural adjustment and trade liberalisation. It is a programme that one either loves or hates and there have been strong views expressed both for and against the programme. I hold no brief regarding structural adjustment as such. All I know is that the Zimbabwean economy desperately needs reform. As Professor Hawkins states “Zimbabwe has been a victim of its politicians. For l0 years they managed to achieve a “worst of both worlds” syndrome. The Marxist-Leninist political rhetoric, the threats – promises – to establish a one-party state, to acquire property, and to achieve “socialist transformation” have done untold damage to the investment climate and civil society in Zimbabwe”. Something needs to be done. My concern however as we embark on this new road is that Government, business and to a lesser extent some economists seem to have ignored one of the basic ingredients which will mean the difference between success and failure of the economic reform programme.
In this regard I believe that we can all learn a lot from Clem Sunter’s book “The World and South Africa in the l990’s”. Although Sunter concentrates on South Africa the book is equally applicable to Zimbabwe’s economic future. Sunter points out that when one opens up any economy that process will only work if one can create an environment in which people are willing to work hard. It is such a simple statement and yet it is so profound. A country is not made successful by its laws or its mineral resources or its government. Ultimately a country will only be a success if an environment is created in which people feel like working hard. I believe that as we take a sober look at Zimbabwe in l99l that ingredient is missing. I have never known the morale of common people to be so low as it is at present. Evidence of this is to be found in the recent Municipal elections and the general apathy in the country. Unless Government and ZANU PF in particular strive to create an environment which people are willing to work hard and strives to improve the morale of the country I believe that structural adjustment is doomed to failure.
Sunter believes that there are four conditions for people to be willing to work hard which are:
l. small government;
2. a sound family system;
3. low taxation; and
4. lack of corruption.
This evening I would like to consider two of these conditions:
small government, lack of corruption, and what I would term respect for human rights and democracy. None of these topics deal with economic issues as such. None of them contain formulas how interest rates should be increased or dropped or which products should be put on the open general import licence. However all three topics I believe are essential to the success of our economic reform programme.
Small Government
If structural adjustment is to work we need to have small government not just in terms of size but also in terms of attitude. What do I mean? Peter Pithart, the Prime Minister of the Czech lands in Czechoslovakia recently wrote an article in a magazine called Oxford Today called “Building the State”. The article emphasises the need to reconstruct civil society in Czechoslovakia. He states ” In recent years our political society has been, to put it mildly, overbuilt; it has expanded and occupied the space of the civil society, with consequences which can be described by one adjective only: totalitarian”. Pithart argues that there needs to be a balance in any country between what he terms state society and civil society. If civil society is destroyed or overcome people become limp and the economy suffers. I believe that the same thing has happened in Zimbabwe. The Government and the party has been overbuilt in Zimbabwe. I should stress that I am not just taking about the increase in the size of the public service. I am talking about the fact that ZANU PF has tried to make support for it synonymous with loyalty to Zimbabwe. I am talking about the fact that Government’s tentacles have reached into all sectors of our society so that we now have a plethora of parastatals and Government seeks to control everything from sport to how business should operate. Dangerously the result has been apathy and low morale among our people.
Government now seems to think that it can address this problem by cutting the civil service by 25%. Whilst I believe that this is necessary it is only part of the answer. Let me give you an example of what I am driving at. Clem Sunter, the South African author referred to above, spoke to the Japanese Ministry of International Trade and Industry and questioned what their role vis a vis industry was. They said “We act like a football team coach. We agree on tactics, provide the right environment and make sure that the pitch is in excellent condition. We don’t own the stadium, but we keep it in good shape and those guys out there – they win the matches. They are the champions. We don’t command them, we help them.” Their deeds match their words: Japan has fewer state employees than any other member of the top economies in the world. Government acts in a support role and is the servant of the people not the other way round. The same applies in other economic success stories around the world. In Switzerland, Germany and the United States, the Government simply provides the most favourable environment for business to operate in, and does not seek to unduly dictate to businessmen. Contrast this with Zimbabwe where bureaucrats have so clipped management’s wings that the demoralised private sector risks loosing all initiative, drive and entrepreneurial flair, where we have the plethora of Ministries and Ministers who seem to do nothing other than earn a salary where organisations like the State Trading Corporation have been set up to compete with business, if public funds were invested in ventures that created no new jobs, added no extra value and generated no new capital investment and where ownership and control were given precedence over economic efficiency. Government is overbuilt to the detriment of the business community and the working people as a whole.
