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Interview Tendai Biti on MDC-T policies (Part 1)
Violet Gonda, SW Radio Africa
May 24, 2013

SW Radio Africa’s Violet Gonda brings you the first in a two-part interview with Finance Minister and MDC-T Secretary General Tendai Biti. He outlines how an MDC-T government will tackle the party’s indigenization policy and restore Zimbabwe’s industries, including the diamond sector, which Biti says has lost $4billion through theft in the four years he has been Finance Minister. He also talks about how the MDC-T intends to repay the country’s $10.7 billion debt and how they will establish an accountable state, after so many years of political instability.

Violet Gonda: My guest on the Hot Seat programme is Finance Minister and MDC Secretary General Tendai Biti who will talk about his party’s policy document that was unveiled at the MDC’s 8th annual policy conference in Harare last week. Welcome on the programme Mr. Tendai Biti.

Tendai Biti: Thank you Violet

Gonda: First of all, what are the key aspects of this document, the policy document?

Biti: It’s a defining paradigmatic document in the sense that, number one it seeks to address a mischief and that mischief being the 33 years of worst, of abuse, of misdirection, of coercive, exclusive economic policies that have been addressed by Zanu PF. So it is addressing the past. Then secondly it is seeking to consolidate the decent work we have done in the inclusive government, particularly the issue of macro-economic stabilization. And then third it seeks to redefine a new path of growth, of upliftment anchored in a democratic developmental model of development. So from that point of view it is a unique document.

Gonda: So how exactly are you, as a party, going to address the issue of macro-economic stabilization?

Biti: Macro-economic stability is simple. Macro-economic stability refers to what I can call for lack of a better word, the economic vitals of a country. Just like a human being has bodily vitals like your body temperature, your blood pressure, your heartbeat. So macro-economic stability refers to issues such as inflation, your rates of inflation, your growth rates, your current account, your balance of payment. So these things, particularly from our experience in government, require common sense, require decency, require discipline. You don’t have to be a rocket scientist to understand that inflation harms you. We Zimbabweans lived in an era, which got us to a point of 500 billion percent inflation by December of 2008 and 231 million percent by July 2008.

So in respect of macro-economic stability, firstly there must be a social open market system where supply and demand sets pricing policies. We’ve done that in the last few years and we have seen the stabilization of prices. Our inflation has been averaging three percent in the last five years and we will continue doing that.

Number two we have liberalized interest rates in Zimbabwe. During the crisis years, interest rates were kept artificially low because the government was borrowing a lot through treasury bills. We have hardly borrowed from the market in the last few years and interest rates have remained positive and market determined.

Number three is the issue of supply side recovery because supply side recovery is so key to macro economic and here there are a number of things that the MDC will pursue which are fundamentally different from Zanu PF. In the outlook period 2013 to 2018 we will maintain the US dollar as the anchor currency of Zimbabwe. We know that Zanu PF wants to bring back the Zimbabwean dollar but we are saying as MDC it’s not yet time to return the Zimbabwean dollar.

The beauty of not returning the Zimbabwean dollar in the outlook period 2013 to 2018 is that number one you maintain people’s confidence; two you don’t create exchange rate arbitrarily; three you don’t create monetary policy distortions particularly in situations where we have seen in the past where people try to monetize the budget deficit by the printing of money with all the consequences that we saw between 1997 and 2008.

The fourth thing that we will do is of course to maintain cash budgeting or a balanced budget. It is so critical for a developmental state to maintain a balanced budget because as I said before, budget deficits and in particular the manner that you finance them is very disastrous.

Number five we intend, the MDC government intends to deal with the issue of the crippled current account deficit and then of course another issue that is so key to our macro-economic performance is the issue of Zimbabwe’s sovereign debt. We’ve got a sovereign debt of ten point seven billion US dollars. It is critical that that debt is wiped off, both from a macro and micro point of view so that we are able to accept the huge amounts of money that are most essential for development of our country. So that’s on macro-economic stability.

Gonda: Where will you get the money from in terms of sorting out Zimbabwe’s huge debt?

Biti: The country doesn’t have a capacity to deal with its own debt. Even if we had capacity, it would be very foolhardy for anyone, and any finance minister to use our resources to pay for our legacy debts when we have got our schools in the positions that they are, our hospitals in the positions that they are, our roads in the way that they are. I think it’s immoral to pay ten point seven billion dollars of debt that we half understand – some of it was used to pay guns, some of which was used to engage in all kinds of shenanigans.

