Zimbabwe: Could BRICS offer the ultimate remedy?

By Justice Zhou

The 2013 World Economic Forum’s elite juggernaut this week rolled into the Alpine resort of Davos, in Switzerland, as political, economic, business and financial leaders of all creed gather to discuss and try to find solutions to economic and financial problems currently bedevilling the Earth.

But conversely, the global economic downturn and unfolding problems of sovereign debt in the West have prompted the developing world to treat this as a caveat and good reason why they should diversify away from too much reliance on the US and developed European countries for growth and financial resources.

Zimbabwe has become the latest African state to endorse the BRICS— Brazil, Russia, India, China and South Africa — the dynamic bloc of the world’s emerging economic giants that won praise for insulating most parts of the world from the 2008 global economic recession. However, could BRICS offer the ultimate panacea to our economic turmoil?

Thanks to their growing political and economic prowess, many economists and financial honchos now view them—in comparison to Western developed countries and multilateral development institutions —as an alternative source of foreign investment, trade and financial as well as technical support for developing African states like Zimbabwe.

According to the BRICS, the newest alliance aims to achieve peace, security, development and cooperation, while also contributing significantly to the development of humanity and establishing a more equitable and fair world.

In Zimbabwe, the notion of BRICS representing a shift in global power from the West has been overly hyped in political circles and the state press, to such an extent that people on the ground have ended up wondering whether they’re simply being  bamboozled in another one of the latest vote-catching crusades.

The conviction that only the BRICS will be the magic potion to our country’s economic woes has been blown out of proportion, so to speak. And as such, there is need to meticulously scrutinise while backed by hard facts — hook, line and sinker— before we blindly lay into strategies like these.

It would be regrettable if it were to be found that the Zimbabwean coalition government’s decision to lean towards the East and the BRICS was disingenuously framed on autopilot, without regard as to what economic benefits the country will possibly reap.

Zimbabwe’s BRICS approach is laudable if it’s meant to pursue an agenda that’s for the good of its citizenry, en bloc. However, if on the contrary this was just a knee-jerk reaction from a few individuals who felt hard done-by in the wake of stricter Western foreign policies, then we must be operating in a bubble of our own.

Should the likelihood of policymakers having a torrid time trying to make a distinction between genuine policies and petty idiosyncrasies of previous government elements, that might be hell-bent on complicating the whole process, be ruled out? No.

But even so, the domino effect brought about by the global financial crisis, originating from the West, has surely provided some rude lessons to all and sundry about the dangers of excessive dependence on the West. 

President Robert Mugabe might have subconsciously laid the groundwork for this new direction when he launched his “Look East Policy” as a sanction–busting strategy, in response to Western punitive measures slapped on him and his Zanu PF party inner circle. It followed accusations of human rights abuses and his slamming of the door to good governance.

His coalition partner Prime Minister Morgan Tsvangirai, from the rival MDC party, last year added impetus to the “Look East Policy” orientation in magnanimous fashion when he paid a maiden visit to BRICS giant China, which has overtaken Japan to become the world’s second largest economy.

During his landmark trip, Tsvangirai met his counterpart Chinese Premier Wen Jiabao in what has been touted as important towards the cementing of China-Zimbabwe economic and bilateral relations.

As if that wasn’t enough, Mugabe’s Zanu PF called for adoption of BRICS currencies as legal tender in Zimbabwe alongside the local currency and US dollar, to facilitate trade and solve a liquidity crunch  currently plaguing the country.

This came hard on the heels of earlier calls to do the same by central bank governor Gideon Gono, who has faced allegations that he abused his authority at the bank’s helm by carrying out operations that contributed in fuelling the country’s economic collapse.

Zimbabwe introduced the multi-currency system in 2009 to reign in world record hyper-inflation following a decade-long and severe economic meltdown.

But to present a bigger picture, the whole issue about BRICS toying with the idea of introducing a currency swap scheme aimed at countering the dollar as a global reserve currency has for quite some time been subject of screaming news headlines. It was reported recently that he BRICS planned a foreign exchange reserve pool worth $240 billion to buffer against external shocks.

Therefore, the shrill calls for BRICS currency from some Zimbabwean quarters could have been motivated by developments like these.

All that being said, the key question is: By insisting that Zimbabwe leans towards the East or the BRICS alone, are we not setting ourselves into the same trap which many countries found themselves in following the 2008 global economic and financial catastrophe?

Take for instance China’s economic growth, which has retreated from double-digit figures, with GDP forecast to expand officially by 8.5 percent in 2013 on condition that some key reforms will be carried out first. There is no doubt about this being the result of the Asian economic giant having been caught in the rip-currents of sluggish US growth and the Eurozone debt crisis.

Isn’t it that the transport industry labour unrest in neighbouring South Africa —Zimbabwe’s major trading partner — recently sent chills down the spines of local policymakers and the business fraternity when freight haulers could not deliver supplies in the country.

Again, India recently unveiled a slew of curbs on gold imports amid worries that these were helping widen the current account deficit of that populous Asian country to historic highs.

With these facts put under careful examination, it is fair to suggest— just for the record— that while the BRICS will play a very crucial role in serving as an alternative to the West for Zimbabwe, they won’t be the panacea to all the economic problems we currently face.

The simple piece of advice offered by prophetic economists and financial gurus, that Zimbabwe should instead look towards the East, West, North ,South, inwards or in all direction, is something our leaders would hesitate to take much to the peril of our economic recovery efforts.

