NEWS & ANALYSIS

Obama and Zimbabwe

Eddie Cross says the Zanu-PF regime encapsulates all that the US President says is wrong with Africa

Stewing in our own Juice

We have had two events of some significance in the past week. The first was the trip to East Africa by the President of the United States and the second was the midyear review of the economy by the Zimbabwean Minister of Finance. Neither gave us in Zimbabwe any real comfort but they did serve to highlight our difficulties and problems. 

I thought that the Obama visit was very successful and he took every opportunity to hammer out his central message – Africa is on the move, its young people are its cutting edge and new technologies are creating opportunity. America wants to be a partner in this process and will support African efforts to maintain momentum. Corruption and bad government, weak institutions and strong men are holding back the process and leaders, who overstay their welcome, are a liability. 

If you drew up a check list of what Obama said is wrong and right in Africa, Zimbabwe would be able to tick off every single negative and place a cross at every single positive. We are the principle example of a State that has done everything wrong since we gained our Independence in 1980. The fact that we are not a “failed State” is purely a tribute to the character, faith ingenuity, perseverance and tenacity of our people. 

I think the aftermath of the Obama visit will resonate for a long time to come, I liken his visit to the MacMillan trip in the 60’s when he outlined the “Winds of Change” in Africa and I actually had the opportunity to hear him speak in Harare. Churchill’s “iron Curtain” speech in Europe after the Second World War had a similar lasting impact on thinking and the media. The images of Obama speaking in Kenya and then at the African Union and being received like a pop star in both places will be remembered for many years to come. Our contribution to the event was that Mr. Mugabe, current Chairman of the AU, was singularly absent. 

The headlines in a local newspaper after the Ministers midyear review said it all – “Chinamasa Review Gloomy”. But even so, for all its gloomy statistics, it was still far too optimistic in its overall outlook. Revenue to the State is well below projections – of particular concern to me was the 30 per cent shortfall in Value Added Taxation on domestic sales – these highlight the dramatic collapse of disposable incomes since 2013. 

I was discussing this with the former Minister of Finance, Tendai Biti and I remarked that the impact of the 2013 election outcome (now exactly two years ago) was as if the economy had hit a brick wall. In a country with a theoretical GDP of $12 billion – the budget of a small City in the Europe or the USA, capital flight in three weeks of $2,5 billion from the banks and the local stock market is a stunning development. Stocks and shares fell in value by a third and in the subsequent fall out in the financial services industry 40 per cent of all our banks folded with the loss of another billion dollars in Clients cash balances. 

Since July 2013, capital flight has continued although no estimates are available. Recovery in the banking sector has been slow and we have seen a massive expansion in the informal sector driven by further job losses and company closures. This has been reflected in State revenues which, despite a massive exercise to maximise collections, have declined steadily. After running a balanced budget during each of the four years of the GNU, the State has built up local debts of $4 billion since 2013 with the budget deficit spiraling out of control. 

Stocks and shares have continued to decline and it is difficult to see how much lower they can go. Today the stock market barely reflects 20 per cent of real market value and despite this, shows no signs whatsoever of a turn around. In any other country, such conditions would be sending alarm bells off all over the place. Here in this Alice in Wonderland situation, even the IMF and the World Bank remain muted and even support the fiction that the economy is still growing! Why they adopt such a stance is a mystery to all of us on the ground here. 

The Minister admitted a budget deficit of $400 million or 10 per cent of expenditure and 15 per cent of income, but this does not in any way reflect the realities on the ground where local borrowings and a buildup of credit liabilities would suggest a budget shortfall closer to 30 per cent of expenditure. This is simply not sustainable and something has to break shortly. His commitment to reduce expenditure on salaries to 40 per cent of revenues was simply fantasy. 

With over 80 per cent of all State revenue going to meet the payroll, there is very little left over for anything else and between unbudgeted expenditure on travel (mainly related to the Presidents new responsibilities) and security expenditures on equipment, there is nothing left for essential services and capital expenditure is now down to ridiculous levels. One good thing about this is that there is nothing available for patronage and this together with the collapse of the ruling Party, has seriously compromised the remaining pillars of support for Zanu PF. 

So where does that leave us as a Nation? Clearly we are again in a downwards spiral in economic terms. Forced migration is increasing and putting a greater burden on South Africa than it can support. In 2006, this drew South Africa into finding a resolution to our leadership crisis which resulted in greater international support and stabilisation mechanisms, negotiations on the way forward and reforms and then a guided election which failed to resolve the crisis but led to establishment of a GNU and four years of respite. 

The leadership of South Africa today is totally different to that which controlled power in 2006 and it is unlikely that we will see any interventions from that quarter. The rest of the world watches with concern but apart from oblique condemnations by the US President, the global community just watches and waits. We are stewing in our own juice and it is not pleasant or comfortable. 

The problem is that a managed, peaceful and legal transition to a new government to replace the one that has failed so miserably in the past three decades was never going to be easy. Without external intervention along the lines of Kissinger in 1976 or Mbeki in 2007, change in Zimbabwe could become chaotic and violent. 

If the existing centers of power collapse – through the death of key leaders or simply economic collapse, then there could well be a fight for power between the differing war lords that have assumed control in the past few years. They cannot win power by democratic means and this is their only other option – they all have arms and some money and external sponsors. 

If the issue is left to the national consensus then we have the problem that when we all agree on what is wrong and where we want to be in 5 years time, we are faced with the question of how do we get there? Negotiation? Who will force the elite in power to negotiate their own demise? Such change requires the exercise of power and the democrats in Zimbabwe with their civil society partners have only one source of power and if that cannot be exercised in a democratic framework; then on the street and that is what the war Lords fear might happen and they are preparing for that day with potentially disastrous consequences. 

Eddie Cross is MDC MP for Bulawayo South. This article first appeared on his website www.eddiecross.africanherd.com