So instead of looking in the past, the positive thing is to engage in a programme of sustained engagement with the World Bank, with the IMF, with the international donor community so the same can counsel and forgive our debt. We have already started that; at the Ministry of Finance, through the development of the Zimbabwe accelerated debt and development strategy. So the long and short of it is that the international community must end, if we do our macro-economic trajectory right, will pay and will cancel and forgive our debt.

Gonda: And who will pay for infrastructural development since you say Zimbabwe does not have money and these are some of the issues that… interrupted

Biti: What we envisage as MDC is that within the first ten months of President Tsvangirai’s government we will have an international conference to deal with Zimbabwe’s reconstruction. You will recall in 1981 with the Zimbabwe conference on debt and development, it is so important that we have a full dialogue with the international community for full reengagement. You’ve just seen in London last week, the conference on Somalia, we definitely intend to have a bigger one with all the multi-lateral, the bi-lateral international community there, the Chinese, the Americans, the British, the Scandinavians. That conference is very important because Zimbabwe has to be fully reintegrated.

Then number two; it is important Violet that we have proper full integration in the IFIs, in particular the African Development Bank, in particular the World Bank. Donald Kaberuka the president of the World African Development Bank has been excellent for Africa in his capacity as president of the ADB. The African Development Bank has over 30 million US dollars for infrastructural development for Africa for the next five years. We are not on the party because of these huge arrears.

The World Bank, both under the old president and the new bank president, has got over 75 billion US dollars for Africa, we are not able to access that.

Most importantly Violet, because of our high risk factor, because of our arrears we are not able to go on the international markets to issue bonds or other paper, in other words borrow from the international finance market. If you look at Rwanda, it has just floated a bond of 600 million, Zambia floated a bond of 300 million dollars, it was subscribed to the tune of 11 billion US dollars, and we can’t do that.

So the bottom line of what I’m saying is that once we lower our risk profile, once we deal with our arrears clearance, it will be able for Zimbabwe to access money from the international community at a bi-lateral level, hence the conference I’ve discussed.

Two it will be able to access money from the IFIs.

Three it will be able to access money from the international markets.

Four it will be able to access capital in the form of foreign direct investment but the precondition for this is a sustainable, credible election and our policies are written on the basis that we are going to win this election, Morgan Tsvangirai’s going to win this election by 78%. He’ll form the next government and he will implement what we are calling ART – Agenda for Real Transformation in Zimbabwe and ART is what we will be launching on Sunday afternoon, the 19th of May in the year of our Lord 2013.

Gonda: So how would you answer your critics who say you’ve had four years to show Zimbabweans that this is what you are capable of doing and so why have you not been able to do that in this inclusive government?

Biti: Firstly we have stabilized the economy Violet. When I came in, inflation was 500 billion percent, now inflation is three percent; when I came in there was no food in the supermarket, there was water and firewood, now there is any goods that you want in the economy. When I came in the economy had last had a positive growth rate in 1996; in the last four years we have had the positive growth rate, in fact between 2009 and 2011, Zimbabwe was the fastest growing economy on the planet so we have done these things.

The second level of our growth trajectory, is inclusive growth, sustainable growth and we can do that, but you must also know that Zanu PF has been working against us. If you take the indigenization policies where comrade Mashakada has been saying foreign directors must come in with investment, you know what the minister of Indigenization has been doing.

So we have done extremely well with one hand of ours tied. Can you imagine what we can do when all our hands are free? We’ve done well with our legs tied; can you imagine what we can do when we can sprint? We will be faster than Usain Bolt.

Gonda: You mentioned the issue of indigenization and many people believe that one way of encouraging or restoring investor confidence is if Zimbabwe establishes a proper indigenization policy because the Zanu PF indigenization policy seems to be frightening investors.

Biti: That’s correct Violet, that’s correct Violet.

Gonda: So what’s the MDC’s policy?

Biti: What ART is going to do which is already articulated in JUICE – what ART is going to do is do the following: number one acknowledge that the Zimbabwean economy needs to be democratized so everyone needs to be an economic player and not an innocent bystander. So we agree that there has to be upliftment. But the best form of upliftment is the following: number one – it’s a job. Everyone needs a job and a job is development and development is freedom. Without a job there is no development and without development there is no freedom.

So we have put at the epicenter of ART and of JUICE – job creation, which is why we have said in the next five years between 2013 to 2018, we will create a minimum, a minimum of a million jobs. Jobs are empowering. As you know if you don’t have a job, you are so totally disempowered. So that’s number one.

