Uncertainty slowing economic recovery
Since the establishment of the GNU in 2009 for once economic indicators looked positive; consumer inflation for the first time in over a decade dropped from the highest in the world to single digit levels while interest rates remain at normal levels although it seems they could still go down. The coalition government to its credit brought back some level of certainty and from this stability, something really vital for the normal running of a business. At government level there is now some semblance of normalcy with the treasury in particular fully reasserting itself as the fiscal authority while the cabinet structure brought on by the coalition government has necessitated a shift in its workings. While the scorecard of this arrangement has been abysmal from the point of view of human rights groups and trade unions it was actually a benign move by the political leaders because the coalition was able to partly end confusion and uncertainty in business circles, day to day lives of people something that has not been fully acknowledged even to this day. In theory business leaders and investors normally consider all factors like democratic systems in place, independence of the judiciary, human rights records and the UN human development index before deciding if a country is a worthy investment destination, it is the exchange rate, inflation and interest rates that normally will form the major basis for going ahead with the investment decision. Apparently we may have the lowest inflation in the region; it is currently hovering around 3% and on the other hand we may have eliminated the currency risk normally a major concern for investors willing to invest in developing countries by dollarizing the economy. These feel good facts though do not take away the fact that a lot still has to be done to move the nation towards the most ideal state, hence it is however incomprehensible that some may be working perhaps with good intentions to undo all this by advocating for events or acts that make everyone nervous and lose optimism. Towards the end of 2010 and into this year it’s now clear that the issue of elections and the drive to indigenise the economy have weighed heavily on the confidence and the enthusiasm that had been built in the early stages of the coalition government. While conflicting messages about the elections are being repeatedly fed into the media leaving everyone flummoxed, most people however have grown to dread elections because of the destruction and pain they seem to leave in their wake leading to pleas from NGOs, human rights groups and even regional leaders for the deferment of elections. The general consensus is that the economy needs time heal, to consolidate the economic gains made so far as well as to allow the government to carry out sweeping reforms while some scholars are less sanguine about the country’s ability to carry out reforms on its own. The bottom line is that elections seem to fuel uncertainty about a lot of things; what happens to this US$ regime after elections? Will companies start to move out again? These are some questions ordinary people are asking and it is the lack of clarity on these that leaves many more apprehensive towards elections. On the business front the concerns are almost the same as the talk of elections brings with it uncertainty; planning and decision making processes which thrive in more certain environments is hampered because no one knows what happens beyond elections since there is no guarantee of continuation of current policies. As a result most businesses will adopt this wait and see approach, which is a decision itself to halt any major expansion or new investment while foreign direct investment will certainly not come until after the ‘elections’ whenever they are held therefore putting brakes on the pace of the turnaround of the economy.
For businesses however elections are not the only immediate concern developing from government actions, the black empowerment drive appears to be the biggest challenge because now even major corporations that had apparently weathered the economic cries of the past decade are now considering the possibility of pulling out i.e. disinvesting from the country and that is really scary. According to the government gazette released on the 25th of March 2011, it is now official mining corporations will have to cede control of their mining operations to designated partners by either giving up or selling 51% of the shares. Readers will to note that the euphemism used here seem to indicate it will just be the transfer of shares when in fact the issue appears to be about control because 51% ownership nominally allows the holder to make decisions without fearing the veto of other shareholders and most certainly very few of the targeted mining houses will accept that. While there has been no resistance to the general idea of indigenisation by these mining corporations as they understand this could be the source of instability, the current form of the empowerment is by no means a win-win situation. It has been said to be another source of tension inside the government itself because some in government believe that in its current form the empowerment effort will actually do more harm to the country’s appeal to investors as many will see it as nothing short of nationalisation a term that puts to paid any dream of attracting foreign direct investment. While the government has indicated that it is open to proposals from industry representatives however judging from what has happened to the mining industry there is pessimism that the government actually wants to listen because the mining companies’ representatives had suggested selling 25% of the actual shares but when the gazette came out it stipulated 51%. It is still a long way before everything is actually implemented there is still some linger of hope that government will show some rapprochement however some damaged has already been made because international news outlets have already relayed this to their global audiences thus reinforcing what may be a wrong perception about the country’s attractiveness to investment. Undoubtedly the damage done 25th of March 2011 may have undone all the positives made by the coalition government since its inception in 2009 but the government can still salvage the situation by halting actions or statements that create panic in business circles. Parties in this government will have to find a common position on these issues and make joint statements or declarations thus avoid these constantly shifting positions and the sooner this is done the better.
