Tuesday, 13 March 2012

Zimbabwe’s Discordant Linkage of Foreign Direct Investment and the National Economy.

Zimbabwe’s Discordant Linkage of Foreign Direct Investment and the National Economy.
By Takura Zhangazha.*
On March 1 and 2 this year, the Ministry of Economic Planning and Investment Promotion held an investment workshop in Gauteng Province, South Africa. The    conference was held under the theme ‘Realizing Zimbabwe’s Investment Potential’ and was primed to attract the South African and the broader  international business community to invest in our country. It turns out that the most contentious issue in the aftermath of the conference was that of the government’s policy of indigenization. This being particularly evidenced by the public spat generated when the Minister of Youth, Indigenization and Economic Empowerment, Mr. Kasukuwere referred to statements made by Prime Minister Tsvangirai at the same conference as being characteristic of a ‘lose cannon’. It is probably not only in Zimbabwe where one minister attacks a senior member of cabinet with such brazen vitriol, but that is probably a full indication of how fractured the inclusive government remains.

The bigger issue however is not related to what can only be viewed as a public display of insubordination by Minister Kasukuwere to the office of the Prime Minister. Instead it is to query the motivation of the inclusive government, via the relevant ministry to host an investment conference without being clear within its own cabinet on the short, medium and long term effects of indigenization of the economy. This is because courting the South African and in the same process, the broader international business community to invest in Zimbabwe is obviously a matter that merits a common and collectively responsible  investment  approach from any serious government.

There are three  quick probable  answers as to why the government went ahead with hosting this conference regardless of evident policy disagreements. The first being that  the ministry responsible  probably wanted to be seen to doing the right thing by way of the government work programme. Secondly, there is obviously an intention by the ministry which is run by an MDC-T minister to demonstrate its commitment to what has come to be viewed as the ‘best practice’ courting  of private-public sector partnerships and Foreign Direct Investment (FDI).

The third reason why cabinet as a collective and with at least four ministers in attendance agreed to host this conference is that Zanu Pf probably wanted to prove a particular political point to both South African business as well as its reluctant  bedfellows in the inclusive government. This being that regardless of the investment conference’s  or international capital’s concerns, it was not going to change its globally controversial indigenization plans. This was a point made even more poignant by the very Minister Kasukuwere’s very public insistence that mining giant, Zimplats concede to ceding shares to the government the same week the investment conference was due to be held.

All these probable and somewhat political reasons are however only symptomatic of a larger problem that faces the ‘matrix’ (to use our Finance Minister’s terminology) of the state, foreign direct investment and the national economy. It is functionally an ‘inorganic ‘matrix thus far into the tenure of the inclusive government. This is  primarily because of its heavy emphasis on the extractive nature of FDI in Zimbabwe without social investment conditionality on those international conglomerates that are being courted. And this, if one takes the examples of the diamond mining industry, has been done with what can reasonably presumed to be collusion between state elites and international mining concerns.  The outcome of these not so clear  deals and mining concessions, has been negligible in relation to progressive societal or public infrastructure  impact. 

To compound matters further, the inclusive government seems over-obssessed with public-private partnerships without clearly delineating the expected broader national development impact of the same. This may be because some ministers are somewhat overkeen on demonstrating their ability to grasp World Bank or IMF concepts even where the same said concepts or strategic economic interventions are inapplicable to our national context or where they have proven to be a failure elsewhere ( a key example is that of biofuel agriculture in Chisumbanje, which has been discredited as disempowering to peasant farmers and damaging to the environment in parts of Latin America). 

The inclusive government, particularly the ministries that are responsible for trade, mining, promoting investment and finance need to learn to drive a much more transparent and publicly accountable FDI bargain. Indeed while the national economy has suffered over the last ten or so years from the flight of investment, it remains necessary that we do not negotiate on a platform of complete desperation for any sort of investment. Be it from the East or the West. 

A firmer FDI negotiation platform would be strongly assisted if the government sets out social responsibility frameworks for potential and current international companies that are in Zimbabwe. This would include making FDI acceptable where it is linked to the development of public infrastructure that will benefit not just the military but also our hospitals, transport networks (especially our national railways) and our education system (with emphasis on transfers of knowledge to Zimbabweans). And in all of this, our ministers must be cautious about seeking international recognition merely because they have come to grasp seemingly complex financial and investment concepts. They must be more focused on our local contexts when they court international capital in order that it also finds progressive meaning to all Zimbabweans and not just those that are in proximity to state power.
*Zhangazha writes here in his personal capacity.