Eddie Cross says Zimbabwe is not a failed State yet – just remove the Reserve Bank of Zimbabwe from the interbank market and prices will fall

I thought we had seen everything that this country of ours could throw at us, but the situation right now looks like nothing we have seen before. Prices have quadrupled and continue to rise inexorably, incomes remain fixed or at least only 15 to 30 per cent higher for people in paid employment, fuel is still short or expensive and now massive electricity cuts. At my place in Harare we are out of electricity for 15 to 18 hours a day, every day.

Personally, I started to pay for my long term security with a major pension company when I was 17 years old, my father having told me you have to have an insurance policy. Eventually my portfolio was 5 policies – all with the same company, the biggest in the region, and I had contributed in one way or another well over a million US dollars to this company for my personal security once I retired.

Today this company, proudly sends me an e mail each month saying we have paid your pension into your account today in the amount of RTGS$94.00 (that is about US$10.00). A cup of coffee costs RTGS$8 to RTGS$12 in local coffee shops.

I met with a small group of student leaders on Saturday and they asked me all sorts of questions – one thing I told them was never pay into a pension fund. But really, what kind of a future can we offer our brightest and best young people if we cannot maintain the most basic economic ingredients for growth? What sort of future faces them and how do that prepare for that future? For most of them the future is a passport.

At Church on Sunday, one of the larger aid agencies told me that they were gearing up to provide basic food to 5 million people in the rural areas but were now thinking they might have to start a program in urban areas where absolute poverty and hunger were becoming a major issue. If you cannot provide food and fuel to your people, we are, as far as many people are concerned a ‘failed State’. How else do you describe what is happening?

But the reality is that we are far from a failed State, our fiscal surplus in the first quarter was $500 million, we are accumulating hard currency in our banks, for the first time ever, the balance of payments is strong, so why the crisis? Let’s look at each problem one by one.

Firstly, food: 20 years after the Government launched the ‘Fast Track Land Reform Program’ and three years after ‘Command Agriculture’ we are still importing the great majority of our food, food prices are high by regional standards and our poorest people (who are 70 per cent of the entire population) cannot afford to buy their essentials for daily life. Why? We have plenty of land, water to irrigate a million hectares of crops, we have the expertise and most of the equipment needed – what’s missing? Two words – real farmers.

In the USA 3 per cent of the population lives on farms, in Europe perhaps 5 per cent, in South Africa 70 per cent of all food is produced by 100 companies, in Zambia a small community of less than 1000 farmer’s make that country a net exporter on a large scale. What they all have in common is the respect of their countries for the contribution they make and security. Personal security and security over assets which enables them to borrow massively from the banks to cover short term costs and capital equipment. Here none of that applies and it’s just a matter of changing our policies.

Secondly, Fuel: In 2009, in a fifteen-minute statement we liberalized – floated our currency, removed all import restrictions, removed all controls on gold production and sales and dismantled price controls. In 10 days’ fuel supplies were freely available at world market prices, no allocations of foreign exchange from the Reserve Bank, no subsidies, no State controlled imports. Just private sector and free markets – ‘publish your prices on the forecourts’ was all we had to do and leave customers to decide where to buy their fuel from.

2013, we reversed those decisions, restored controls and State intervention, made the Reserve Bank the main trader in foreign exchange and we allowed monopoly interests to take control of the fuel industry. Instantly we were back in 2008, fuel shortages, high prices, well above regional and international levels and constant disruptions and shortages of foreign exchange. What do we have to do – unscramble the egg, go back to basics. Do not tell me we do not know what the solutions are – we do, it’s just the will to do the things that are necessary. What mechanism was behind the 2009 announcement by Chinamasa? A simple resolution in Cabinet, the day before.

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