Terence Zimwara
Is an economic consultant
Contact him on the following
temra-temra.blogspot.com
tem2ra@yahoo.com
0733406743
Thursday 28 April 2011
corruption
Corruption; the tried and tested smart sanction
While debate has raged about the impact real or imagined of the so called smart sanctions or restrictive measures or whatever you want to call them, there is in fact a more overt form of sanctions which needs no debate at all-it is corruption whose debilitating effects are there for everyone to see. No amount of sanctions imposed from outside will outdo the obliteration done to the economy by the self- imposed sanctions of corruption. If there was a time when authorities would deny any reports of corruption in government as well as outside government that time is gone because now this scourge rips through all of facets of a Zimbabwean’s daily life, there is simply no denying it anymore. Unfortunately these sanctions do not discriminate, they know no race, no political ideology, no tribe or creed it permeates through government departments, public utilities, private enterprises even the non- governmental organisations unfortunately some people think it is normal. Since independence we have seen high profile cases of corruption where public official breached trust bequeathed on them as public servants by trading or abusing privileged information to sometimes the outright pilfer government assets and this has been driven primarily by greed. Organisations like Noczim, GMB, and Zupco etc. have all dominated media headlines for all the wrong reasons ranging from manipulation of procurement processes to the actual abuse of property owned by these organisations. However more subtle forms of corruption are known to occur in public utilities which are not under the media radar as well as in private business enterprises and the ramifications are quite glaring because countless government initiatives to resuscitate the economy over the years failed as this greedy lot whose ranks continue to swell would pounce on resources allocated for such initiatives. Having statutory bodies like the State Procurement Board to source on behalf of government and the previous Anti-Corruption Commission to stamp out corruption yet that has not stopped these greedy ones from continuing their illicit practices as they have found ways go to around these institutions. Businessmen have established networks that essentially work to influence the procurement processes by acquiring privileged information concerning tenders illegally by using employees of the organisations inviting the tenders. However in most cases the invitation of tenders as a procurement method seems to have been abandoned by many businesses as they left role solely to the individual responsible to make decisions himself and we simply cannot over emphasise the moral hazard here and how deeply flawed this is. The more blatant forms of corruption often involve company officials demanding a share of profits before they can actually award the major contract and for most of these fly by night companies this is quite acceptable as they fail to see the bigger picture. Fortunately for most businesses this is not sustainable because they understand the consequences. Allowing this to continue unabated will in the long run affect competitiveness which in turn affects profitability because widespread corruption has the capacity to bring down the individual business as well as the entire economy. To their credit privately owned businesses launched an initiative known Tips-offs Anonymous platform set help eradicate corruption by encouraging employees or anyone concerned to come forward with incriminating evidence against company officials. The only problem now could be that people are not exactly aware of this and it appears only meant for the problem at private business level and not exactly acknowledging this to be a national problem which needs coordination between all the parties. What is positive though is that there is consensus that corruption is vile hence a coordinated approach towards this is paramount starting with telling people why we have to fight corruption. Education and information dissemination remains one of the powerful tools at our disposal that we can use in this fight because we already have literate and intelligent citizenry much willing to help fight this problem. That the economic crisis of the past decade was precipitated by corrupt practices across the entire economy has to be sufficiently emphasised just like we did with our HIV-AIDS awareness campaigns which most people agree brought about changes in behaviour and attitudes of towards this disease. People need to understand if corruption goes unchecked at their workplace this will without doubt result in the company facing increased costs, costs which may force the employer to refuse to increase wages or even worse to lay off some workers. For consumers corrupt practices often translate into higher prices something which is unwanted at this stage because the present wages are already meagre thus an increase in prices will further erode their disposable income. For the government the consequences are even bigger because in addition to losing revenues due to companies paying less taxes as their make little profits or incur losses and consumers spending less due to reduced disposable incomes, the government will be forced to borrow to cover its deficits created by lost revenues. Such a deficit works to hamper government welfare programs because normally it is social programs that are sacrificed when funds are running short so it is in the government to fight corruption. On top of that growing levels unemployment will present the government with a problem of social issues like protests and demonstrations resulting from these idle working class people as well as a threat to the country’s security. So it is in the interest of all parties to work together towards finding lasting solution to the problem of corruption. In other words people need to be informed about the