January Disease- No lessons learnt

Terence Zimwara

As the festive season ends, a new season comes into play and it’s a season of bankruptcy as well as tough economic times.

The so called January Disease a term coined by the late popular musician, Paul Matavire, is a time when Zimbabweans are generally broke and penniless having overspent during the festive season.

Over the years Zimbabweans make it a point that they visit relatives and parents during the Christmas and New Year holidays. During this time expensive furniture, gifts or assets are bought as the festive mood demands.

For unclear reasons people overspent to the point of forgetting their financial obligations which become due immediately after the holidays and January of 2014 is not going to be any different.

In January schools fees and accessories become due and given the prioritization of education it is inevitable parents will have to pay for these even as they might not have the wherewithal when it is needed.

To add to the burden, rentals and other utility costs are often increased in January making it impossible for most households to survive this period.

As a consequence, many households resort to selling some of their assets to pawn brokers or securing loans from loan sharks after pledging their assets as collateral.

This January however the situation will be worse if the prevailing economic conditions are anything to go by. Most economists are predicting a tough year particularly the first few months of the year as the economy remains in deflation mode with the annual inflation last recorded at 0.54 percent from 0.58 percent in the preceding month.

It would appear people were already broke heading into the festive season this time around. There were numerous reports of cash shortages while business leaders were concerned that business activity had not picked as was the trend during this period in previous years.

Towards the end of 2013, Willard Zireva told an analyst briefing that Zimbabweans should brace themselves for a tough beginning of 2014 because there simply no money in the economy at the moment.

In light of this one would have hoped that people would skip the traditional festivities associated with the Christmas holidays yet judging with activities in the run up to the 25^th of December it appears few took heed of warnings of dire economic times ahead.

It is inevitable the auction houses will be busy in the coming few months as desperate people try to raise money to for school fees, rentals and other utilities. For some it will even be worse as they will have their prized possessions attached by the deputy sheriff and get auctioned off for ridiculous prices.

Unfortunately people seem to have a short memory and they repeat the same next year and the year after. The government should perhaps through the relevant department try to run a campaign to educate people on how best they can manage their finances especially during the festive holidays.

A successful campaign might potentially result in a less mentally stressed workforce and perhaps result in improved performance even in the present economic environment.

Buy Zimbabwe campaign: Facing the realities

Terence Zimwara

The Buy Zimbabwe lobby continues to struggle in making headway in as far as halting the appetite for imports is concerned. If anything the results on the ground seem to suggest that few people are taking heed of the Buy Zimbabwe message as the soaring balance of trade deficit will attest.

According to Zimstat the country’s official statistics body, Zimbabwe’s trade deficit has continued to widen reflecting a relentless appetite for foreign products. In August 2013 the amount of imports topped $704 million while exports were less with a value of $283 million.

In fact that has been the trend throughout the whole of 2013 with the overall deficit currently at $3 billion according to the last figures released and some are focusing that it will reach $4 billion by year end (2013).

It would seem there are a few takers for the Buy Zimbabwe initiative and this is in spite of this lobby receiving generous space in national media and support from government.

So the question is why is the lobby not having an impact in the mind of the consumer? What is it going to take to alter the perception of the average consumer towards the quality of local products? Or is it really about perception?

Obviously the first factor that local producers have to deal with is the issue of cost. Locally produced goods are in most cases expensive and given the dire economic situation consumers are justified in their preference for cheaper imported products.

 Local manufacturers face a host of challenges and these inevitably reflect in the final cost of their products. The country’s largest industry representative body, Confederation of Zimbabwe Industries (CZI) acknowledges that the odds are heavily staked against local producers.

In a submission to parliament last year, CZI identified the lack of access to long term affordable capital as one key factor affecting local companies. Since dollarisation in 2009, it became clear that the economy needed long term and cheap credit to help revitalize local companies.

Plant and machinery that became obsolete during the period of economic decline needs to be changed yet in the absence of a lender of last resort and the use of foreign currency as legal tender, the state has not been able to influence the direction economy.

However, the CZI submission also touches on other issues that it believes contribute to this quagmire. CZI believes the Zimbabwe labour market is highly inflexible and high labour costs that companies incur are not in line with productivity.

The fast developing economies like China and South Africa all have labour markets which are flexible to some degree. Flexible labour markets allow companies to hire labour only when needed and when there is no demand for labour workers are laid off easily without the companies facing enormous retrenchment costs.

Of course the issue flexible labour and reforming the labour is a controversial subject on its own where sharp differences exist between employers and workers.

The CZI also identifies another factor which the Buy Zimbabwe campaign should be focused on, the abuse of certificate of origin and the porous nature of the border points.

A certificate of origin is an international trade document that has to be completed by an exporter or its agent and certified by an issuing body. It attests that the goods in a particular export shipment have been wholly produced, manufactured or processed in a particular country.

