No country is an island. Okay, some are literally islands but no country is an island, figuratively. Still, some appear to be islands. Let’s leave the analogy then, what we are trying to say is that a country needs other countries to succeed.
Zimbabwe has been in trouble for the last couple of decades because we have been going it alone. There were sanctions imposed on the country and years after the serious ones were lifted, politicians continued to cite those as the reasons for our economy failing.
Sanctions have the effect of cutting a country off from the rest of the world. Of course it could be argued that in Zimbabwe’s case it is our policies that cut us off from the international community.
In this new Zimbabwe, there will be no recovery unless production increases. Production requires capital and that’s where the problem is, Zimbabweans currently do not have the money/capital. We need help from the international community.
We could look to the money lenders like the World Bank. Small problem, we already owe the World Bank and they won’t extend more to us until we make some repayments. It’s a case of, dude can you lend me a five bucks lest I go hungry for the night and the other dude is like, pay me back the $10 you owe me first and i’ll give you the five.
The second guy is not being unreasonable and the first guy knows it. You can’t keep lending to someone who doesn’t pay back unless you are running a charity. That’s Zimbabwe’s position with the World Bank in a nutshell.
Britain’s offer
Britain, our oldest friend, has seen the predicament that we are in and is not ruling out helping us. The British Foreign Secretary said they could pay the $10 we owe so we could get the $5, lest we go hungry for the night. This would be after they see how the democratic process unfolds in Zimbabwe.
Why not give us the $5 directly? Britain is not in the lending business and would rather leave that to those who are. The gesture would be merely to help a friend not to open an evergreen credit facility. This is especially true for a borrower who is notorious for defaulting on repayments.
But the offer or whatever you think it is shows the international community’s willingness to reengage Zimbabwe. Which is what we need. This being an island did not do us any good.
So Britain would help us settle our debts with the World Bank and other lenders so that we can borrow more. They would loan us the funds to clear the debt. We need the money but is this set up the best option on the table? Debts need to be repaid after all.
Should we go this route?
I know we are all excited by this new page Zimbabwe has turned. We have been promised accountability and progressive policies but let’s not forget that nothing happens overnight. Zimbabwe is not an attractive destination for investors just yet.
Even for the international lenders like the aforementioned World Bank, we still are a risky customer. That all leads to any debt we receive coming with not so favourable terms. In short it comes at a high cost. Paying back involves cash leaving the country. Can we really afford to be saddled with repayment obligations for millions as we try to rebuild the nation?
If not debt then what?
Right off the bat, the method is not going to be too popular because it’s more of a long term solution. We have suffered for too long as Zimbabweans, we kind of want immediate relief, which is understandable.
The solution is to make Zimbabwe an attractive destination for foreign investors. This involves changing our policies as regards indegenisation laws and even to other nuisances that drive investors away. Things like a corrupt police force do not inspire confidence.
The aim is to attract equity investment. The beauty with equity investment is that there is no fixed repayment of the capital required. It directly leads to funding of local businesses which in turn employ more people and increase production.
All at a cost much cheaper than debt financing. You do not have to pay back equity. You only get to share profits and if those are repatriated out of Zimbabwe that would be no problem at all. The problem with debt is that whether businesses in Zimbabwe have recovered or not the debt still has to be repaid.
Equity investors only get return on their investment if the Zimbabwean businesses start posting profits.
That’s the reason we are paying close attention to what’s happening on the Zimbabwe Stock Exchange.
One last look at Britain’s offer
While we appreciate that the international community wants to reengage with us I personally think the route we need help in is making Zimbabwe an attractive investment destination.
The offer to pay back the World Bank and others is still sweet in that we need to pay back what we owe. We also know that by paying back what we owe inspires confidence in foreign investors so that would help in attracting equity funding.
So the offer to loan us the funds to pay back those debts is an offer we should take regardless of which route we choose to take.
So paying back what we owe should be as a sign of good faith to the international community and not to open new channels of credit. I realise it might not be possible to forgo debt altogether but it should be minimised.
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Basically, I pay your debt. You then owe me, but I own you. You become my bitch. I can turn the screw as much as I want. You can’t do anything cos you’re my bitch remember.
I know you’re broke, so I know you’re gonna default eventually so of course I will have Ts and Cs that in the event of your default I will pick and choose from the best assets…your land, your mines etc.
Go hungry for 1 night. It won’t kill you. It will make you more creative and more resourceful.
Excellent dissertation on the matter Dhedhi Taps.
