Past Legacies and the Challenges of Transition in Africa II

Published on 29th October 2012

From Liberation Movement to Government: Past Legacies and the Challenges of Transition in Africa  Case Study: Zimbabwe

Not all Zanu PF policies in the 1980s failed. A more worthy wealth redistribution initiative launched a much-needed improvement in education. Although former Rhodesian governments had achieved a better standard of education than had any other African country, the system’s major shortcoming was that too small a percentage of junior school pupils could find places in the limited number of senior schools. Mugabe promised that senior school places would be created for all children and that the State would bear all the costs of tuition for all children.

With considerable help from donor countries and aid agencies, the education promises were kept. By the mid-1980s, tens of thousands of well-educated young people with high hopes were offering themselves to the employment market. Unfortunately, with the handicaps imposed on the business sector still very much in place, jobs to absorb more than a fraction of the school-leavers were simply not being created.

These continuing constraints on the business sector, especially price controls, shortages of foreign currency and threats of eventual take-overs by the Marxist-Leninist State, showed every sign of continuing to discourage the investment needed for employment growth. Very few companies could maintain apprenticeship or other training programmes, and that problem was made worse by new regulations that allowed government to choose which young people would selected for apprenticeship training.

Towards the end of the 1980s, the numbers of high school graduates was topping out above 100 000 a year and the lack of employment opportunities had become politically embarrassing. After advice was sought from various institutions, the World Bank presented a very reasoned argument that was to place the country onto a new development path. 

World Bank economists were able to persuade government that investment was needed for employment creation, but that domestic investment depended on savings that, with high taxes and price controls, were too difficult to accumulate. Obtaining foreign investment instead depended on competing successfully for foreign investors, but they preferred to avoid countries that imposed controls on almost every form of economic activity.

Investment flows, said the World Bank, also depended upon confidence that ownership would not be threatened, so it recommended that government should abandon its business nationalisation plans.

With offers of financial assistance, the World Bank proposed a programme of trade liberalisation measures that was conditional upon government keeping its promises to reduce controls, and also to reduce its own budget deficits as these were “crowding-out” business activity. The plans were accepted, and when the terms became known, Zimbabwe enjoyed an upsurge of investor interest.

To keep the budget deficit from rising above three percent of Gross Domestic Product, the World Bank advised the government to shed the employees who were not needed. This, they argued, should not be difficult because many of them had been employed to enforce controls that were to be abandoned, and the expected surge in economic activity was expected to create many job opportunities that would soon have them back at work.

Government agreed, World Bank money arrived, the first of the measures were introduced and business began to warm to its new freedoms. With price controls being lifted and access to more imports, the business sector in 1990 enjoyed the first flush of real optimism it had seen since independence.

Government then announced its proposed 1991 budget. Contrary to the agreed plan, this showed that it intended to raise a substantial sum to fund another large budget deficit. The World Bank was most displeased, and their reasoning soon became clear: when government loan stock was offered to the market to fund the deficit, the private sector ignored it.

With trade liberalisation and the removal of controls, every business and all the institutions were looking forward to investing their funds in ways that were much more exciting than waiting for Government Stock to mature.

Further attempts were made to sell government paper, but they also failed. Government officials delivered a plea for help to the World Bank. But as the terms of their agreement with Zimbabwe had been breached, the World Bank decided that Zimbabwe had disqualified itself and the country’s request for more help should be denied. Try the IMF, they said.

The IMF said they could certainly help, but warned that the conditionalities would be a good deal tougher that the terms set by the World Bank. They amounted to very much more than the already difficult instructions to get rid of subsidies and controls, to cut the size of the public sector, to cut taxes and to reign in the budget deficit.

To this list, the IMF added, among other things, a substantial devaluation, the abolition of the import licensing and allocation system and the privatisation of Zimbabwe’s loss-making parastatals. After much debate, the IMF’s Economic Structural Adjustment Programme was adopted.

As import licences were abolished, as price and rent controls were removed, as taxes were reduced and as investment regulations were greatly simplified, business conditions improved enormously. New housing schemes were started and new shopping malls were designed around the rising numbers of retailers who at last had access to imported goods.

But not everybody was happy. A severely dissatisfied group was soon to emerge and its members were those who had lost their income from the sale of foreign exchange allocations and import licences. These former recipients of substantial handouts were left out in the cold.  But they claimed that their entitlements were not being respected so they formed themselves into a militant war veteran’s pressure group. The initial responses they received angered them and by August 1997 their patience had run out.

They confronted Mugabe himself and, to make up for their lost incomes, they demanded pensions for the rest of their lives. Also, they demanded substantial gratuities to make up for the lack of support they claimed had been shown in previous years. On top of all that, they demanded free farmland.

For reasons that became the subject of some speculation, Mugabe felt obliged to concede to all their demands. But finding the money for pensions and gratuities proved to be a serious problem, specially as nearly twice the number of people expected presented themselves for registration as war veteran pensioners. Additional taxes were proposed to help raise the amounts, but these led to street riots, so the government was forced to seek other options. It ended up raiding the proposed capital expenditure budget for some of it, and it simply printed the rest.

Mugabe’s land acquisition plan proved more difficult. His initial demands were that large-scale farmers should relinquish five million hectares of the eleven million hectares they were farming. Specific farmers were identified, Land Acquisition Orders were served and an initial batch of a few hundred farmers was ordered to vacate their land.
However, the farmers challenged these orders in court, claiming that their property rights were protected by Zimbabwe’s constitution. The courts agreed and declared the Land Acquisition Orders to be ultra vires the constitution.

These court decisions so angered Mugabe that he started making arrangements to replace the constitution. The new one, which had to win the approval of the electorate in a referendum, was duly prepared and it contained clauses that would formally and legally empower him to dispossess landowners. However, the referendum rejected the new constitution.

This made Mugabe even angrier. His responses to it were, first, to use his parliamentary majority to pass constitutional amendments that legalised his right to confiscate land and, second, to declare that commercial farmers would be forced to relinquish, not five million hectares, but all eleven million hectares. Thirdly, he set about replacing all the judges who had defied him.

The events that followed devastated Zimbabwe’s economy. But because Mugabe believes the electorate has since shown him deep disrespect by voting against him is several elections, he feels nothing for their hardships. He now holds the population in contempt and is eager to see it punished and disciplined. Other tactics are being used to render powerless the opposition parties, the very existence of which he treats as an insult.

What is particularly insulting about the Movement for Democratic Change, the principal political challenger, is that it originated from the trades union movement. Morgan Tsvangirai is the former leader of the Zimbabwe Congress of Trade Unions. Mugabe’s reactions against his challengers suggest that he firmly believed that they were his most loyal supporters.

So great was their loyalty, they had not ever thought of joining the ranks of reward-seekers, but that is where the clue to their behaviour can be found. As has happened in the transitions from liberation-movement-to-government-to-rejected has-beens in a number of other countries, it is the workers, whose prospects, then job security and finally self-respect, are trampled by the transfers of so-called wealth needed to keep the patronage machine running.

To be continued.

By Mr. John Robertson

During a conference on the mostly unsuccessful progressions from independence to democracy experienced by most African countries. The Brenthurst Foundation sponsored conference was held in  Italy at Lake Como.

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