LETTER FROM AMERICA: For Zim it is voodoo economics, stupid
AT the end of the year, I must have a telephone conference with my beloved friend Fabian Mabaya and his wife Happiness of Masvingo. I warned my brother that the year 2016 is a year of reckoning for Zimbabwe’s voodoo economics, and he kindly retorted that we have gone through worse things before.
I applaud his sense of self-assurance.
My encounter with voodoo economics in Jamaica and in Malawi left me shaken to my roots. Of course the imperialists were behind regime change in both cases. Voodoo economists do not appreciate the simple fact that capital investment can take years to mature and that even under the best of circumstances, all business is risky. When these businessmen make profits, voodoo economists think that they deserve a share of the profits, and that business men have no social conscience.
Zimbabwe’s border timber companies started planting pine trees in 1893. The future brightened up for them after the end of the First World War in 1919. Similarly the British South Africa Company did not pay dividends until 1919 and beyond. Mining companies go through similar experiences; their enterprises are capital intensive, an accident or a fire can easily disrupt or shut down their investments.
Finance Minister, Patrick Chinamasa, is waking up to the fact that the truth of indigenisation law. The law allows non-capital actors (fancy word for bankrupt politicians) who want to take over for free a business started by others.
Sitting in smoke-filled grass-thatched huts these stalwart voodoo economists with fancy degrees gotten without too much study fail to understand that the largest Zimbabwean companies took 20 or more years before they made profits. Mazoe Citrus Estates began surveys in 1923 and it was only after the Second World War that their main product, Mazoe Crush, became a national drink.
The timber companies started planting pine and wattle trees in the Vumba Mountains in 1893. They did not realise any profit until 1919.
One banker wrote me: “Ken, it is as if profit is a dirty word. These people hate companies which are prospering.”
Second, these voodoo economists, who wrote the Zimbabwe Agenda for Sustainable Socio-Economic Transformation economic blueprint, believe that they are the originators of social conscience. My mother was a home economics teacher for Globe and Phoenix Mine in Kwekwe. The mine provided accommodation, a hospital and a school, all for free to its workers. The health department regularly fumigated workers’ houses for pests. My mother weighed children in a basket on the look-out for malnutrition. Hungry children were put on Nestle milk diet, for free.
Interference and blackmail drove many businesses away from Malawi. When the late president Hastings Banda was going for lunch, a coterie of vehicles went ahead at noon shutting down businesses. The voodoo economists did not appreciate that if small restaurants miss lunch business, they are done.
Similar practices have surfaced in Zimbabwe. During the ZANU-PF Conference in 2014, youths went around local businesses asking for donations. One butcher told me he had offered a side of beef. Two days later, the youths returned the side, and told him it was too small. They recorded his name in a book of life, provided by war veteran Jabulani Sibanda.
At the end of his contract, an earthmover could not access his US$5 million pay-out from the Ministry of Roads.
The Reserve Bank of Zimbabwe (he told me) wanted him to apply for his money, stating why and for what purpose he needed the money. But that is not all.
The Zimbabwe Revenue Authority (Zimra), had already assessed him taxes on the sum of US$5 million and was charging him penalties for the late payment. I must add that penalties are 80 percent of the original tax assessed.
Any communication with Zimra is like going through a Greek maze. The officers are nice enough, but are full of words, such as turn-around time to communications, the chef will be processing the inquiry, the papers are on the chef’s desk, the boss has just left, but will be back tomorrow, the fax machine is temporarily out of order; after 18 months of this voodoo stuff, I gave up.
I wanted approval for 10 bursaries my company provided for Mucheke High School and for four university students. The law is very clear about that, but Zimra does not read the law. Now I have nightmares, especially at Christmas, angels waking me up, asking about the children’s school fees.
Chinamasa, is tied up in Houdini’s box. Zimbabwe cannot bo-rrow, even from South Africa. The last time Zimbabwe “bought maize” South Africa provided “rolling stock” (fancy word for railroad trucks).
The trucks were not returned and about the loan, they were told kusasa (tomorrow). Zimbabwe owes China US$140 million, of which Chinamasa says $40 million has been forgiven.
Chinamasa will borrow from the African Development Bank, and pass that money to the World Bank creditors, where US$1,2 billion is in arrears. Now, suppose he has borrowed US$1,2 billion and has paid off World Bank arrears, Abracadabra, Hare Krishna, he seeks relief from the World Bank. Zimbabwe stopped payments in 1999.
Now, after 17 years, Zimbabwe wants new loans. If that happens, I will burn my shirt.
The year 2016 will challenge these voodoo economists.
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