How to manage post-colonial African economies
✑ TINASHE NYAMUNDA` ╱ ± 10 minutes
For one, take economic management out of the control of neoliberal technocrats.
No amount of tinkering around the edges will help.
For one, take economic management out of the control of neoliberal technocrats.
From: Africa Is A Country, Feb. 21, 2019. ╱ About the author
Tinashe Nyamunda is a historian of the financial history of Southern Africa. He teaches at the University of the Free State.
Alot has been written about the failings of the ZANU-PF regime in Zimbabwe since the 1980s. Analyses of economic collapse that correctly and consistently point to the capacity and shortcomings of this nationalist liberation movement-turned-government have centered on its authoritarian rule, maladministration, corruption, neo-patrimonialism, clientelism, political paternalism and violence. Acknowledging initial positives in health and education, land reform and mixed attempts at economic indigenization, other observers have turned towards amplifying what they view as the positives from these experiences. Illuminating as these perspectives are, they are insufficient in explaining the current crisis. They miss a critical point: an assessment of how to manage post-colonial economies.
The politics and predation of the economy by ZANU-PF became the rallying point of the country’s opposition movement from the late 1990s onwards. As the economic crisis escalated into the 2000s, it resulted in hyperinflation and the demonetization of the Zimbabwean dollar. The only brief respite was offered by dollarization, a short-lived moment of the Government of National Unity between 2009 and 2013 but the crisis soon resumed following the controversial 2013 election victory of ZANU PF and its eventual introduction of a pseudo currency: bond money (including electronic money; hereafter referred to as bollars) in 2016. Building on this, the post-coup dispensation of President Mnangagwa argues that it simply needs more time to get the economy on an even keel. But the opposition, now under Nelson Chamisa, who succeeded as party leader following the passing of Morgan Tsvangirai, maintains that it can do a better job. Without elaborating its policies, the current MDC’s policies are not dissimilar to those of ZANU- PF, which has led to increased political, public and academic discourses about the best approach to resolving the enduring crisis.
Characteristic of the crisis has been the consistent problem of managing money. Whereas the early 2000s legacies are associated with hyperinflation, the post 2013 challenges were anchored on a shortage of foreign exchange emanating from constrained production capacity. This is what led to the introduction of bollars by Reserve Bank Governor John Mangudya. But their focus on monetary policy has been ineffective. Even as Chinamasa was replaced by Mthuli Ncube as Finance Minister following the contested post-coup ZANU-PF election victory, the government’s Transitional Stabilisation Programme (TSP) has not worked. If anything, the official maintenance of an artificial 1:1 parity between the bollars and US dollars has caused further structural hiccups in the economy where parallel market rates have depreciated the pseudo currency in excess of 350% against the greenback.
Ncube proposes that the 1:1 bollar to US dollar parity is just an interim measure laying the ground-work for a more stable local currency to be introduced in the near future. Meanwhile, his fiscal consolidation plan to reduce government spending, settle domestic government debts by raising taxes and his plan to pay off international debt lack substance. Economic problems in Zimbabwe cannot be reduced to fiscal consolidation; they are much deeper, historical and structural. Ncube’s neoliberal leanings neglect production issues. On top of unchecked government spending, the economy is not producing sufficiently to generate foreign exchange to achieve equilibrium. There is just no way a country without secure land agrarian tenure, characterized by leakages, money laundering and under-invoicing in its corporate sectors across the economy can run efficiently. The economy displays numerous features of state-capture and rampant corruption that politicians ignore, and until at least some of these issues are meaningfully confronted, no amount of tinkering around the edges will help. If anything, the problems will worsen.