I was about to write something similar (less provocative, but similar). The current leaders of Zimbabwe are no dummies. They know the deal. The History of other countries that the USA and Britain have sucked into their web should be fresh in the minds of these 60 to 75 year old African Politicians. Unfortunately, what everyone sleeps on is the fact that the foundation of Politics and ruling is corruption. There will be no real change for the average and not so average man and woman in Zimbabwe. The luxuries you witnessed with the Mugabes and other government officials are not far behind we the current group that has taken over. IT IS THE WAY..and Zimbabwe will be no different. The Americas and Britannias will turn these Politicians of ours into bitches..as stated. and the rest of us will be holding the debt. The sad thing about it, is we “the people” can do nothing about it. For those of us who are conscious (and we are few), we just sit back and watch…cause once the place I was born in, educated in, grew up in, worked in, fostered children in and did a whole lot of other things in, gets a whole of this small country. There will be many ways for the conscious (those that understand how the game works) to fit in to the scheme of things.
Basically, I pay your debt. You then owe me, but I own you. You become my bitch. I can turn the screw as much as I want. You can’t do anything cos you’re my bitch remember.
I know you’re broke, so I know you’re gonna default eventually so of course I will have Ts and Cs that in the event of your default I will pick and choose from the best assets…your land, your mines etc.
Go hungry for 1 night. It won’t kill you. It will make you more creative and more resourceful.
Excellent dissertation on the matter Dhedhi Taps.
I was about to write something similar (less provocative, but similar). The current leaders of Zimbabwe are no dummies. They know the deal. The History of other countries that the USA and Britain have sucked into their web should be fresh in the minds of these 60 to 75 year old African Politicians. Unfortunately, what everyone sleeps on is the fact that the foundation of Politics and ruling is corruption. There will be no real change for the average and not so average man and woman in Zimbabwe. The luxuries you witnessed with the Mugabes and other government officials are not far behind we the current group that has taken over. IT IS THE WAY..and Zimbabwe will be no different. The Americas and Britannias will turn these Politicians of ours into bitches..as stated. and the rest of us will be holding the debt. The sad thing about it, is we “the people” can do nothing about it. For those of us who are conscious (and we are few), we just sit back and watch…cause once the place I was born in, educated in, grew up in, worked in, fostered children in and did a whole lot of other things in, gets a whole of this small country. There will be many ways for the conscious (those that understand how the game works) to fit in to the scheme of things.
That’s robbinh Peter to pay Paul. Its a way of colonizing like I said on Pindula, kana uchida kubata huku unoikandira chibage. Iyo thinks it’s love but wakutoona nyama. Zim is to them a jackpot they can’t wait to lay their hands on. Don’t give them the opportunity… We would much rather admit we are a Highly Indebted Country though either way we are screwed.
Unfortunately Ash that is not how the game works. You are right, it is a way of colonizing. I don’t understand the Shona, but your last statement as “we would much rather admit………etc, is not how the game works. We are a small nation. The authors of this semi-coup understand exactly what comes next. These manifestations that are appearing now appear to be an “after the coup effect”. they are not. How do I know..I just know. Just wanted to bring you up to speed. there is nothing that will be said in any forum, News paper or otherwise to change the course of these up coming events that have played out with other Nations of this sort in the past. That slogan “Zimbabwe will never be a colony again” is just for amusement and consoling. You are up against people who eat and sleep New World Order.
Just recover one of those billions looted and we in the green that simple… Plus since when is Britain out any other country really out friend… Look how South Africa our own neighbor took us to the cleaners… They took out skilled labor… Our minerals… Our fdi… Ask in the name of silent diplomacy/looting
The way I see it is like this: Compensation for the former Zimbabwean White farmers has always been an albatross around The Queen’s kingdom neck. It is said the British had promised to pay the farmers but something went awry so they reneged. I think those farmers have always been knocking at Number 10 Downing Street for their dues (musiidzanwa wavo) and the British government fearing raising a stink from their parliamentarians and citizens they crafted this ingenious trick to the naive “new” Zimbabwean administration (who are are desperately looking for friends) into paying the farmers they owe. Don’t play with the British. It’s just like telling a stingy drinker that you will pay for the beers and then later on you trick them into giving that money back by asking them to pay for the fuel to go out for a braai. Hahaha!
Just think about how fast the British sent a representative to see a coup leader and the swift readmission of Zimbabwe into the Common Wealth. During the Government of National Unity they refused to lift targeted sanctions speedily telling all the AU and SADC members that it was a process. What has now changed?