initiatives like the tips-offs anonymous, how it works without endangering the well-being of the participants, whistle blowing initiatives which give incentives to participants who expose corruption need to be instituted as well . Wikileaks has been a revelation because it gives total anonymity to participants who are thus encouraged to expose what they feel is wrong and honestly the corruption levels merits us having such a whistleblowing site. Of course the education of the citizens and exposing the corrupt alone will not achieve much if there is no real deterrence to would be bribers and those who solicit for such bribes. This lack of deterrence arises from the fact that there seems to be no action towards most of those found to have acted illegally and this therefore reinforces this view that one can get away with taking bribes. In fact there has been far few convictions and custodial sentences of persons of abusing positions for personal gain and this is where the government more than anyone else should take the lead and walk the walk where senior people are implicated in illicit deals. The coalition government has said it will constitute new a body that will that will be mandated with working on these high profile corruption cases and one hopes this will work in some as this is appears to be the initiative of the three signatories of the coalition.
Terence Zimwara is an economic consultant
temra-temra.blogspot .com tem2ra@yahoo.com
While debate has raged about the impact real or imagined of the so called smart sanctions or restrictive measures or whatever you want to call them, there is in fact a more overt form of sanctions which needs no debate at all-it is corruption whose debilitating effects are there for everyone to see. No amount of sanctions imposed from outside will outdo the obliteration done to the economy by the self- imposed sanctions of corruption. If there was a time when authorities would deny any reports of corruption in government as well as outside government that time is gone because now this scourge rips through all of facets of a Zimbabwean’s daily life, there is simply no denying it anymore. Unfortunately these sanctions do not discriminate, they know no race, no political ideology, no tribe or creed it permeates through government departments, public utilities, private enterprises even the non- governmental organisations unfortunately some people think it is normal. Since independence we have seen high profile cases of corruption where public official breached trust bequeathed on them as public servants by trading or abusing privileged information to sometimes the outright pilfer government assets and this has been driven primarily by greed. Organisations like Noczim, GMB, and Zupco etc. have all dominated media headlines for all the wrong reasons ranging from manipulation of procurement processes to the actual abuse of property owned by these organisations. However more subtle forms of corruption are known to occur in public utilities which are not under the media radar as well as in private business enterprises and the ramifications are quite glaring because countless government initiatives to resuscitate the economy over the years failed as this greedy lot whose ranks continue to swell would pounce on resources allocated for such initiatives. Having statutory bodies like the State Procurement Board to source on behalf of government and the previous Anti-Corruption Commission to stamp out corruption yet that has not stopped these greedy ones from continuing their illicit practices as they have found ways go to around these institutions. Businessmen have established networks that essentially work to influence the procurement processes by acquiring privileged information concerning tenders illegally by using employees of the organisations inviting the tenders. However in most cases the invitation of tenders as a procurement method seems to have been abandoned by many businesses as they left role solely to the individual responsible to make decisions himself and we simply cannot over emphasise the moral hazard here and how deeply flawed this is. The more blatant forms of corruption often involve company officials demanding a share of profits before they can actually award the major contract and for most of these fly by night companies this is quite acceptable as they fail to see the bigger picture. Fortunately for most businesses this is not sustainable because they understand the consequences. Allowing this to continue unabated will in the long run affect competitiveness which in turn affects profitability because widespread corruption has the capacity to bring down the individual business as well as the entire economy. To their credit privately owned businesses launched an initiative known Tips-offs Anonymous platform set help eradicate corruption by encouraging employees or anyone concerned to come forward with incriminating evidence against company officials. The only problem now could be that people are not exactly aware of this and it appears only meant for the problem at private business level and not exactly acknowledging this to be a national problem which needs coordination between all the parties. What is positive though is that there is consensus that corruption is vile hence a coordinated approach towards this is paramount starting with telling people why we have to fight corruption. Education and information dissemination remains one of the powerful tools at our disposal that we can use in this fight because we already have literate and intelligent citizenry much willing to help fight this problem. That the economic crisis of the past decade was precipitated by corrupt practices across the entire economy has to be sufficiently emphasised just like we did with our HIV-AIDS awareness campaigns which most people agree brought about changes in behaviour and attitudes of towards this disease. People need to understand if corruption goes unchecked at their workplace this will without doubt result in the company facing increased