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How
to put Zimbabwe back on its financial feet
Norman
Reynolds, Business Day
August 21, 2007
http://allafrica.com/stories/200708210261.html
OVER the next 10 years,
the international community will have to pour vast sums of money
into Zimbabwe. Immediately, Zimbabwe requires at least R900m just
for food. To also cover fuel, electricity, medicines, other essential
imports, and to fund rand civil service payments, the figure would
be about R8bn - until December. The Zimbabwe "bill" for
humanitarian and recovery costs will come to at least R300bn from
next year to 2012. If Zimbabwean refugees were welcomed and used
in SA for the next three years to build our faltering economy and
services, and if there was a proper currency, transfer and payment
system to Zimbabwe, they would provide about a quarter of that R300bn
bill direct to their families inside Zimbabwe.
If SA plays a leading
role, it can restore the New Partnership for Africa's Development
vision and the promise of the African Union. It can demonstrate
a "failed state" programme able to be used elsewhere in
Africa, including in SA's marginalised townships and rural areas,
and provinces such as Eastern Cape, which still hold the majority
of citizens as economic prisoners.
A "recovery"
programme has to be built upon the quick realisation of economic
and social rights. People must become "competent" immediately
- that is, be able to look after themselves, their families and
to contribute to their communities.
Below, I outline a humanitarian
and recovery plan prepared by a colleague and me for the Zimbabwe
United Nations (UN) Country Team in 2003. It uses all foreign aid
and transfers strategically to rebuild the modern economy, with
the local rand equivalent supporting a community-based economic
and social rights programme of the kind recently approved for SA
by the government under a new Local Economic Development programme.
The programme is called the Sustainable Community Development Programme.
Citizens are invited
to mobilise and to register in community trusts formed at village,
neighbourhood and street level. They are then given resources enabling
them to act as partners of the government and business in development
and service delivery, and in the realisation of high local income
multipliers (local cash circulation).
Child rights are set
at R400 a child under 18 each month. Of the payments, 30% goes to
pay school fees, 10% to the community trust and the balance to the
parent/local supplier for food. In this way, the money circulates
locally three to four times, activating and rewarding local economic
production in a market differentiated from the national market.
Investment rights, worth
R2000 per adult a year for four years, are paid to each community
trust for each registered resident adult. The money is used jointly
to build local productive capacity, such as gardens, irrigation,
improved grazing and woodland, rental housing and other infrastructure,
and to finance individual crop production and food processing. Member
labour contributions will double the cash value of the investment
rights.
The total annual cash
infusion into a community of 1000 adults and 1000 children under
18 would be R4,4m. To this, the adults would add about R3m worth
of labour. The local income multiplier would rise from around a
pathetic 1,4 or so at present to between three and four. The total
annual local economic activity generated a year would be about R16m,
or R32000 for a family of four. Total investment would be R5m a
year or R10000 a family.
This surge in "unlocked"
local energy and investment would drive the national gross domestic
product at least 3% higher each year. As important, in contrast
to the International Monetary Fund balance of payments route, which
sells the country at a discount to foreigners, it would first build
local demand to reward the revival of neighbourhoods and then of
companies, ensuring that all Zimbabweans are active participants
and owners locally and nationally.
Strategic use of the
considerable foreign exchange (forex) provided by the international
community and the Zimbabwe diaspora would be managed through a series
of forex "windows". The first window would aim to back
exporters, so that the forex provided is first multiplied. For instance,
tobacco used to earn $12 for every $1 it took to grow the crop.
Mining, tourism, some industrial production and all of agriculture
earn forex. The funds in this "window" would not be auctioned
- they would be "sold" at a price agreed on by the donors
and the reserve bank.
Any forex surplus to
the first window would be passed to a second "window"
through which national essentials such as fuel and medicines would
be bought. This would act to keep the cost structure of the economy,
and inflation, down. Any further forex surplus would go to a third
window, which would auction it for use by domestic producers. A
fourth window would auction small surpluses for private use .
The use of economic and
social rights programming, within a strong "localisation"
model to balance "globalisation", would allow Zimbabwe
to come under a form of United Nations/African Union economic and
social trusteeship. It would guarantee that all citizens were economically
active and secure .
* Dr Reynolds is a development
economist.
Please credit www.kubatana.net if you make use of material from this website.
This work is licensed under a Creative Commons License unless stated otherwise.
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