In analyzing these challenges, the works of scholars such as Samir Amin are illuminating. His argument in the first ever publication of the Review of African Political Economy in 1974, focusing on “Accumulation on a World Scale” suggests that the colonial economy was designed to promote development in the metropole and inhibit it in the periphery. These structures were maintained by post-colonial governments in perpetuity. More recently, Alden Young’s book, Transforming Sudan, interrogates the origins of the economic framework inherited by Sudanese policy makers as an Anglo-Egyptian condominium. This framework is anchored on a system of National Income Accounts (NIA). The NIA framework considers the extent to which a country accounts for its Gross National and Domestic Product (GDP), among other indicators. These are the yardstick for measuring the developmental success of government policies. However, wherever they have been ineffective, as in the case of Zimbabwe, the government maintains the performance of seeking economic solutions while deploying the arsenal of patronage and authoritarian rule to maintain power.
The use of such abstraction has its roots in the late colonial period. Starting with Colin Clark’s work published in the 1940s, these statistical tools were adapted from the global North and became the popular mode of economic management in Nigeria in the late 1940s and 1950s. Through the work of Phylis Dean, data was collected for the accounts of central African nations from 1947. But by the time Nyasaland (Malawi), Northern and Southern Rhodesia (Zambia and Zimbabwe respectively) were brought into the Federation of Rhodesia and Nyasaland in 1953; she concluded that the NIA framework would be difficult to implement in an African context. Dean could not measure communal agrarian work done by work parties, children and women easily in monetary terms. She also found it difficult to trace migration wages, for example, because of seasonal employment, lack of traceable work contracts and for economies whose currency were tied to empire. Yet African economic technocrats unquestioningly adopted NIA following independence.
Despite the limitations of NIA, a commission headed by Oliver Stone encouraged the United Nations (UN) to make its adoption by newly independent countries a condition for membership in the organization. To guide the process, the UN created the United Nations Economic Commission for Africa (UNECA). Among its first officials was Chidzero, the future Finance Minister of Zimbabwe. His experience there between 1960 and 1968, and as Deputy Secretary General at the United Nations Commission for Trade and Development (UNCTAD), influenced his work in government between 1980 and 1995.
Zimbabwe adopted NIA conditions for UN membership at independence. Despite its modernization undertones, the NIA framework was problematic. With limited research on NIA in the case of Zimbabwe, the Sudan example is illustrative. Young shows how postcolonial Sudan maintained late colonial NIA structures, thus embedding colonial relations of exchange. This dilemma raises the critical question: what is an economy?
Zimbabwe adopted the same trap at independence. The country pursued policies anchored on GDP performance while trying to sustain a floating Zimbabwe dollar. During white Rhodesia’s Unilateral Declaration of Independence (UDI) era, Rhodesian currency was maintained by stringent exchange controls between 1965 and 1979. At independence, radical transformation was stifled by limitations placed on land redistribution, which could only occur on a willing buyer-willing seller model, and respect for property placed by the Lancaster Agreement. Also, the need to attract foreign investors led Chidzero to adapt what he called a pragmatic approach, avoiding socialist rhetoric and guaranteeing the safety of investments in Zimbabwe. In attempting to settle inherited debt, Chidzero hosted an investment conference in 1981, the Zimbabwe Investment Conference. ZIMCORD, as the investment conference was known, raised just over US$ 3 billion as Zimbabwe. It was expected that despite the limitations of Lancaster, the funds would be a shot in the arm of development supporting a NIA framework predicated on maintaining the economic structure through exports. But by the late 1980s, imports nevertheless outstripped exports and the economy was under severe strain that led it to seek IMF and World Bank support.
Chidzero was at the forefront of pushing for the adoption of neoliberal economic reform espoused by the IMF/WB conditional for securing loans to balance the national budget and recurrent BOP deficits. He adopted the disastrous Economic Structural Adjustment Program (ESAP) between 1990 and 1995. The program was notorious for opening up fragile economies to international cheap imports, undermining prospects of industrial growth and thus weakening their currencies and economies. As Alois Mlambo demonstrated, ESAP eroded the early gains in health and education. Yet successive finance ministers and generations of economists trained on these kinds of economics logic unquestioningly followed the legacy left by Chidzero who eventually died in 2002. The crisis in today’s Zimbabwe was rapidly accelerated by off-budget expenditure on War Veterans payouts and the government’s misadventure in the DRC in 1997, resulting in the rapid depreciation of the Zim dollar.