costs, costs which may force the employer to refuse to increase wages or even worse to lay off some workers. For consumers corrupt practices often translate into higher prices something which is unwanted at this stage because the present wages are already meagre thus an increase in prices will further erode their disposable income. For the government the consequences are even bigger because in addition to losing revenues due to companies paying less taxes as their make little profits or incur losses and consumers spending less due to reduced disposable incomes, the government will be forced to borrow to cover its deficits created by lost revenues. Such a deficit works to hamper government welfare programs because normally it is social programs that are sacrificed when funds are running short so it is in the government to fight corruption. On top of that growing levels unemployment will present the government with a problem of social issues like protests and demonstrations resulting from these idle working class people as well as a threat to the country’s security. So it is in the interest of all parties to work together towards finding lasting solution to the problem of corruption. In other words people need to be informed about the initiatives like the tips-offs anonymous, how it works without endangering the well-being of the participants, whistle blowing initiatives which give incentives to participants who expose corruption need to be instituted as well . Wikileaks has been a revelation because it gives total anonymity to participants who are thus encouraged to expose what they feel is wrong and honestly the corruption levels merits us having such a whistleblowing site. Of course the education of the citizens and exposing the corrupt alone will not achieve much if there is no real deterrence to would be bribers and those who solicit for such bribes. This lack of deterrence arises from the fact that there seems to be no action towards most of those found to have acted illegally and this therefore reinforces this view that one can get away with taking bribes. In fact there has been far few convictions and custodial sentences of persons of abusing positions for personal gain and this is where the government more than anyone else should take the lead and walk the walk where senior people are implicated in illicit deals. The coalition government has said it will constitute new a body that will that will be mandated with working on these high profile corruption cases and one hopes this will work in some as this is appears to be the initiative of the three signatories of the coalition.
Terence Zimwara is an economic consultant
temra-temra.blogspot .com tem2ra@yahoo.com
Tuesday 12 April 2011
Buy Zimbabwe
Buy Zimbabwe: It’s a hard sell
Over the last few days the media has been awash with coverage of the conference “Buy Zimbabwe” a gathering that essentially sought to encourage local citizens to buy locally produced goods. Promoters of this see this is some kind of master plan well placed to help struggling businesses break even or better still this has a potential of returning these to profitability. However the question has to be asked; since the whole concept here is to dissuade citizens from purchasing imported merchandise, what do these local producers have to do to gain loyalty and custom of citizens? How will customers be protected from the excesses of these businesses given that most customers earn much lower than the estimated poverty threshold. These are very significant questions that have to be answered with equal verve by the proponents of this so called “Buy Zimbabwe”.
It is my well-considered view that this well packaged “Buy Zimbabwe” could be a ruse often used by these business lobbyists to try and justify subverting an inherent risk to any business, competition and potentially make huge profits. Proponents of this often point to the ‘success’ of a similar initiative elsewhere including South Africa the so called BUY SA however what they conveniently fail to disclose is that apparently the SA economy is dominated by a few organisations who are consistently accused of abusing their position by engaging in unfair practices like colluding on prices. While it has been difficult uncover in most cases, it thought that illegal cartels exist across many business sectors in SA and sometimes this can be evidenced by the revenues and profits generated by businesses in telecommunications, food industry, car assembling, cement manufacturing and media. Some are not as fortunate as Sasol the petroleum giant was recently caught and fined by the EU recently for running a cartel that manipulated the paraffin market. Major businesses like Tiger Brands (food), Mittal (steel), MTN and Vodacom have all been accused of certain anti competition acts and have been brought before the anti-competition tribunal. Now when cartels are created their sole purpose is to cause price rises or to put it bluntly they simply fix prices which in turn guarantees certain amounts of profits therefore the very existence of these cartels undermines the welfare of consumers. The lobbyists groups may even rope in the government enforce this buy local only and the SA automobile industry is a prime example. In Africa most people cannot afford to buy brand new vehicles hence they resort to reconditioned second hand vehicle from Asia particularly Japan yet interestingly these are barred from the roads of SA. The usual reasons such as protecting jobs are cited yet consumers’ rights of not only South Africans but the greater Southern Africa region are not equally mentioned. As a result consumers buying South African assembled vehicles may be paying more than they should because the whole industry enjoys protection from imported vehicles hence one cannot rule out collusion or unfair practices. Once these businesses start to enjoy fruits of government protection or policies that shield them from competition, it will be difficult in the long term to rein in these once they are caught on the wrong side of law.