The CZI alleges that SADC and COMESA certificates of origin are being abused to bring in goods of other countries into Zimbabwe.

 Abuse of such certificates allows goods from countries that do not qualify for reduced tariffs to find their way on the Zimbabwean market without paying the relevant custom duties. CZI says this creates an unfair advantage for imported goods against locally produced goods.

CZI recommends an increased budget allocation to Zimbabwe Revenue Authority (ZIMRA) specifically to fund investigations into such abuses.

This should become self funding over time as the penalties from culprits who have been caught will pay for the investigations.

Major retailers however seem to be singing from different hymn book if the recent statements by OK Zimbabwe boss, Willard Zireva are anything to go by.

Speaking at a results briefing late last year, Mr Zireva told analysts that while his company supported the Buy Zimbabwe campaign in principle that did not mean OK Zimbabwe was going to compromise on quality.

In fact OK Zimbabwe has maintained a ratio of 65 percent imported merchandise to 35 percent locally produced goods. OK Zimbabwe argues that most local producers lack the capacity to supply it and this forces it source from outside the country.

In addition there is the issue of ‘quality’ of local products when compared with imports, retailers are not convinced that local products now match imports on quality. This is perhaps where Buy Zimbabwe can work with local producers and the retailers to find ways to improve the perception of local products.

 If locals perceive locally produced products to be of inferior quality then it will not matter that local companies improve their technology or packaging. Consumers will still not buy and it is in that context that Buy Zimbabwe needs to be supported.

However this lobby should not try to influence government to impose penalties on imports just to prop up inefficient local producers.

 Lately there has been an increase in noise by those that advocate for protectionism yet they conveniently forget that the country has signed multiple free trade agreements and cannot hike tariffs without facing repercussions.

Dealing with the trade deficit is not going to be a walk in the park, it will take genuine effort, painful decisions and it will take time. These efforts have to begin now otherwise the economy risks collapsing again as the continuing liquidity problems already show.

Mandela’s Legacy: A Zimbabwean perspective

Terence Zimwara

Nelson Mandela, South Africa’s first democratically elected president who passed away in December of 2013 is widely regarded as the greatest statesman to ever come out from Africa.

Some even place him as the greatest statesman of all time because of mainly what he did after his release from prison. Mandela spent 27 years in prison and when he was released he chose to forgive everyone that had wronged him and it was this act that won him admirers for the rest of his life.

At his memorial service world leaders including three former United States presidents, incumbent  Barack Obama, French president and his predecessor, British Prime Minister David Cameron and Tony Blair all attended.

 In total more than 100 world leaders showed up for the memorial service something that normally happens in Western capitals like Washington or Brussels further highlighting the immense respect and popularity Mandela had.

On Facebook, twitter and other social media, messages of condolences poured in as ordinary people joined in reflecting the life of a man that brought some degree of peace to his country.

However Mandela’s legacy is not complete without criticism from those who feel he did not do enough to address the economic imbalances created under the apartheid system.

From inside South Africa, black people still complain that they are still relatively poor when compared to their white counterparts and more so this is still the case almost 20 years after the end of apartheid.

Others sensationally accuse him of being partly to blame for the high levels of crime and violence among the youths because it was Mandela that brought to an end corporal punishment in schools thus breeding an undisciplined youth.

Others say his policies have mainly benefitted whites who have remained rich despite initiatives like the Black Economic Empowerment (BEE). However it is north of the Limpopo River when where some of the stinging criticism of the man seems to emanate from.

Opinion is sharply divided among Zimbabweans when it comes to Nelson Mandela’s legacy. While some joined the rest of the world in the reflecting the life of an international icon, others were questioning what they termed the exaggeration of the man’s success.

Shane a 25 year old Zimbabwean male had this to say about Mandela’s legacy.

“Mandela was celebrated for the qualities that he had which many African leaders still do not have. Mandela served one term and stepped down a feat which has not been matched by any African leader,” said Shane.

Shane added that Mandela was a champion of reconciliation. Having spent 27 years in prison, he did not seek revenge against his former oppressors once he was in power.

Chiedza a young woman from Harare agreed with Shane although she felt the world ignored some of Madiba’s misdemeanors and chose to highlight only the positive that he had achieved.

“Although he was a hero, he was also a womanizer but the world chose to prosecute his ex wife, Winnie Mandela,” said Chiedza.

She said Winnie Mandela had an affair once but she came out the worst as the world has made it appear as she was the only one guilty of this.

“If Mandela was all about forgiving, how come he failed to forgive his wife for one act which he was also guilty of,” lamented Chiedza.

A journalist who prefers to remain anonymous believed that Madiba had delivered some positives during his reign but his heroism was staged managed.

