Foreign investment is not the answer

Zimbabwe is currently a clean slate on which anyone can write. The government is pushing for indigenisation saying this is the only way it can empower its people. Others argue that the country cannot do without foreign investment. Indigenisation is scaring away foreign investors? Who is right? It depends on your own persuasion. Academic and former Tanzanian minister Abdulrahman Babu argued in the postscript to Walter Rodney’s book: How Europe underdeveloped Africa that foreign investment is not the solution. But that was more than 40 years ago. Here is an excerpt.

Throughout the last decade we have been posing the wrong questions regarding economic backwardness. We did not ‘look into the past to know the present’. We were told, and accepted, that our poverty was caused by our poverty in the now famous theory of the ‘vicious circle of poverty’ and we went round in circles seeking ways and means of breaking that circle.

Had we asked the fundamental questions which Dr Rodney raises in this work we would not have exposed our economies to the ruthless plunder brought about by ‘foreign investments’ which the exponents of the vicious circle theory urged us to do. For, it is clear, foreign investment is the cause, and not the solution, to our economic backwardness.

Are we not underdeveloped now because we have been colonised in the past? There is no clear explanation to the fact that practically the whole of the underdeveloped world has been colonised either directly or indirectly by the western powers.

And what is colonialism if it is not a system of ‘foreign investments’ by the metropolitan power? If it has contributed to our underdevelopment in the past, is it not likely to contribute to our underdevelopment now, even if the political reins are in our hands?

Put in this way the question of underdevelopment is immediately rendered more intelligible, even to the uninitiated. And this is how Dr Rodney is directing us to pose our questions.

The inevitable conclusion is that foreign investment does not only help to undermine our economies by extracting enormous profits, etc., but it does more serious damage to the economies by distorting them into lopsidedness and if the process is not arrested in time, the distortion could be permanent.

As long as we continue, as we have done for centuries, to produce for the so-called ‘world market’ which was founded on the hard rock of slavery and colonialism, our economies will remain colonial. Any development will be entirely incidental, leaving the vast majority of the population wholly uninvolved in the economic activity.

The more we invest in export branches in order to capture the ‘world market’ the more we divert away from investing for people’s development and, consequently, the least effective our development effort.

And since this type of investment does not contribute much towards the development of material and technical base internally, our economies are rendered always responsive only to what the Western world is prepared to buy and sell, and hardly responsive to our internal development needs.

That is why, although most of our development plans make elaborate resource allocation for ‘rural projects’ invariably most of these resources find their way back to the urban projects and consequently accentuate the urban/rural disparities.

Slums, unemployment, social maladjustment and, finally, political instability are our most outstanding characteristics.

Almost without exception, all the ex-colonial countries have ignored the cardinal development demand: namely, that to be really effective, the development process must begin by transforming the economy from its colonial, externally-responsive structure, to one which is internally responsive.

Where we went wrong is when we followed blindly the assumptions handed down to us by our exploiters. These assumptions can be stated briefly as follows: Growth in underdeveloped countries is hampered by inadequate growth in exports and inadequate financial resources and is made worse by ‘population explosion’ in these countries. Step up exports, increase aid and loans from the developed countries and arrest growth in population.

Throughout the last decade our efforts have been to follow religiously the above prescription, and even if our own experience continues to disprove it, we still adhere to it even more fanatically!

The greatest need appears to be a process of mental de-colonisation, since neither common sense nor sound economics, not even our own experience is with us in this.

*We welcome responses, opinions, views on foreign investment. Please send them to: charlesrukuni@insiderzim.com

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