Are there any signs that Government intends creating a small government in size and attitude or is even aware that it is part of the problem? I regret that all Government seems to be concentrating on at present is reducing the size of the civil service. The budget is evidence of this and the following examples are pertinent:
(a) There is no indication in the budget that Government has any intention of cutting down the size of the Cabinet. The salaries, wages and allowances paid to the Vice Presidents and the administration of the office of the President and Cabinet rose to $4 780 000,00 an increase of l4,35%.
(b) The bill for salaries, wages and allowances in the Ministry of Political Affairs has increased by 27,58% to
$26 8l0 000,00.
(c) Included in the vote for Public Construction and National Housing are new works of $4 000 000,00 for renovations to State House in Harare and the construction of a Vice President’s residence costing $3 000 000,00. Added to this are buildings for the CIO being built at Zimbabwe House and State House costing $l,6 million.
The point is that if we are going to create an environment in which people are willing to work hard, Government and the ruling party has to lead by example. It is no good talking about belt tightening when $7 million is going to be spent on plusher residences for the President and the Vice President. There is no point in expecting commitment from people when the Civil Service is being cut back by 25% and yet the cabinet is not being cut back by 25%. Why should common people in Zimbabwe be committed to working hard and tightening their belts if they are not being led by example. It is vital to the people’s morale that Government reduces the size of the cabinet immediately.
It is also vital that the morale of the business sector be improved as well. For all the talk of privatisation of parastatals there are still alarming signs that Government still wants to invest in the economy. For example in yesterday’s Business Chronicle there was an advertisement placed by the Zimbabwe State Trading Corporation seeking to employ a branch manager and an accounting assistant for the Bulawayo Branch. The duties and responsibilities of the branch manager include co-ordinating the corporation’s import and export activities in Matabeleland and the Midlands. Clearly Government’s intention is to continue to compete with business and is not prepared to simply act in a support roll.
If structural adjustment is going to work Government must reduce the size of Government and change its attitude towards civil society by pulling back. Why is this necessary? Firstly it makes good economic sense. By cutting back on the number of ministries and cabinet ministers, Government investments and Government in civil society, the budget deficit will be reduced. That means that less revenue has to be collected which means that income tax and other taxes can be reduced thus putting more money into the hands of consumers thus fuelling the domestic economy. Secondly the morale of the people must be lifted as they will think that we are all in this together and that the common people are not the only ones who are being asked to tighten their belts for the good of the country.
Corruption
The second condition necessary to create an environment in which people are willing to work hard is the destruction of corruption in our society. Common sense dictates that where corruption is rampant in society it gives rise to considerable disillusionment amongst the workers and common people. Corruption is present in every society and economy in the world and Sunter simply makes the point that only an open political system minimises corruption in any country. Wherever there are controls almost inevitably corruption will flourish. Whenever Government has its hand in everything almost inevitably corruption will prosper. Wherever there is control of the media corruption booms as control of the media inhibits investigative reporting which is necessary to expose corruption.
From the evidence before me as a lawyer I believe that corruption within Government and Zimbabwean society is rife and that the Willowvale Scandal pales into insignificance compared to the level of corruption now. Weekly I hear of corrupt acts by politicians and big business all of which are well substantiated. In fact I have been trying to work out what comrade means these days – does it mean Communists Only Made Rich After Diddling Economy? We should not be surprised that this is taking place in our society. The statement of Lord Action that power corrupts and absolute power corrupts absolutely is borne out by what is happening in Zimbabwe. The degree of control that Government exercises in Zimbabwe society fuels corruption. The fact that Government effectively controls the ZBC, The Herald, The Chronicle, and if Geoff Nyarota is to be believed, is trying to control the Financial Gazette means that corruption can never be fully exposed in our society. Furthermore the controls in the economy, especially as regards the distribution of foreign exchange, exacerbates the problem. Where people have absolute control over, for example, the distribution of foreign exchange, and no fear of being exposed for exercising that control improperly, corruption will inevitably flourish.
