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.