Coming back to Zimbabwe the situation is very different, for the size of our economy the competition is certainly there. Established players have to contend with new entrepreueners joining the competition and from the point of view of all sober minded, this should be encouraged. Now in addition to these locals producers, competition is also coming from imported merchandise particularly from China and perhaps it is this Chinese factor that may have prompted these Buy Zimbabwe enthusiasts to raise their tempo. However businesses here need to look at themselves before asking customers to buy their products because ultimately for most Zimbabwean customers it has to be the price and quality that will be the deciding factor. According to one diplomat attending the BUY ZIM the prices of local drugs cost 10 times than what they sell for in his country Egypt thus would it not be sensible for anyone to buy local drugs when he has access to cheaper ones. Of course global trade is not exactly free but we need to be assured that local producers are applying the best trade practices before entertaining complaints against unfair trade practices by other countries. Corruption has becoming heavily entrenched within business to an extend that it is seen as normal to demand kickbacks or some kind of enticement from suppliers or business partners, however when local products fail to match prices of imported stuff suddenly these businesses expect consumers to look the other way and just Buy Zimbabwean, that won’t fly.
It is fair to say that the cost build-up of most businesses include these kickbacks, bribes and inflated prices and this may partly explain why local products are expensive though it does not explain the poor quality associated with some of these products. Business has to understand that consumers are still smarting from a decade of hyperinflation and shortages of basic products and that they will do what they can to save money as they still earn miserly wages. In addition the government should be wary of such lobbyist and instead seek a consensus between business groups and consumer and worker groups before setting policy. The last decade was a very difficult period for everyone though the silver lining from this is the apparent entrepreneur attitude borne out of those adversities; we have very dedicated small entrepreneurs but certainly we do not wish to see these becoming too big to a point where the government becomes toothless towards them as is the case in SA. The government in SA appears to pander to interests of these businesses at the expense of workers’ rights and consumers welfare because these organisations claim to pay taxes and employ thousands of workers. To an average consumer economic realities will prevail over the sentimental reasons for buying Zimbabwean products not to mention the quality of the products. Unless businesses adequately address these concerns then this Buy Zimbabwe campaign remains a hard sell.
- Post-colonial southern Africa has grappled with the question of how to emancipate and empower the previously disadvantaged. Like the rest of the continent the region is endowed with an array of vital natural resources; from gold to platinum, iron ore to chrome, diamonds the list is endless. DeBeers, Rio Tinto, Anglo-American are some of the mining that not only control these minerals on the regional front but they actually dominate at the global stage and perhaps it is this power and influence that may have prompted sudden clamour for the transfer of ownership these to previously disadvantaged. During the colonial rule blacks were systematically excluded from economic activity and now they have to become active in business because of the mere fact that they are the so called indigenous people something everyone seems agrees with. It is the formula for achieving this transfer that is causing much consternation between these two sides, the foreign owners of businesses earmarked for this empowerment, who are unfortunately are mostly whites and the previously disadvantaged who in most cases are black. There is no easy way to navigate this contentious issue without falling foul to venom of extremists on either side of the divide however the steps taken by authorities in Zimbabwe appear to have taken a new thrust to this problem and potentially this could be a death knell to the mining industry. The government has apparently gazetted the new ownership structures for the mining industry, asking these multinational companies operating mines to cede 51% shares to designated entities, in other words this essentially forces these mining houses to give up control of their investment to a third party . This is being done despite protest from business leaders, political parties and one arm of the government and this could be its worst decision yet because this could potentially spark the massive disinvestment from the country and in the process undoing the economic gains made since the start of the GNU. The country is in need of foreign direct investment (FDI) yet by gazetting this piece of legislation the government is sending message that FDI is not a priority at this point yet a few months back there was an investment conference here where business executives from around the world were encouraged invest. These contradictions have only worked to dissuade investors who had adopted a wait and see attitude from coming on board and the tone now being used by fervent supporters of this drive clearly shows little regard to what happens in the aftermath. Racist rhetoric, racist innuendos and the inflammatory language that has characterised debate on this issue seem to have prevailed in the diverting attention from real issues to racist demagoguery and sentimental reasons. It has become a racially charged and emotive issue with organisations like the AAG unrelenting on their stance that indigenisation has to happen as a matter of urgency, however the hard facts point to the failure of the indigenisation effort. When we carried out the land reform apparently we used the same rash approach, where the desire to carry out the reforms quickly was aided by political expediency and we all know what happened. Those reforms may have been carried almost a decade ago yet the country still has not bridged the expertise gap as shortfalls in cereal production still persist with FEWSNET estimating that 1.7 million people will need food aid this year and this apparently has been happening since the land reforms.