Ncube’s approach to economic management mirrors that of Chidzero-style technocrats, which exposes a deep ignorance of crucial structural, political and historical antecedents of the enduring crisis. In an economy with more than 90% formal unemployment, under military rule, governed through patronage and violence, policies designed for an industrialized country with near-democratic institutions and systems can never work. The artificial separation between politics and economics and the fiction that politicians can focus on the politics while the technocrats work on the economy is a false dichotomy. Even in the 1980s, corruption, patronage and the heavy financial costs of pursing the Gukurahundi massacre not only cost human lives and caused untold suffering, but also placed a heavy burden on the fiscus. The technocrat that Ncube appears to be, will not turn around the Zimbabwean economy.
Even under the best of political and social circumstances, African economies have other international, historical and legacy impediments that need to be confronted before they can make that turn. While African technocrats are still pursuing dead approaches to economic management, the rest of the world is moving on. There has been a recent global resurgence in interest of African Economic History asking that crucial question: “Why are we so poor?” Diverse international scholars are actively undertaking various interdisciplinary studies that address this question. Ironically, Zimbabwe is one of a handful of African countries with a fully functional Department of Economic History at the University of Zimbabwe, where such questions have been studied for decades, and an amazing group of scholars and students has been produced. Sadly, the state has made no use of this intellectual capital.
Furthermore, there is a big global shift that has prompted a rethinking of economics globally and a movement spearheaded by the Institute of New Economic Thinking (INET) to investigate these issues. The Africa Working Group and the Economic Development Working Groups of INET’s Young Scholars’ Initiative is taking the question of the challenges of Africa to the world. Zimbabwean economic historians have been leading lights in this regard, hosting workshops, conferences and plenaries inside the country and abroad to tackle these issues.
But who is listening?
The politics and predation of the economy by ZANU-PF became the rallying point of the country’s opposition movement from the late 1990s onwards. As the economic crisis escalated into the 2000s, it resulted in hyperinflation and the demonetization of the Zimbabwean dollar. The only brief respite was offered by dollarization, a short-lived moment of the Government of National Unity between 2009 and 2013 but the crisis soon resumed following the controversial 2013 election victory of ZANU PF and its eventual introduction of a pseudo currency: bond money (including electronic money; hereafter referred to as bollars) in 2016. Building on this, the post-coup dispensation of President Mnangagwa argues that it simply needs more time to get the economy on an even keel. But the opposition, now under Nelson Chamisa, who succeeded as party leader following the passing of Morgan Tsvangirai, maintains that it can do a better job. Without elaborating its policies, the current MDC’s policies are not dissimilar to those of ZANU- PF, which has led to increased political, public and academic discourses about the best approach to resolving the enduring crisis.
Characteristic of the crisis has been the consistent problem of managing money. Whereas the early 2000s legacies are associated with hyperinflation, the post 2013 challenges were anchored on a shortage of foreign exchange emanating from constrained production capacity. This is what led to the introduction of bollars by Reserve Bank Governor John Mangudya. But their focus on monetary policy has been ineffective. Even as Chinamasa was replaced by Mthuli Ncube as Finance Minister following the contested post-coup ZANU-PF election victory, the government’s Transitional Stabilisation Programme (TSP) has not worked. If anything, the official maintenance of an artificial 1:1 parity between the bollars and US dollars has caused further structural hiccups in the economy where parallel market rates have depreciated the pseudo currency in excess of 350% against the greenback.
Ncube proposes that the 1:1 bollar to US dollar parity is just an interim measure laying the ground-work for a more stable local currency to be introduced in the near future. Meanwhile, his fiscal consolidation plan to reduce government spending, settle domestic government debts by raising taxes and his plan to pay off international debt lack substance. Economic problems in Zimbabwe cannot be reduced to fiscal consolidation; they are much deeper, historical and structural. Ncube’s neoliberal leanings neglect production issues. On top of unchecked government spending, the economy is not producing sufficiently to generate foreign exchange to achieve equilibrium. There is just no way a country without secure land agrarian tenure, characterized by leakages, money laundering and under-invoicing in its corporate sectors across the economy can run efficiently. The economy displays numerous features of state-capture and rampant corruption that politicians ignore, and until at least some of these issues are meaningfully confronted, no amount of tinkering around the edges will help. If anything, the problems will worsen.