“Mandela was a moderate leader who favoured negotiations while opposed to protests as was espoused by Steve Biko. In the end Mandela left blacks in the political reins while the economy was left in the hands of the minority whites and that is his legacy,” said the journalist.

These sentiments are shared by the majority of Zimbabweans who feel that while the man deserves his legacy there remains many unsaid truths that are being conveniently left out.

On the political front Madiba divides opinion again because of some of his policies which challenged the Zimbabwe’s long standing position in the region.

For the instance when the regional body Southern African Development Community (SADC) was created Zimbabwe had always exercised a leading role because it was largely its brain child.

While the leadership of the body was rotated between the member states, the Organ on Security and Defence of SADC was however permanently stationed in Zimbabwe as part of a long standing agreement between the states.

South Africa which later joined the regional body insisted that the chairmanship had to include the security organ as well leading to disagreements which were widely reported at the time.

Since then South Africa has replaced Zimbabwe as the big brother of the region and that is why many here do not share the same sentiments with the rest of the world when it comes to Mandela’s legacy.

So depending on one’s ideological leanings, Madiba’s legacy will remain a subject of an unending debate among Zimbabweans even as the rest of the world agrees he was a true hero.

Corruption is equal to sanctions

Terence Zimwara

The debate on the state of the economy has often been politicized and many unsuspecting commentators have entirely blamed sanctions as the real course of the economic depression of the last decade.

Indeed the United States and European Union countries have imposed what they like to call 'restrictive measures' on Zimbabwe and officials have seized on this as the cause of the economic collapse.

In the meantime corporate malpractices and general corruption have tended to receive less scrutiny suggesting that these issues were not seen as serious.

Over the last few weeks however, the whole Zimbabwean media has been on a crusade against corporate greed and public enterprises like the Zimbabwe Broadcasting Corporation (ZBC), Premier Service Medical Aid Society (PSMAS) and Harare City Council have been targeted.

Shocking details of remuneration packages have emerged, with officials awarding themselves packages of hefty salaries against a background poor service delivery.

Tendai Mahachi Harare City’s town clerk is reported to earn $37000 per month while he along with the rest of the city’s administration officials earn a combined figure of $500 000 per month in salaries and benefits.

Happison Muchechetere the suspended chief executive officer earned a cool $27000 per month at ZBC yet ironically the same state broadcaster had gone for close to year without paying salaries to its employees.

Cuthbert Dube, the chief executive officer of PSMAS has earned the ire of citizens after it was revealed he was earning a staggering $230000 per month when the medical aid society itself was reeling from a $38 million debt.

While the media onslaught has exposed these three individuals, it is only logical to conclude that this is just a tip of the iceberg, the real culprits remain unexposed.

What is even more scary are reports that Cuthbert Dube is still in the office or that he is in line for a huge severance package.

The town clerk, Tendai Mahachi was suspended after revelations of his salary yet the government reinstated him immediately after the suspension.

Similarly there were reports of corruption at the technically insolvent national airline, Air Zimbabwe but at the time of writing there has not been any form remedial action taken.

What is becoming clear especially from the organisations mentioned above is that their poor performances are certainly linked to the reported poor corporate governance at these institutions.

Such poor performance is seen in the pothole strewn roads, non collection of refuse or failure to provide accommodation to the growing housing waiting list in the case of Harare City Council.

For ZBC the result has been the very poor quality of programmes on national television or the embarrassing episode of ZBCTV failing broadcast the just ended CHAN tournament where the Zimbabwe team performed beyond expectations.

The desire by those running these organizations is to enrich themselves quickly before the next batch managers replaces them. There is no accountability and more importantly there is no deterrent at all.

Last year Deputy Finance minister Samuel Udenge acknowledged this during symposium on Anti- corruption and bribery that the country did not have a strong enough deterrent to prevent would be criminals from engaging corrupt practices.

Cuthbert Dube may have robbed PSMAS policyholders for several years but there has not been any talk of him going to court for his misdeeds.

The same goes for all those whose corrupt practices have been exposed, there is little chance of them being prosecuted until the Prosecutor General’s office has been furnished with dockets of the alleged crimes by the police.

The Zimbabwe government owns or controls several dozen commercial and non commercial enterprises and if most of them are run similarly to how the above mentioned corporations then it quite it probable that corruption at the companies may have played a greater role in ruining the economy than sanctions or the so called restrictive measures.

In fact efforts aimed at revitalizing the economy will fail as long as individuals entrusted with the job of executing policy are more concerned with their selfish needs rather than national needs.

It is one thing for government to tout ZimAsset as the panacea to the economy’s troubles and another to actually see the strategic plan working.

The government will have to deal with corruption head on first before it enunciates new economic blueprints because corruption can be as debilitating as sanctions effectively rendering much vaunted ZimAsset another usefuless document.