The first fact is that we do not have the capital to see through this process. The government is still struggling to meet its obligations with respect to the civil wages, it has not been able to secure funding from multilateral lenders as well as to secure lines of credit to fund its own short falls. The economy is generally undercapitalised clearly there is no way funding can be secured for the sovereign wealth fund which has clarity issues not to mention the risks associated with it. Apparently we never had the wherewithal in the first place when these multinational corporations came to set up operations here and nearly a century later we still do not have the capital or access to capital due many other factors. For instance there are a number of people who have registered a number mining claims along the Great Dyke area but they do not have funds to start operations worse still some do not even wish to start mining operations, instead they surf the internet for potential partners. Once identifying potential suitors they lease their rights to them for periods ranging from 3 to 5 years and receive royalties during the period, certainly this is not the intention of the indigenisation effort. Secondly and perhaps the most important one, we do not have the expertise and know how to successfully run these mines and no matter how we may want to gloss over this, it is the painful truth.
Over years the ZMDC a government mining house has failed run mines even when international prices for the minerals were high and this has been attributed to corruption and incompetence. This is essentially why the SA government has resisted calls for nationalisation of mines and prefers the broad based economic empowerment (BBEE) because it understands that no matter how emotional the issue, common sense dictates for a gradual takeover of mines. The current BBEE requires not only mining houses but all non-black owned business to sell shares to previously disadvantaged groups at market value or agreed values and to incorporate these into major decision making bodies. At least this way, a process is initiated that will in the long term bring these previously disadvantaged at par with their white counterparts readying them for eventual takeover as well as running their own start-up businesses successfully. The BBEE apparently has its own flaws but it is less brazen and at least it takes into account the concerns of the present owners while ensuring that empowerment is actually carried out. The SA BBEE uses the old method, the carrot and stick approach and apparently it is working: companies that attain the BBEE certification will be eligible for government tenders and others benefits thus motivating white owned businesses to look for black partners. Zambia which has huge deposits of copper and cobalt deposits once nationalised all these and production dropped dramatically in the ensuing years however production has been on a steady rise because that government eventually allowed these foreign companies back.