Number two – as part of our, if you like, our empowerment programme and in the process of creating those jobs, the issue of domestic savings is critical. The MDC intends to ensure that there is financial inclusivity in this country, which will guarantee savings of at least 30 to 50% of GDP. When people save it means others will borrow and start businesses, re-equip their businesses, retool their businesses.

Number three is foreign direct investment. This economy needs foreign direct investment that is at least 75%, 50% of GDP and because we have got friends all over unlike Zanu PF, we will be able to attract foreign direct investment.

Number four Violet; we have got a false – and this is where Zanu PF doesn’t get it right, we have got a false accumulation model. The false accumulation model, which we have is extractive; diamonds are extracted and sent to Israel; tobacco is extracted – 90% of it goes elsewhere. We make the best cotton in Zimbabwe but 80% of it goes out. If you look at a dress that a person is wearing in Zimbabwe or a shirt it is all written made in China and so forth so there is no value edition. So the MDC is saying let’s change the accumulation model from extraction to beneficiation and value addition. So the greatest empowerment project of the MDC is an agro-industrial transformation of Zimbabwe which will see beneficiation and value addition industrialization, industrialization, industrialization it’s key.

Number four is the issue of technology – ICT. This economy is rural and it’s underdeveloped. So you need to revolutionize this country through ICTs so that there is 4G, there is futuristic technology. If you have a population that is educated, ICT literate which is producing manufactured goods, not the situation where we can’t even make chisharo chebhasikoro then you have got proper empowerment in our country. Then of course you must also have a situation where in respect of every investor, there is an appreciation of what he is doing for the local economy. In fact in terms of taking locals on board, in terms of educating our people, in terms of community social responsibility, the building of schools, of hospitals. What we are calling in our document ‘horizontal and backward linkages’ – spatial linkages particularly in the mining sector, one of the sad things about the Zanu PF mining policy if you take Marange and so forth, is that people are just being given licenses’ left right and centre, nothing comes to the country, there is no valuation of what is underground.

So if a person spends three million dollars to set up a diamond company like Mbada, one diamond carat is five million, what comes to the government is zero because everything is shrouded in corruption and so forth. So the issue again of giving meaningful mineral values to our minerals is an essential corner of the MDC policy.

Gonda: How much can you estimate in terms of how much the country is losing out from these diamonds. How much has Zimbabwe lost since you became Finance Minister?

Biti: We’re talking about the MDC policy Violet.

Gonda: Yes I’m going to come back to that issue.

Biti: Yes, I’ll answer both questions. Firstly if we get our mining policy right, if Zimbabwe gets its mining policy right and I said this in my 2013 budget and we say this in ART, the Agenda for Real Transformation, the country should by 2018 be getting at least 14 billion US dollars mineral exports, 14 billion US dollar mineral exports. But there has to be a paradigm shift, a fundamental paradigm shift.

Number one you need exploration; exploration is not taking place. Exploration last took place in 1968 in Zimbabwe, real exploration.

Number two you fundamentally need to change the way you parcel out concessions. At the present moment Mpofu just quietly, nocturnally, opaquely parcels out mining concessions. Some of us we just read the newspapers – ah suddenly there’s a company called OGPD in diamonds, suddenly there’s a Ghanaian company mining diamonds. It’s opaque it’s not transparent! How those concessions are being given out nobody knows but the value is being lost.

Thirdly you must come out, we must revise the Mines and Minerals Act so that when an investor is coming in here we need to know the value of the platinum that is underground – that is not happening.

Fourth is the issue of spatial linkages that I’ve already referred to. Number one you need horizontal linkages. This is a situation where procurement, domestic procurement for mining is sourced locally, then backward linkages which is value addition. Then the most important thing – spatial linkages. Spatial linkages arrive in the following manner – mining is high value, low impact so companies extract but the communities around those companies are very poor so you want to ensure that there is high value and high impact. So if you take a mine like let’s say Mbada, it must build houses, it must build universities, it must value add the diamonds that it is making. And with diamonds it pains me Violet that a little village called Surat in India is employing 60 000 Indians who are cutting and polishing our diamonds when we can do that – because to cut and polish a diamond you don’t need a Bachelor of Arts degree from the University of Zimbabwe but Zanu PF is allowing these things because they functionally illiterate when it comes to issues around the economy.

But to your more specific question on diamonds – in 2013, 800 million US dollars diamonds were exported out of Zimbabwe but what we got as treasury was 45 million US dollars. Now 45 million as a percentage of 800 million is less than 10% so people are stealing and people have got degrees of stealing. These are not sustainable. So I’m suffering as Minister of Finance and yet, and I’m going around begging, but I’m begging with a gold begging bowl because people are stealing. That’s not sustainable.