If corruption continues to flourish I have no doubt that the morale of common honest people in Zimbabwe will be further affected. If the morale of common people and the business community is badly affected that will inevitably affect the success of the structural adjustment programme.
Are there any signs that Government is doing anything to tackle the problem of corruption? Regrettably there are no signs that Government has any intention of loosening control of the media, which is the first step in combating corruption. If anything control of the ZBC has been tightened and The Herald and to a lesser extent, The Chronicle, are still Government mouth pieces. The dismissal of Geoff Nyarota and the subsequent resignation of Dr Enock Dumbutshena from the Fingaz Board are disturbing signs that all is not well at the Fingaz. It is amazing how people in this country express their views silently but clearly. When Geoff Nyarota was editor of The Chronicle you couldn’t lay your hands on one. It is now easy to get hold of The Chronicle. When Geoff Nyarota was editor of the Financial Gazette you couldn’t lay your hands on one. I was in Kingstons just this week and there were piles of last week’s Financial Gazettes lying unsold. Obviously the people have passed judgment on the Financial Gazette. Some may be encouraged by the announcement that a new Sunday paper, reportedly backed by Lonrho, is about to be published. I am not convinced that such a paper will lead to investigative reporting if it is backed by a multinational as it will inevitably have to abide by the whims of its master. Evidence of this is given in the British Observer newspaper, which recently ran an article exposing President Banda of Malawi. Pressure was brought to bear on Lonrho and the Observer published two retractions – so much for the freedom of Lonrho controlled press.
I firmly believe that if Government is going to deal with corruption the following needs to be done:
(a) the Mass Media Trust needs to be sold off to the people and the party should relinquish its control over the board;
(b) the ZBC Board should be changed so that it is distanced from the Ministry of Information and becomes a completely separate, independent and impartial body.
(c) Government needs to seriously consider introducing legislation designed to combat corruption. Time does not permit today for me to give examples of what can be done but consideration should be given to setting up a commission of enquiry into corruption which should be chaired by a Supreme Court Judge. Only then will the common people realise that Government is serious about exposing corruption and therefore tackling it. If Government does not adopt these measures corruption will undoubtedly flourish and the morale of the people will be badly undermined – this will impact our structural adjustment.
Democracy and Human Rights
Earlier on this year I wrote an article which was published in the Financial Gazette in which I argued that structural adjustment, trade liberalisation and the economy generally will, in the long term, stand or fall on the degree of genuine democracy brought to Zimbabwe. I am reinforced in this view by an article published in the Financial Gazette last week entitled “Democracy could pull Africa out of Poverty”. In the article a Mr Gerrishon Ikiara, a Kenyan Economics Professor at the University of Nairobi was quoted as saying “a much more free political system is essential if African economies are to move forward. “Economists say that the pro-democracy wave sweeping across Africa from Mali to Madagascar may at last trigger economic liberation and they point out that decades of mismanagement by military dictators and one party autocrats have stifled enterprise and investment in countries south of the Sahara. It is trite that countries with the strongest economies in the world are those with the greatest amount of freedom and democracy. No amount of economic tinkering with structural adjustment programmes will work unless people are free to say what they please, think what they please and to elect the best people for the job.
Is Government and ZANU PF committed to democracy and human rights observance in Zimbabwe? It is a critical question which must be answered as we tread the path of structural adjustment. In my paper written in May l99l I came to the conclusion that despite the lifting of the State of Emergency and the September l990 decision of ZANU PF Central Committee that it would not legislate a one party state, the Government is still not committed to democracy in the true sense of the word. I am reinforced in this view by events which have taken place since May and in particular the Budget. To give a few examples:
l. The Student Academic Community
The University of Zimbabwe Amendment Act l990 was passed at the beginning of this year giving Government absolute control over the University. Minister Karimanzira promised to meet with students but when he met with them he simply dug his heels in. The Act has not been changed and despite calls from various quarters (including The Chronicle recently) Government shows no intention of changing the Act. This has led to the resignation by Professor Kamba and the fears I expressed in May are starting to become a reality. Any expanding economy relies on strong Universities which in turn are producing innovative thinkers. In May I predicted that Government’s attempt to control the Universities would lead to a further brain drain and this is happening now. Not only has Professor Kamba resigned but there was a recent report in the press of the fact that levels of professional staff at the University are dangerously low and that people are resigning left, right and centre. This brain drain will have an extremely negative impact on the Zimbabwe economy and Government needs to repeal the University of Zimbabwe Amendment Act immediately.
