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It's not sanctions
Peter Bailey, Zimbabwe Independent
July 26, 2007

http://allafrica.com/stories/200707270558.html

Last week the Zimbabwe Independent published an article in which Reserve Bank of Zimbabwe governor Gideon Gono argued that "sanctions were ruining" the economy. Harare-based PETER BAILEY responds:

THE only international sanctions are personal sanctions against individuals. There are no official sanctions by multilateral institutions as far as I am aware. They refuse to assist Zimbabwe for many reasons including the manner in which the land reform programme was instituted.

No one has said that land reform was not necessary but the manner of its implementation was bound to destroy the agricultural base which was the mainstay of the economy of the country.

Perhaps Gono would like to look at the history of this country and appreciate that under full economic sanctions with blockades on oil products this country, without the support of the international monetary institutions, had the strongest economy in its history.

In the 1970s the Rhodesian dollar was more than equal to the pound sterling and effectively worth US$2. There was electricity and water, traffic lights that worked and roads and general infrastructure that was properly maintained. The health and educations services were very good, and one might add that some sectors were favoured by politics but capable of expansion.

Perhaps Gono could revise his thoughts and look at laying the blame for this country's economic problems on some other source.

One of the major contributory factors could be the fixed exchange rates that have now been in existence for some years when the economy has progressed further and further into recession.

When there had to be an adjustment to $15 000 to US$1 to help tobacco farmers and exporters, now we have a government price of $60 000 per litre of fuel in the knowledge that the fuel is approximately US$1 per litre.

The parallel market rate is around $150 000 to US$1. There is a reason why this rate is so set, which is neither good nor sensible, and I am quite sure that this rate would not be acceptable to any international financial institution considering loans to this country. It has allowed the enrichment of favoured persons.

By his own admission, the balance of payments position has deteriorated from US$830 million representing three months' cover to a deficit of US$2,5 billion by the end of 2006. This reflects an excess of imports over exports of over US$3 billion over a 10-year period and it is small wonder that international financiers would not consider Zimbabwe creditworthy.

This situation is not the result of international sanctions but the direct result of internal policies. Internal policies have resulted in the huge reduction in exports from this country including agricultural, mining, industrial and commercial products.

Perhaps Gono should look at all the controls applied by the Reserve Bank as well as the government to examine why many companies cannot export, why they cannot access international credit and why many companies have closed and gone to neighbouring countries. Look at why so many products that were made here are now imported.

In regard to gifts, donations and services offered by non-governmental organisations, these have so often been subjected to controls and interference by the state that they have great difficulty operating under the conditions to which they are subjected.

Many of the problems centre around the control policies of a Marxist-Leninist oriented government. Marxism has not been successfully implemented anywhere in the world.

It was a system geared to making everyone equal with everyone contributing and taking what they needed to live. It envisaged that there would be no money in the system and thereby the means of accumulating wealth would be destroyed. It was a dream and was never capable of successful implementation.

However, the command type economy did allow the politicians to become wealthy instead of the entrepreneurs. It took away the freedom of the people which was not what Marx envisaged.

Gono must share in the responsibility for the inefficiency of operation of the country. He has introduced many regulations that are wasteful and create inefficiency. The controls on bank withdrawals have resulted in businessmen being unable to write a cheques to discharge a debt but making constant trips to the bank to make transfers or obtain money.

Even paying tax is inefficient in that the businessman has to go the bank to transfer money and then go to the Zimbabwe Revenue Authority to obtain a receipt when he could just write a cheque and send it to the tax office.

Every process becomes more and more of a problem and the country is extremely inefficient and wasteful of resources.

The introduction of a state fuel supplier has made the acquisition of fuel both erratic and inefficient. There are queues for many products and services.

The failure to provide electricity and water has created vast inefficiency with many people and businesses needing generators and using vast amount of fuel in the process. The failure to maintain the infrastructure results in the import of far more spares than is necessary.

The importation of products by the Reserve Bank reflects the state of the nation. It is the job of business to import and distribute products and instead of creating work in the private sector the private sector operates inefficiently and below capacity.

Gono highlights many of the facilities that do not work or are inefficient because he says it is due to sanctions. He should look at the efficiency and use of the foreign currency available, the number and type of motor cars that are imported vis-à-vis the need for equipment and production.

How many and what decisions are being made for political and not economic reasons?

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