Now back to your question…
I have two suggestions on either accept or refuse the offer. On the one hand, we desperately need the cash and it seems to be coming from no one other than the British. On the other hand we can tell the British ( and whoever wants to make us drink from their poisoned chalices) what Bob used them: TO GO AND HANG! and try a few tricks of our own:
1) We call upon our masses to industrialise the nation using home grown solutions and support them by giving them incentives from proceeds from our natural resources. This route calls upon the administration to keep a close eye on proceeds from resources and channel them into the development of home grown solutions,
2) Call upon those in the diaspora to bring back the technologies they are learning outside for the development of the country for a fee.
3) Being a country with highly educated people the government can export these and earn from the taxes paid by these people.
The keyword is inentivising those with export key labour. Rather than giving land to build houses on rowdy party youths, the government should instead give subsidized to free land to build houses to anyone with critical skills who gets employed outside and pays taxes back home. That way, we will not need anyone’s tied finance.
That’s my take.
I’m no fan of the current administration but we are all Zimbabweans and we cannot pay for their blunders.
Lloyd, your response to this question makes you my hero. However, a qualified hero. The in-house solution was never a on the table. This is not how dictators, Military rule or democracies work. The 3 possibilities (alternatives to taking the loan) you mentioned is what you coined the new administration of being “naive”. People fail to realize that a country, especially one like ours, is not a product of what the people think….governments are an industry on its own. It’s a big club and we ain’t in it. I understand though…you are given the illusion that you are and what you say and want to do in the country matter….nonsense. Money…Power…Military…..if you are missing any of these components (even if you have access to someone else’s) you are just whistling hot air. I will end here.
Debt restructuring is a facilitated process where commitment to a plan and accountability are key. International partners can participate in such facilitation.
Any form of funding must be directed at recapitalisation of Zimbabwe based industries and businesses thereby creating capacity to settle the debt that accrued over decades of decline in economic performance from sustainable activities in the country.
The political solution enhances economic turnaround by applying the wisdom of God, to create a n environment of trust, love , unity of purpose, patience, tolerance, and productivity.
As Zimbabwe, we need to invest in our future too with what we have already, use it as seed and not just be consumptive (seed to the sower thereafter bread for eating abounds ) bearing in mind, in All labour there is profit. It is time we work SMART.
A good article and good comments. As others have said, Zimbabwe should avoid debt. If you look at nations in the West, their growing debts are one cause of their decline. In the States, another cause is the degrading of our educational system. To make the suggestions above work, education has to be restored in Zimbabwe. I hope too that Zimbabweans do not lose their faith or their family and community ties. As we see here in the States, if God is pushed out of the picture or If families and communities are not together, the nation can not succeed.
NO. Heeeeelllll noooooooo. NAAAAWWWWW. NYO. no. I don’t mean to sound vindictive, but Britain sure as hell ain’t our oldest friend (I was beyond words when I read that statement from May’s spokesperson, like, for real, we are going to be blatantly oblivious to history now, *cough* colonialism *cough*, tf outa here.)
I get it, zim owes money, that money needs to be repaid, as a member of the international community we need to show we can uphold our debts and commitments. But there is no way in hell, a britain that is currently in free all (relative to where it was pre-brexit) is going to be setting up deals that are win-win for both parties, there is no way. Whatever deal they set up is going to be beneficial to them and them alone. Guys how can we be continually duped by the same people time and time again. I get it, mugabe did a great job vilifying britain, to such exaggerated levels one was left to question if they were truly the demon being depicted. But lets be objective about this. Besides the colonialism they supported up until world war 2 when they had an epiphany abusing and practically enslaving a people was wrong. The gukurahundi they applauded the zimbabwean government for conducting so much so they knighted mugabe even after the fact, and they knew how many people died (don’t get me wrong that ish was awful and an apology is required to truly let bygones be bygones), only now years later for it to be abhorrently wrong & incondonable. Then there’s the lancaster house agreement, because that agreement was made under the conservative administration, the labour government are not obliged to uphold it?? This people support zimbabwe when its beneficial to them and are against zimbabwe when its beneficial to them. Depending on what zimbabwe we get, determines that britain we get.
If zimbabwe manages to get its ish together, they will come, regardless, they are thirsty for trading partners post brexit. The mere fact zimbabweans are compensating white farmers should be enough. Honestly. If we are to take a loan, i just hope its from a more reliable “ally”. But as noted in the article, FDI would definitely be the way to go. I guess time will tell.