Austerity For Prosperity: Is This The Right Model For Zimbabwe?

It has now been just over one year since controversial Oxford Professor of Economics Mthuli Ncube took over the reins at Zimbabwe's Ministry of Finance. His plan for a nation desperately in need of answers was the ‘Transitional Stabilisation Programme’ whose mantra is ‘Austerity for Prosperity’. Eight Months into the blueprint and the results so far can optimistically be described as mixed but more accurately as disappointing. The twin deficits bedevilling the current account and budget have largely disappeared, but so have electricity, basic commodities, fuel and a living wage for the majority of Zimbabweans. Theory and reality are somewhat divorced from one another. What’s going on? Is the first African to lecture at the prestigious London School of Economics being too academic with people’s livelihoods? 

Would you inject a patient in a hospital's Intensive Care Unit with a vaccine? Probably not. The ordinary Zimbabwean was already struggling to make ends meet and the taxation-heavy policies government introduced mirrored such a cruel act. The result is that the poor have been impoverished further as prices continue their upward trend against stagnant incomes. By way of ‘Austerity for Prosperity’, the learned professor has seemingly taken a Eurocentric approach to our predicament. The phrase itself is borrowed from Greece but a key difference is that the citizenry of the European nation were not reduced to paupers of the kind we are witnessing in present-day Zimbabwe. In its simplest form, such a policy in economics is mainly applicable in the developed world where tightening one’s belt (austerity) does not translate to tightening the hangman’s noose on the general populous. For example, in a developed economy, austerity would mean reducing the use of your credit card or forgoing your annual holiday; in a developing economy, this might entail being able to afford bread or not – essentially, the difference between life and death. Austerity should not lead to businesses shutting down or turning to the informal economy for survival. Future tax revenues will decline, jobs will be lost, and skilled labor will migrate. (Thus adding to the already-high numbers of Zimbabweans living abroad).

Much optimism surrounded the appointment of the professor to head the nation’s treasury because, in addition to his academic acumen, his global connections in finance would hopefully play a key role in unlocking fresh loans from international financial institutions and increased foreign direct investment (FDI). Little has materialized out of this so far, but the government should not be relying on it anyway. FDI is not a friend of Africa nor is it a solution to her problems. It is a sure-fire way of submitting to neo-colonialism – our liberators didn’t die for this. We often salivate over what riches the outside world can bring us without comprehensively considering what they will take from us when they do. According to Global Justice UK, for every $1 in FDI that enters Africa, about $1.25 leaves the cradle of mankind. This is therefore not a sustainable method of developing the continent. Zimbabwe is not as significant to the global economy as we may think. The world doesn’t need us, and we are adequately resource-endowed as to not need them. FDI has done little for Zimbabwe other than masking poor domestic economic policies and rampant corruption.

In the absence of external finance, it is important to support the local business environment – let’s be “Open for Business” for Zimbabweans. Let’s reduce the tax burden on the people. Zimbabweans cannot continue to simultaneously be the poorest and most heavily taxed people in the region. Exporters need to be supported by the government and not robbed by unfair and inconsistent currency policies. The Zimbabwean working class needs to be paid a wage that will allow them to fend for their families.

At its roots, economics is about the stomach. More precisely, it is about putting food in it. This year it is estimated that 1 in every 3 Zimbabweans is facing starvation, as reported by the United Nations. Adjustments need to be made to government’s plans, hopefully, sooner than later because food is not entering the stomach right now.

"The result of neo-colonialism is that foreign capital is used for the exploitation rather than for the development of the less developed parts of the world. Investment under neo-colonialism increases rather than decreases the gap between the rich and poor countries of the world." - Kwame Nkrumah, Former President of Ghana

"I would rather argue, that we need to mobilise the right mindsets, rather than more funding. After all, in Africa, we have everything we need, in real terms. Whatever is lacking, we have the means to acquire. And yet, we remain mentally married to the idea that nothing can get moving, without external finance." - Paul Kagame, President of Rwanda.

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