We could go on with this proof and ultimately we will be compelled to acknowledge the unique advantage these multinational corporations possess that no one country has, that is expertise and the capital. Certainly borrowing a leaf from SA’s BBEE could work to ensure the successfully indigenisation of the mining industry let alone the entire economy while mindful of creating black oligarchies as has happened in SA. Terence Zimwara is a freelance writer Contact him on +263 733406743
The rise of China: The other side
The rise of China: the other side
Since the late 90s and well into the 21st century the Chinese economy has been enjoying extra ordinary growth that it now ranks as the second largest economy after the US and some analysts believe that if it maintains its current growth rate it may well overtake the US as the world’s largest economy. While this spectacular growth has given China a new status on the world stage controversy continues to dog China for the formula it has used to ensure an astounding growth because China continues to be at loggerheads with the US, EU and some members of the BRIC economic alliance over the value of its currency. It is also tussling with western governments over its activities in Africa where it has sought to shield dictators from falling through a range of tools from supplying arms to blocking action against these at the UN. Worse still it has worked pretty hard to silence dissent, we all remember this year’s winner of the Nobel peace, a Chinese national was not present to receive his prize as he is currently incarcerated for working towards reforms in his country and this helped to highlight the mismatch in China. While the US,EU and indeed the rest of the world seem to have found a co-relation between a democratic system and sustained economic growth, China however is on a campaign to invalidate this because behind its commendable growth is a brutal state that abhors dissent and has employed thousands policeman to police the net. As the dissemination of information evolves making it nearly impossible for governments to control the flow of information the Chinese government’s tactics are becoming more brazen, with the climax of this being the blockade of Google services in China after the company refused to be a willing appendage of the communist state’s censorship tools. There is censorship on religion, education, social networking, in fact there is censorship everywhere and now there is concern that China wants to export its brand of governance to susceptible regimes particularly in Africa and elsewhere. Regimes that have committed heinous crimes like Sudan in Darfur, Cote D’voire, and Zimbabwe have all benefited from the Chinese veto power at the UN Security Council leading to accusations that China is an irresponsible leader and this may have prompted the ICC to take the unprecedented step of indicting the sitting president of Sudan Omar al Bashir since the UN is increasingly becoming paralysed. There is growing concern that China now uses its intransigence at the UN security country to extort natural resources from countries with questionable human rights records so as to guarantee the flow of these resources to China. Hopefully China should be learning from current events in the Arab world that dictators will ultimately fall no matter how powerful and entrenched they are as Ben Ali of Tunisia and Hosni Mubarak of Egypt recently found out hence it would wise for China start to distancing itself from dictators if it wishes to gain respect of the world. On the economic front everything is not so rosy, the Yuan is believed to be undervalued with respect to currencies of its trade partners a situation the US and others charge gives Chinese exports an unfair advantage and when you add the cheap labour then you will understand why Chinese exports compete very well globally. The world trade organisation (WTO) apparently has not been able to deal with cases of complaints against Chinese exports and the problem has become political threatening to ignite a global trade war and a return to protectionist instruments by aggrieved states against Chinese imports. The US congress nearly took the unprecedented step of declaring China a currency manipulator an act which would have given the government the unilateral right to block or penalise Chinese merchandise and no doubt other states would have followed suit and this could have been devastating for the China. While internal economic activity has been on the rise in China, however that economy is largely driven by exports therefore a combined effort to block passage of Chinese exports into the US and EU markets could have far reaching effects and the Chinese government is well aware of this and perhaps this explains why it instantly signalled its readiness to be more flexible on its currency. There were reports of marginal movement of the Yuan after the US treasury secretary Timothy Geithner was invited for talks by Chinese authorities but that has not eased concerns of world leaders and it’s only a matter of time before real hostilities on the trade front start, though China has tools to counter this like its massive reserves at its disposal, it will be the biggest loser in the end. The other side of China’s growth is the secret wars it is currently waging against its adversaries and its growing military spending which is now second to that of the US. While intelligence matters do not feature in the public domain, intelligence officials in the US have publicly voiced concerns that government firewalls and information systems have suffered attacks from what appears to be state sponsored cyber armies and China is suspected to be this sponsor. At the same time China is modernising its military as it races to match the military superiority of the US and EU states. A few years back it stunned the world when it fired at an old satellite in space and successfully destroyed it raising fears that this adventurism could unsettle other states like Japan and India encouraging them to venture in this as well thus triggering a new arms race. Many have suggested that China’s military build-up could be aimed at Taiwan an independent state that the former believes to be a renegade province which has to retaken by force if necessary. Clearly it can be deciphered from all this that China is eyeing the US’s position as the world sole super power and it wants it to attain that status sooner, however whatever happens China will have to understand that without democracy and the basic freedom its position will be shaky and it may not be able to withstand the protests or revolutions that may start as has been the case with Arab leaders. Obviously social networks like Twitter and Facebook are already under surveillance by Chinese authorities but no one knows the shape or the form protests will take until they occur and the only way to pre-empt this is to start instituting reforms now. There is nothing ideological about freedom of assembly, the right to free speech, freedom to choose because these are universal needs of human beings the sooner China realises that and acts the better its future prospects.
Terence Zimwara is a freelance writer
Contact him on 0733406743
tem2ra@yahoo.com
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