The world according to Biti

Anyone who says elections in Zimbabwe are coming up this year, next year or in 2013, is out of his mind, so says Zimbabwe’s Finance Minister and Movement for Democratic Change secretary-general Tendai Biti according to the Financial Times. 

“ Who knows? What we do know is that we have agreed on a roadmap, based on the completion of a constitution-making exercise, from the creation of a new electoral roll, new constituency boundaries. So what will determine the date of the next election is the implementation of these things.

“ZANU-PF are unrepentant and incorrigible. But Africa has seen through them. South Africa, President Zuma, and others, won’t tolerate digressions from democratic will. We have learnt a lot from North Africa as global citizens. The lesson is that you can’t disrespect people’s will.”

Below is the full story from the Financial Times.

The world according to Zimbabwe’s finance minister

by Sid Verma, FT Tilt

Tendai Biti’s in-tray must be quite literally creaking. As finance minister of Zimbabwe, Biti faces an unenviable number of political and economic challenges, ranging from the country’s huge brain drain, skills shortages, a broke central bank, a lack of fiscal infrastructure, and a banking crisis, to name but a few.

Biti, installed in February 2009, is a key figure in a power-sharing agreement between two parties – the Movement for Democratic Change (MDC) and Robert Mugabe’s Zanu-PF. But it is a messy marriage of convenience. The MDC are still fighting a turf war with Mugabe’s supporters, who are in control of key institutions, including the central bank, army, police and judiciary. The battle has exacted a heavy personal toll on the finance minister, who has suffered a number of attempted assassinations over the years.

The secretary-general of the MDC — who is the usually the contact for foreign financiers when they fly into Harare — shared some insights on the political and economic obstacles facing Zimbabwe in an interview conducted on Wednesday on the sidelines of the African Development Bank annual meeting in Lisbon.

Politics

The Global Political Agreement (GPA), fleshed out as part of the power-sharing government, stated elections should be held under a new constitution by March 2010. Having missed this deadline by a mile, speculation has grown that elections could take place before constitutional changes are established. Here’s Biti’s take:

Anyone who says elections are coming up this year, next year or in 2013, is out of his mind. Who knows? What we do know is that we have agreed on a roadmap, based on the completion of a constitution-making exercise, from the creation of a new electoral roll, new constituency boundaries. So what will determine the date of the next election is the implementation of these things. Zanu-PF are unrepentant and incorrigible. But Africa has seen through them. South Africa, President Zuma, and others, won’t tolerate digressions from democratic will. We have learnt a lot from North Africa as global citizens. The lesson is that you can’t disrespect people’s will.

Debt

The government approved a plan in November to pay arrears of around $1.3bn to international lenders, including the International Monetary Fund, the African Development Bank and the World Bank, in a move that would ensure the country was eligible for concessional loans to help rebuild its battered economy. Biti said debt repayment was behind schedule, but he declined to give any firm figures and dates:

We had hoped by now that IMF would be in Zimbabwe to execute and conduct an accelerated engagement programme but we are weighed down by [missing] certain targets, like economic reporting and fiscal deficits and so forth.

What’s more, the noise around the elections has delayed the debt repayment plan, he said:

If you judged us purely by macro-economic standards, you would find we are in compliance compared with a lot of other African countries. But, unfortunately, the story of Zimbabwe is that we get judged by non-financial things because our politics is very ugly.

Indigenization

A new Zimbabwean ‘indigenization‘ law gave foreign mining companies until June 2 to show how they will sell 51 per cent of their respective equity to black Zimbabweans or state companies. It has sparked concerns of foreign investor flight. Here’s Biti’s take:

It [the new law] is a contradiction in terms [given Zimbabwe’s need to attract external capital] but I think when you study the laws you can achieve democratising [the economy] without causing damage [to foreign investor confidence].

Asked how the indigenization push would affect foreign banks in Zimbabwe, he drew a contrast between mining companies that hold physical assets and financial institutions:

We are in the process of consulting with them. It is important to remember banks don’t own anything [unlike mining companies that hold physical assets], they are just vehicles from people’s capital, a bank transmits wealth.

Aid

Biti’s orthodox economics and push for better governance have generated a degree of optimism among western donors, who previously withheld funding in protest against Mugabe’s rule and misuse of funds. Although aid disbursements have picked up, Biti laments the slow pace of change:

A lot of donor funds have said that they will not come into Zimbabwe as long as the Zanu-PF is there. But there are ordinary Zimbabweans that need assistance. They [aid agencies] should rightly raise the rule of law. I advocate engagement through the African Development Bank’s Zimbabwe fund, or the World Bank’s multi-donor trust fund, this [type of aid vehicule] mitigates [the risk of] corruption by Mugabe and his lot.

Zimbabwe is suffering from a huge capital shortage, we need overseas development assistance. The ratio of revenues to GDP is 30 per cent, which is highest on African continent, usually its 15 per cent but donors have not been a party vis and viz Zimbabwe.

China

Supporters of Mugabe, and others, often moot the prospect of Chinese FDI and aid into Zimbabwe as a tool for disengaging from the West. But Biti flatly denied China had a strategic presence in the country:

We have not received bilateral aid from China and we have yet to see the fruits of its investment [in Africa].

Estimates

For the 2011 fiscal year end-December, he forecast 9.3 per cent growth, 4.5 per cent inflation, a balanced cash budget, a current account deficit, a marginally surplus capital account, 23 per cent expansion of the agricultural sector and 44 per cent growth in mining.

Reforms

He pledged the following:

• To introduce a new income tax act.
• Establish a new financial services supervisory body to oversee the beleaguered banking system.
• Demutualise the stock exchange.
• Establish central depository services.
• Look into allowing dual citizenship in order to attract the diaspora.

Biti is battling valiantly to heal Zimbabwe’s economic wounds, but to kickstart a sustainable recovery, political stability is desperately, desperately needed.

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