Fugitive democracy and economics, exclusion of the people


By Dr Tafataona Mahoso

IN the last instalment, I described, from the point of view of current mass media abuses, a growing structure of political and intellectual discourse which is characterised by exclusion of the majority of Madzimbahwe while at the very same time claiming to represent the popular public interest. To take this issue further, it is necessary to start with current examples.
The 2007 US State Department’s Human Rights Report on Africa boasted that US-sponsored ‘stakeholders’ in Zimbabwe were setting up NGOs (dubbed human rights defenders) at the rate of 25 organisations per month.
All this was being done in the name of ‘the people’.
But now, with the ascendancy of Donald Trump as US President and his assault on discredited neo-liberalism and the Washington Consensus of the last 35 years, the same ‘human rights defenders’ are being dismantled almost at the very same rate at which they were set up.
Coming to the economy, readers should notice that the intervening function of sponsored NGOs in politics is parallel in economics and finance by the Word Bank, the IMF and other international financial institutions trying to perpetuate the neo-liberal agenda of the global financial elite often referred to in the West as the richest one percent of the population.
If it is one percent in the West, one can imagine how much smaller it is here.
The main demand from this minority, voiced mostly through the World Bank and the IMF, has been for shrinkage of the demand side of the economy without any reference to its potential and actual impact on the livelihoods of the majority of the population.
In recent months, Madzimbahwe have been subjected to World Bank and IMF prescriptions for our economy which are masked as objective reports.
Consistently and persistently, these ‘reports’ urge the Ministry of Finance and Economic Development and the Reserve Bank of Zimbabwe to inflict deeper and deeper budgetary cuts on the nation and keep a tight lid on inflation without any reference to impact on the people.
What is shocking is how seriously these prescriptive ‘reports’ are taken, especially within the banking sector.
Recently I had a conversation with bank managers who argued that the RBZ was justified in first promising to provide Bond notes and coins in denominations from one to $20 Bond note and later baulking and stopping at $5 Bond note as the highest denomination.
The bankers said they understood and accepted this as necessary to curb inflation and to avoid the perception that Zimbabwe was engaged in ‘printing money’.
Moreover, both the BRZ and the banks were eager to blame the people for cash shortages; saying people were hoarding cash instead of banking it.
But the bankers could not answer four simple questions in relation to their defence of the RBZ:
l First, I asked why a nation’s money or currency should be hoardable? If the RBZ has provided adequate liquidity for what it understands to be the size of the Zimbabwe economy and the legitimate economic activities commensurate with that economy, why should there be allegations or fears of hoarding? Why would adequate money become hoardable? I have travelled in many countries where their central banks provide adequate liquidity and I have never seen their money hoarded to the extent of destabilising the whole system. In fact the motive to hoard money is non-existent because money there is perceived to be more valuable if used for productive purposes than if it is hoarded!
l Second, I asked what the quantitative calculations on the Zimbabwe economy were which first led to the announcement that we would get Bond notes and coins in $1, $2, $5, $10 and $20 denominations. What further calculations led to the stoppage of the Bond notes at just $5 instead of going up to $20 Bond note? If the changes were justified on the basis of an understanding of our real economy, let us have the explanation.
l Third, why was it that the banking sector and the minority were always raising fears of ‘printing money’ ahead of the real glaring fact that we do not have our own money to print in the first place? It is bad enough that people and agencies who justify printing money as ‘quantitative easing’ in the US, the UK and the EU would scare Madzimbahwe who do not have their own money to worry to death about the RBZ ‘printing money’!
Was this in fact not a trick to divert attention from the fact that we do not have a currency of our own in the first place? Is printing money not a problem that should follow the creation of that money in the form of currency in the first place?
Back in early May 2015, I warned readers of this column about the obvious risks the IMF-World Bank-dictated policy of austerity and shrinkage posed for the nation:
l A policy of demand shrinkage and contraction in the face of increased tax extraction has the effect of defeating the national objectives of the President’s mega-projects programme. This is so because contraction and shrinkage in the face of intensified tax collection has the effect of undercutting and even eliminating the would-be partners for the foreign firms bringing in FDI through mega-projects. The foreign investors will have no one to trade with or to sub-contract their operations to once in Zimbabwe, since these potential partners would have been destroyed through contraction, shrinkage and aggressive tax collection. This would force the foreign investors to try to bring in self-contained projects whereby even minor technicians have to be brought in from outside because there are no longer any meaningful local employers to provide the skills and organisational support which could otherwise be sourced locally. The destruction of so many indigenous banks in recent years, for lack of national money, is a perfect example of the collapse of potential local partners for the foreign investor. Lack of cash benefits big companies while destroying small indigenous ones.
l Second, shrinkage and contraction of the demand side in the face of aggressive tax collection have the effect of destroying the social sector of education, health services, medical aid as well as insurance and triggering ‘IMF riots’ which end up scaring away the same valued foreign investors.
l Third, the real purpose of the policy of contraction and shrinkage of the demand side in the face of intensified tax collection is to increase short-term revenue for the purpose of meeting accelerated debt payments at the expense of medium-term and long term national interests and objectives.
l Fourth, the IMF-dictated policies arising from its Staff Monitoring Programme (SMP) will increase mass poverty and inequality by reducing the real incomes of the majority and inducing the povo to borrow money to survive, to pay school fees, medical aid shortfalls and Local Government rates.
l When coupled with the absence of a national currency, the depreciation of the SA rand and the appreciation of the US dollar, these contraction and shrinkage measures have the immediate effect of flooding the country with agricultural and other products from the rand area. While import restrictions through Statutory Instrument 64 have addressed the immediate problem of cheap imports, this does not go far enough. The nation needs an economic growth policy pursued for its own value and as a way of mobilising the population for production, value creation and value addition.
More than one year after those warnings, it is clear that the revenue base has not grown significantly and Treasury still has difficulty funding even the much reduced and inadequate budget of just US$4 billion.
The reason is clear: The policy of austerity and shrinkage precludes an economic growth strategy and it excludes participation of the 14 million Madzimbahwe who are treated as a liability instead of being taken as the very first asset which they really are.
One programme which from the outset treated the people as the very first asset is the Command Agriculture Programme and it is not surprising that the agricultural sector has experienced growth for the first time in a very long time.
That growth is a direct product of increased expenditure on agriculture! The reason for its success is the focus on mobilisation of the average farmer who fully understands the purpose of the programme in terms of popular livelihoods, income generation and even value addition through agro-industries.
It is not surprising therefore that the spirited attacks on Command Agriculture cannot in any way be said to represent the popular view of the people.
It has to be viewed and treated as purely elitist and retrogressive.


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