2. The Court System
The Constitution Amendment Act ll of l990 has badly undermined the independence of the judiciary in this country. In particular the provision which excludes the right of recourse to the Courts by sellers who feel they have been treated unfairly following the compulsory acquisition of their land not only undermines the Courts but will prevent the large injection of foreign capital we so badly need. As Professor Hawkins has said “The message broadcast to investors at home and abroad is that, under certain conditions, property might be expropriated. This is hardly the message foreign investors want to hear”. Government has shown no inclination to change the Act although it has delayed the publication of the Land Acquisition Bill which may contain some provisions protecting people.
3. Opposition Political Parties
Despite the fact that Government has stated that it will not legislate a one party state there are still alarming signs that Government at the very least still intends introducing a de facto one party state. There are the obvious examples of this intention given in the fact that the media still slavishly follows the party line. But the most damming evidence is given in the Budget itself as evidenced as follows:
(l) Ministry of Political Affairs
Much has been said about the fact that the Ministry of Political Affairs vote was reduced by $l4,7 million in the new budget. The fact remains however that the reduction was effected by reducing the costs of national service and as I have already indicated the actual salaries for people in the Ministry of Political Affairs went up by 27% and the overall budget of the Ministry of Political Affairs (aside from national service) increased from 29,4 million to 33,l million, an increase of just under l3%. If Zimbabwe is committed to a multi party democracy why is some 33 million of taxpayers’ money going to one political party?
(2) The CIO
An interesting provision contained in the vote for the Office of the President and the cabinet is a grant for “special services” of 70 million. The budget estimates state that part of the expenditure on this item will not be subject to audit by the Comptroller and Auditor General. The provision is the vote for the Central Intelligence Organisation. To give you some idea of how this has grown the CIO was first given a vote in l97l/l972 by the Smith Government of $825 000,00. In the Public Construction and National Housing Budget we note that the CIO is constructing buildings in the coming year amounting to $2,36 million. The CIO’s job is primarily to gain information on Government’s opponents. Whilst I concede that the CIO also gathers intelligence on enemies of the state (which I have no quarrel with) its most visible role in Zimbabwe is to report on political renegades. If Government is truly committed to multi party democracy, freedom of association and expression one questions why the CIO budget is so large and has been increased given the fact that the State of Emergency has fallen away, we are formally committed to multi party democracy and that the general political climate in Southern Africa had improved.
(3) Defence Spending
Dr Chidzero in his Budget speech stated, and I quote, “The defence vote remains as the second largest under current expenditure allocations at $l,l45 million, a nominal increase of l0% over the l990/l99l outturn. The increase on this vote has been due mainly to contractual obligations. The vote would have otherwise remained stagnant in nominal terms.” With respect to the senior minister this does not show the whole picture. Firstly the Ministry of Public Construction and National Housing has been granted a vote of 552 million of which over a third has been allocated to the Ministry of Defence in the sum of $l77 million. In the year l99l/l992 the Ministry of Defence has increased its spending on building by just under l6%. Included in building programmes is $6 million being spent on the Harare KGVI Officer’s Mess, $40 million being spent on Five brigade battlefields and $6,3 million being spent on Darwendale Tunnels. To get this vote in perspective one needs to point out that the entire budget for the Ministry of Health for the same period is $28,7 million and the Social Fund to cushion the impact of structural adjustment is at present only $20 million. The actual increase therefor in overall defence budget is ll,l% and the total expenditure is $l,322 billion. This increase needs to be seen in the light of the improved political environment in Southern Africa and the fact that whilst Mozambique is still in turmoil our obligations are now only to guard the Beira and Limpopo corridors. If our external enemies aren’t as threatening as before why are we still spending so much on defence and most of that at home? Is this because Government believes it necessary to keep the army “on sides” in case they lose the wider support of the people? I am not saying that this is the position as I am not well enough informed to make a judgement. However it does alarm me that the defence vote still accounts for over l0% of our entire expenditure and repayments, and that a vast amount of money is being spent on establishing army barracks, officer’s messes and the like within Zimbabwe, entirely divorced from operations in Mozambique.
