Zimbabwe promises to provide a classic case study on whether economic necessity forces political change during the course of 2003, according to a leading Zimbabwean academic.
In an article written for Absa’s latest Economic Perspective, Professor Tony Hawkins from the University of Zimbabwe’s Graduate School of Management, says there is a widely held view — “except in government circles” — that the Zimbabwean economy, whose GDP has shrunk by 27% in just four years, won’t be able to survive a fifth year of such punishment.
“Without exception, all of the macro-economic indicators of the Zimbabwean economy paint a picture not only of a rapid, but also an accelerating, economic decline.
“The cost of unworkable economic policies such as an overvalued, pegged exchange rate, stricter exchange controls, a huge fiscal deficit, negative real interest rates and price controls, are certainly going to be devastating, resulting in the widespread closure of businesses and retrenchments.
“In addition, agricultural crop estimates point to a maize harvest of only 700 000 tons, which will be less than 40% of the country’s annual consumption of 1,8-million tons,” Hawkins asserts.
Hawkins adds that a number of lessons can be learned from Zimbabwe’s 23 years of independence.
“One of the key maxims of the New Partnership for African Development (Nepad) is that poor governance undermines even the best economic policies. Good governance is not an optional add-on, but a prerequisite for efficient development policies.
“Secondly, ‘fast track’ land reform is a contradiction in terms. There are no quick fixes in development. Recent African history abounds with examples of IMF/World Bank ‘miracles’ and role models that have run out of steam — Kenya and the Republic of Côte d’Ivoire in the 1980s, Ghana in the 1990s and Zambia, as well as Uganda up to a point, in recent years,” he states.
In any event, land resettlement alone is not a viable strategy for alleviating poverty, he argues. It can contribute to poverty reduction — both in South Africa and Zimbabwe — but the fact that the dramatic advance of agricultural productivity globally, and especially in industrialised countries, has been driven by rapid technological progress, is a constant reminder of the trade-off between growth and equity.
“Thirdly, if economic reform is to succeed, it has to be sustained over a decade and longer — not just a few years. It has to achieve critical mass, extending beyond the often superficial three-year macroeconomic stability programmes fostered by the IMF and World Bank. Successful land reform cannot take place in an environment of weak institutions, deep- seated corruption, macroeconomic instability and the collapse of the rule of law.”
At independence in 1980, Hawkins points out, Zimbabwe had a sound physical infrastructure, a skilled, educated population and strong institutions.
But many of the skills have since emigrated; the infrastructure is decaying visibly and its institutions — the public service, parastatals, the judiciary, the health and education delivery systems and the police — are also deteriorating.
“Institutional decay takes decades to remedy,” he adds.
Hawkins argues further that South Africa, as the one African country that has maintained strong institutions, cannot afford in any respect to follow the example set by its northern neighbour.
“Given its strong institutions and its achievements in restoring macroeconomic stability, South Africa is well placed to implement land reform at a pace and in a manner consistent with maintaining business and investment confidence.
“Finally, above all, it is not possible to ring-fence radical policies, particularly unsuccessful ones. Few doubt that President Mugabe has brought contagion to southern Africa and possibly to sub-Saharan Africa as well. It would be absurd to argue that Zimbabwe’s policies do not pose a challenge to Nepad — not only in the sense of the peer review mechanism, but also because the country’s policies run counter to the rational, orthodox thrust of Nepad’s economic development strategy,” Hawkins states. ‒ I-Net-Bridge