Economic problems in Zimbabwe cannot be reduced to fiscal consolidation; they are much deeper, historical and structural.This raises fundamental question about the logic of economy management in Zimbabwe. There seems to be an enduring fascination with technocrats and general confidence in their capacity to address the country’s problems despite their disappointing record. This can be traced back from the country’s first Minister of Economic Planning (1980-1983) and second and longest serving Minister of Finance, Bernard Chidzero (1983-1995). Despite beliefs that post-independence economic performance was good, the illusion was created by the advances made in the expansion of health and education provision. But in economic terms, the country has consistently been on a trajectory of economic decline, if GDP numbers are anything to by. This is worth examining as the source and endurance of the crisis in Zimbabwe.
In analyzing these challenges, the works of scholars such as Samir Amin are illuminating. His argument in the first ever publication of the Review of African Political Economy in 1974, focusing on “Accumulation on a World Scale” suggests that the colonial economy was designed to promote development in the metropole and inhibit it in the periphery. These structures were maintained by post-colonial governments in perpetuity. More recently, Alden Young’s book, Transforming Sudan, interrogates the origins of the economic framework inherited by Sudanese policy makers as an Anglo-Egyptian condominium. This framework is anchored on a system of National Income Accounts (NIA). The NIA framework considers the extent to which a country accounts for its Gross National and Domestic Product (GDP), among other indicators. These are the yardstick for measuring the developmental success of government policies. However, wherever they have been ineffective, as in the case of Zimbabwe, the government maintains the performance of seeking economic solutions while deploying the arsenal of patronage and authoritarian rule to maintain power.
| "Globalization and its Alternative: An Interview with Samir Amin", in three parts. An interview by Tricontinental Institute, 2018, in which Amin discusses the changing nature of globalization throughout history, and argues for an alternative. |
|---|
The use of such abstraction has its roots in the late colonial period. Starting with Colin Clark’s work published in the 1940s, these statistical tools were adapted from the global North and became the popular mode of economic management in Nigeria in the late 1940s and 1950s. Through the work of Phylis Dean, data was collected for the accounts of central African nations from 1947. But by the time Nyasaland (Malawi), Northern and Southern Rhodesia (Zambia and Zimbabwe respectively) were brought into the Federation of Rhodesia and Nyasaland in 1953; she concluded that the NIA framework would be difficult to implement in an African context. Dean could not measure communal agrarian work done by work parties, children and women easily in monetary terms. She also found it difficult to trace migration wages, for example, because of seasonal employment, lack of traceable work contracts and for economies whose currency were tied to empire. Yet African economic technocrats unquestioningly adopted NIA following independence.
Despite the limitations of NIA, a commission headed by Oliver Stone encouraged the United Nations (UN) to make its adoption by newly independent countries a condition for membership in the organization. To guide the process, the UN created the United Nations Economic Commission for Africa (UNECA). Among its first officials was Chidzero, the future Finance Minister of Zimbabwe. His experience there between 1960 and 1968, and as Deputy Secretary General at the United Nations Commission for Trade and Development (UNCTAD), influenced his work in government between 1980 and 1995.
Zimbabwe adopted NIA conditions for UN membership at independence. Despite its modernization undertones, the NIA framework was problematic. With limited research on NIA in the case of Zimbabwe, the Sudan example is illustrative. Young shows how postcolonial Sudan maintained late colonial NIA structures, thus embedding colonial relations of exchange. This dilemma raises the critical question: what is an economy?
What was transformed in Sudan by the 1960s, was not so much the colonial economy but the people who planned and managed it at independence.As Sudan gained its independence, development became anchored on ways to account for and increase especially the production of cotton to earn foreign exchange as part of its state-building. The country borrowed and constructed roads, rail, dams for hydroelectric and irrigation infrastructure to achieve this. What was transformed in Sudan by the 1960s, was not so much the colonial economy but the people who planned and managed it at independence. So, instead of any significant structural transformation, the concentration with income accounts (read GDP) only led to an entrenchment of colonial economic structures.