4. Ratification of International Human Rights Instruments
A further indication that Government is not absolutely committed to democracy and the promotion of human rights in Zimbabwe is given by its appalling record to date regarding the ratification or signature of international human rights instruments. In fact it is ironical that with CHOGM coming up shortly, Zimbabwe has ratified the least number of international human rights instruments within the Commonwealth aside from Malaysia and Brunei. The Zimbabwean Government, ll years after Independence, has still not ratified the international covenant on economic, social and cultural rights, the international covenant on civil and political rights, the convention against torture and other cruel, inhuman or degrading treatment or punishment, the convention on the elimination of all forms of discrimination against women, the convention on the prevention and punishment of the crime of genocide, the ILO convention number 87 on freedom of association and protection of the right to organise, and the ILO convention number 98 concerning the application of the right to organise and bargain collectively. Whilst the ratification of the abovementioned documents do not in themselves indicate that Governments are committed to democracy it is puzzling why our Government has not seen fit to ratify these instruments. Once again it raises the question as to whether or not Government is committed to democracy and the promotion of human rights.
Why is respect for democracy and human rights important to the success of the structural adjustment programme? It goes back to Sunter’s comment that opening up the economy will only work if one can create an environment in which people are willing to work hard. Such an environment is not created if, firstly Government are not accountable for their actions and, secondly, if people do not feel they are free, their commitment to the country and innovation is stifled. If Zimbabwe is to compete in the world economy it needs to be efficient and innovative. Democracy is a vital ingredient for both efficiency and innovative thinking. If people cannot express their views and change their leadership the inevitable result is that corrupt and inefficient leaders will be allowed to remain in power which ultimately will rot the entire Zimbabwean economy. If people feel stifled in their private lives then the chances are that our most brilliant people will either leave the country or become so demoralised that they lose their vision.
Conclusion
From all that I have said above it seems to me as if Government is not intent on opening up Zimbabwe society and is not intent in bringing about a balance between state and civil society. As I said it seems committed to an African style privatisation in which the key players are well connected men and women not too far from the seats of power. If I am correct in this assumption it means that either Government thinks it can successfully turn the economy round in this manner or it is holding on for dear life. In this regard we need to learn from the experience of China and the Soviet Union. Regarding China I recently read an article called “Of Marx, Mice and Men”. The article provided a reminder that China was the first communist country in modern times to tread the capitalist road. As far back as the late l970’s Deng Xiaoping visited Japan and assured his hosts that China was open for business. China tried to do a Japan. When challenged about the incompatibility of communism and the strategy of progress – by – exporting, he said, “it doesn’t matter whether a cat is black or white, as long as it catches mice”. Japanese businessmen studied Deng’s proposals and Japan was soon in the grip of a China boom. By l988 it looked like a thundering success. For the first six months of l988 China’s economy grew at an annual rate of l2% well ahead of the population growth. By the third quarter of l988 the growth in the Chinese gross national product hit l7%, equal to the best results ever achieved in the days of Japan’s and South Korea’s expose of growth. The rest is history. The opening up of Chinese society was simply a facade which was uncovered in June l989 with the violent suppression of legitimate student protest. By the third quarter of l989 China’s economic growth was down to .8% well under the population increase. There is a lesson to be learned for Zimbabwe. Likewise in the Soviet Union Gorbachev’s attempts to tread the fine line between reforms and his communist conservative bed fellows has failed. In Zimbabwe we still call our Ministers Comrades and we have a red star on our flag. It seems as if ZANU PF, like Deng Xiaoping believes that it doesn’t matter whether a cat is black or white, as long as it catches mice. I believe that this is foolhardy. It does matter what type of cat we are. If we are an undemocratic cat toying with economic reform we will fail. We need a cat which has truly abandoned its discredited ideology in word and deed, and which is committed to small government (in size and attitude), combating corruption and the promotion of true democracy.