What we are saying is now, and what we are saying in ACT and JUICE is Zimbabwe must move away from these vicious cycles of extraction to virtuous circles of inclusion, of incentive, of putting the country first. Unfortunately that is not the position right now.

Gonda: You mentioned that we only got 45 million in 2013 alone but are you able to give us an estimate from 2009 to 2013?

Biti: The rough estimate would be around four billion dollars. Remember, remember when we say 800 million that is only that which has been acquitted through the central bank, that has been acquitted through the central bank in terms of CD 1 forms but you and I know that the bulk of the diamonds are not even being sold legally. They are being transported illegally, smuggled out illegally. So if you were to get the figures of production, the current figures that are coming from the ground and just put a rough cost of say 60 dollars a carat, what has been lost since we started producing diamonds is at least four billion US dollars.

Gonda: Right what will happen to all these dubious companies that you mentioned that have been given licenses’ clandestinely? What will an MDC government do about this?

Biti: Well anything that has been done irregularly, irregularly, must be regularized. Anything, done illegally, irregularly, must be regularized.

Gonda: We hear there is massive theft everywhere – in the diamond industry, in government departments – so how will you monitor this and how will the MDC establish an accountable state?

Biti: The problem with the current situation is that the law is not being presented and one of the things of ART is that there must be a redesigning of the state so that the state itself, the government institutions themselves respect the law, respect the people of Zimbabwe and are transparent and accountable and subordinate to parliament. And if you look what we have done in the constitution, which is an integral part of MDC policy, the MDC, the constitution was born out of struggles of the MDC and the democratic movement in Zimbabwe. One of the things that is happening is that you have all these executive commissions liable, all these executive commissions and their people subject to two terms of office including permanent secretary. That will go a long way towards establishing an accountable state. But in terms of resources the law is very clear – even the current constitution – every cent to the benefit of Zimbabwe must go the Consolidated Revenue Fund and the Consolidated Revenue Fund is the budget which is looked after by parliament but the problem now is that you’ve got sub-budget – the police have got their own police fund, the judiciary has got its own fund for fines and so forth, a road fund and so forth. So you’ve got a multiplicity of these funds. The constitution must be respected. Unless parliament itself has said you can have this fund like the road fund everything must come to the Treasury.

So the question Violet is not about what has happened in the past, the question is are you going to move forward well and correct and legal in the future and that is what the MDC wants to focus on – in the future because if you are not careful you might spend a lot of your energy pursuing the past. The MDC doesn’t drive looking in the rear view mirror, it looks at the front mirror because we want to move forward and serve our people.

Gonda: You know, people will say your proposals are good on paper but will be difficult to implement because of maybe a small group of people, the elite, and that until there’s political stability, it’s going to be difficult even to get people to invest in Zimbabwe, so how are you going to manage this?

Biti: You know Violet, the reason why all political parties must put their policies on paper, and so far we are the only party who has done that, is that people must be able to hold us accountable. You said you were going to do this – what have you done? Zanu PF has not done that, they are attacking our JUICE but what do they have.

Even indigenization is not a Zanu PF policy – it is a government policy. They don’t have anything on paper. In 2008 they didn’t even have a manifesto so we are putting this so that we are held to account – you guys you promised this, why are you not doing this? You guys you have got your JUICE, you have got your Agenda for Real Transformation, why are you not delivering? So that’s important.

Then the second thing is yes, implementation Violet is a problem. You are going to have the challenge of number one; the securocrats, the selectorate – those that are appointed, the bureaucrats, if they don’t want you to move these things, you won’t move them. That will be a fight. Then number three you will have a fight with Zanu PF and the chaos faction of Zanu PF.

Number four you will have a fight with certain sections of the international community that are not sympathetic to you because you would have shut tapes that they were drinking from when Zanu PF was there. So we are aware of these challenges but we don’t need to say I am not going to go into my field to plant because it is going to rain today. You don’t do that. You look the beast in the eye and you won’t blink and the MDC is not going to blink!

Gonda: Join us next week for the final part of the interview with Finance Minister Tendai Biti where the MDC-T Secretary General details his party’s land policy. What will happen to multiple farm owners and will the party embark on a land audit? He also responds to questions regarding the image of the MDC-T, which some observers say has been damaged by individuals who have adopted the ‘Zanu PF way of thinking’.

To contact this reporter email violet@swradioafrica.com or follow on Twitter

SW Radio Africa is Zimbabwe's Independent Voice and broadcasts on Short Wave 4880 KHz in the 60m band.

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