Zimbabwe adopted the same trap at independence. The country pursued policies anchored on GDP performance while trying to sustain a floating Zimbabwe dollar. During white Rhodesia’s Unilateral Declaration of Independence (UDI) era, Rhodesian currency was maintained by stringent exchange controls between 1965 and 1979. At independence, radical transformation was stifled by limitations placed on land redistribution, which could only occur on a willing buyer-willing seller model, and respect for property placed by the Lancaster Agreement. Also, the need to attract foreign investors led Chidzero to adapt what he called a pragmatic approach, avoiding socialist rhetoric and guaranteeing the safety of investments in Zimbabwe. In attempting to settle inherited debt, Chidzero hosted an investment conference in 1981, the Zimbabwe Investment Conference. ZIMCORD, as the investment conference was known, raised just over US$ 3 billion as Zimbabwe. It was expected that despite the limitations of Lancaster, the funds would be a shot in the arm of development supporting a NIA framework predicated on maintaining the economic structure through exports. But by the late 1980s, imports nevertheless outstripped exports and the economy was under severe strain that led it to seek IMF and World Bank support.
Chidzero was at the forefront of pushing for the adoption of neoliberal economic reform espoused by the IMF/WB conditional for securing loans to balance the national budget and recurrent BOP deficits. He adopted the disastrous Economic Structural Adjustment Program (ESAP) between 1990 and 1995. The program was notorious for opening up fragile economies to international cheap imports, undermining prospects of industrial growth and thus weakening their currencies and economies. As Alois Mlambo demonstrated, ESAP eroded the early gains in health and education. Yet successive finance ministers and generations of economists trained on these kinds of economics logic unquestioningly followed the legacy left by Chidzero who eventually died in 2002. The crisis in today’s Zimbabwe was rapidly accelerated by off-budget expenditure on War Veterans payouts and the government’s misadventure in the DRC in 1997, resulting in the rapid depreciation of the Zim dollar.
Ncube’s approach to economic management mirrors that of Chidzero-style technocrats, which exposes a deep ignorance of crucial structural, political and historical antecedents of the enduring crisis. In an economy with more than 90% formal unemployment, under military rule, governed through patronage and violence, policies designed for an industrialized country with near-democratic institutions and systems can never work. The artificial separation between politics and economics and the fiction that politicians can focus on the politics while the technocrats work on the economy is a false dichotomy. Even in the 1980s, corruption, patronage and the heavy financial costs of pursing the Gukurahundi massacre not only cost human lives and caused untold suffering, but also placed a heavy burden on the fiscus. The technocrat that Ncube appears to be, will not turn around the Zimbabwean economy.
Even under the best of political and social circumstances, African economies have other international, historical and legacy impediments that need to be confronted before they can make that turn. While African technocrats are still pursuing dead approaches to economic management, the rest of the world is moving on. There has been a recent global resurgence in interest of African Economic History asking that crucial question: “Why are we so poor?” Diverse international scholars are actively undertaking various interdisciplinary studies that address this question. Ironically, Zimbabwe is one of a handful of African countries with a fully functional Department of Economic History at the University of Zimbabwe, where such questions have been studied for decades, and an amazing group of scholars and students has been produced. Sadly, the state has made no use of this intellectual capital.
Furthermore, there is a big global shift that has prompted a rethinking of economics globally and a movement spearheaded by the Institute of New Economic Thinking (INET) to investigate these issues. The Africa Working Group and the Economic Development Working Groups of INET’s Young Scholars’ Initiative is taking the question of the challenges of Africa to the world. Zimbabwean economic historians have been leading lights in this regard, hosting workshops, conferences and plenaries inside the country and abroad to tackle these issues.
But who is listening?
| Top image: Following the tracks from the Zimbabwe border to Zambia at sunset. From: Youngrobv / flickr |
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