“Look East” vs “Look West” monolith not good for Zimbabwe’s economy

By Justice Zhou

What chances are there of Zimbabwe turning around its economic fortunes in 2013 and beyond? This must be one of the major questions people are trying to deal with as we look forward to the fiscal year ahead.

I think the gloomy storyline which still portrays Zimbabwe as a hopeless pariah is rather extreme because the situation at present is a stark contrast to 2008, the period when our economy reached the climax of implosion, which was marked by world-record hyperinflation and acute shortages of food and foreign exchange.

However, the fact that little has been done so far in terms of job creation, infrastructure rehabilitation, restoration of production in industry and so forth is inescapable. These continued failures on the part of the coalition government are surely a shot across the bow for paranoid individuals within its ranks.

Year 2013 shows all the signs of great potential, and there is no ideal time to start cleaning up our political act than right now. We have polls and the UN World Tourism Organisation general assembly meeting in Victoria Falls among other events lined up for us during the course of the year.

Take out of the equation reports that the country’s President will weirdly decree that next elections be held without crucial reforms, and it’s all systems go— the missile is ready to blast off!

But unless political sanity prevails, make no mistake, the outcome would be devastating.

When will the monolithic “Look East” versus “Look West” fixation which pervades our discourse and body politic come to an end? It must come to a close primarily because what Zimbabwe needs is to take everyone on board if it is to emerge as a success story on the global stage.

The worst is surely behind us. And with vast tracts of farming land, splendid tourism attractions and a wide array of mineral resources in our repertoire—including deposits of diamonds as well as platinum and gold ores which are considered as mining industry bellwether—aren’t we spoiled for choice?

I was taken aback to learn in the news recently that the government has halted the random acquisition of farms covered under Bilateral Investment Promotion and Protection Agreement as the state  reportedly “strives to manage its liability” following a plethora of legal challenges by dispossessed local and foreign farmers. Lands Minister Hebert Murerwa was quoted as having said so.

When the news broke, many might have digested it with a pinch of salt, for reasons that are obvious.

How miraculous that it has finally dawned on some of our politicians that the promotion of foreign investment and revival of Agriculture are vital for the well-being of our economy. Could it be we now realise that the tide is rapidly turning against us, maybe?

Zimbabwe can no longer pretend to be an island unto itself in these times of globalisation, whereby the planet’s economies are interconnected and nations rely on each for just about everything.

One would assume that we came out of a severe decade-long economic turmoil more battle-hardened and wiser, but alas, at least for those who still hold the habits of the old-regime so dear.

A marketplace of ideas, instead, will come in handy for us and it’s about time media maniacs and irrational politicians stop profiling people based on what ideological rubric they belong in or dictating what policy choices should be treated as holy.

It’s for this very fixation with dogma and treachery that these few elements together with the complicit state press, in particular, find progressive critics continuing to be a real pain on their backsides.
If I am not mistaken, the proponents of the anti-Western economic growth and development strategy argue that Zimbabwe should look no further than the East or sometimes the so-called BRICS group of emerging economies.

I suspect that their beliefs are based on the Marxist-type and now invalidated Dependency Theory.
According to economists, the theory holds that wealthy western economies amass their riches at the expense of poorer countries in the South (or East), representative of a wider plan to keep less developed countries poorer and forever begging  for Western aid.

The theory advocates an inward looking approach to development and greater role by the state in terms of imposing barriers to trade, making inward investment difficult and promoting nationalisation of key industries.

But economists argue that the resultant inefficiencies in the economy and growth in corruption, related to excessive state involvement as suggested by this theory, have exposed such African countries as Zimbabwe.

Such way of thinking is misguided in itself because the BRICS themselves are looking in all directions for development resources to prop their fast-growing economies.

On the flipside, there are those who argue that we must rather solely turn to the developed West (or North) as a strategy to grow our economy or to obtain financial and technical support. Again the advocates of this viewpoint, based on the so-called Washington Consensus, are equally missing it if the impacts of the current global economic and debt crises are to be taken into account.

Renowned Zimbabwean economist Vince Musewe recently put it this way: “ After listening to the economic crisis within the European Union and the solutions that are being promoted, I remain frustrated if not angry, at how we have got things so wrong here in Zimbabwe.

All over the world, presidents …grapple with how to restore economic growth within their economies and how to create more jobs to address the widespread unemployment and poverty.”

Musewe added: “The army has even become an economic expert, and is suggesting that if necessary, we must sit on our mineral resources (e.g. platinum) until they decide who can invest… we must all wait until they get "suitable partners" to partner with them as is the case with our diamonds. Forget the fact that millions of Zimbabweans are desperate for jobs and poverty is increasing by the day.”

So we hear it straight from the experts. This Look East” versus “Look West” monolith will not work for us at all.

Again, the state press stands accused of collusion with the old-school political mavericks in entrenching this polarisation, and of stoking the fires of our economic woes. I personally do not think it is the fault of all the journalists in state news outlets that we find ourselves in this mess.

It simply boils down to the fact that if people operating the state media conduct themselves as a propaganda outfit of some sort, the public will view them as such.

The answer, therefore, to  what chances there are for Zimbabwe to get its economy up and running in 2013 and beyond, lies in us taking stock of how we arrived at where we are today and correcting that. Only then can we brace ourselves for a humdinger of prosperity and higher standards of living we all crave.