Kubatana.net ~ an online community of Zimbabwean activists

Archive for March, 2009

Time to get more creative about aid

del.icio.us TRACK TOP
Tuesday, March 31st, 2009 by Amanda Atwood

I’ve just finished Dead Aid, Zambian economist Dambisa Moyo’s book on “why aid isn’t working and how there is another way for Africa.”

At a time of STERP and budget slashing, Moyo’s book poses an interesting challenge to Zimbabwe’s Minister of Finance and the inclusive government as a whole.

Moyo is sharply critical of aid and its role in Africa’s development:

Sixty years, over US$ 1 trillion of African aid, and not much good to show for it. Were aid simply innocuous – just not doing what it claimed it would do – this book would not have been written. The problem is that aid is not benign – it’s malignant. No longer part of the potential solution, it’s part of the problem – in fact aid is the problem.

Foreign aid and concessional loans have contributed to Africa’s bad governance and human rights track record, Moyo posits, by supplanting the relationship between governing and governed with the relationship between government and donor.

Moyo doesn’t for a moment doubt Africa’s need to develop. But rather than relying on aid for this purpose, Moyo recommends that countries instead turn to a combination of:

  • Bonds
  • Trade – local, regional and foreign
  • Foreign Direct Investment
  • Micro-finance
  • Leveraging remittances

In her book, Moyo outlines the potential each one of these areas has for promoting growth – and the challenges countries would face in leveraging each of these options.

Unfortunately, the principle challenge raised by Moyo’s suggestion is a governance one – it would require political will for governments to convert their aid dependency into a more business model approach to financing. Financing is hard work compared to getting aid, and it requires transparency, accountability, and sound decision making to keep it. For politicians who have themselves been getting rich off of aid – even as their countries don’t develop – there’s a disincentive to move to the harsher conditions of the market. Those politicians who would want to change would face stiff resistance from their more corrupt and less forward thinking colleagues.

Despite the obstacles, Moyo consistently argues that moving away from donor dependence and towards a more diversified, business model of finance, is good for its own sake, as well as having the potential to be more financially lucrative. Of course, as Moyo points out, having confidence in the institutions – the banking system, the government, the laws, and the government’s respect for these laws – is an important part of encouraging business in a country.  Zimbabwe has a long way to go on this score; suspicion is still rife.

But Moyo’s point on remittances particularly stood out, given recent conversations I’ve been having.

The UN estimates that there are around 33 million Africans living outside their country of origin. Remittances – the money Africans abroad sent home to their families – totalled around US$20 billion in 2006. According to a United Nations report entiteld Resource Flows to Africa: An Update on Statistical Trends, between 2000 and 2003 Africans sent home about US$17 billion each year, a figure that even tops Foreign Direct Investment, which averaged US$ 15 billion during this period.

Although the actual remittance sums taken individually are relatively small, taken collectively the remittance amounts flowing into African nations’ cofferes are enormous. On  a household level, remittances are used to finance basic consumption needs: housing, children’s education, healthcare, and even capital for small businesses and entrepreneurial activities – the heart of an economy.

Remittances are, of course, in some sense a form of aid (the recipient is essntially getting something for nothing). And like other forms of aid, there is the inherent risk that remittances encourage reckless consumption and laziness. But at least some part of the money is reaching the indigent and making its way to productive uses. And unlike aid, it does not increase corruption.

With Zimbabwe having moved to a US dollar based economy, obviating the official vs. parallel market exchange rate dilemma, and with the mandatory foreign currency remittance to the central bank lifted, moving money from overseas into local bank accounts should become easier. And hopefully, with an interim government that is able to engender a bit more trust in the population, encouraging remittances should be met with less cynicism than Gono’s Homelink initiative was some years back.

Even my lowly banking society, CABS, has created USD accounts for all of its existing ZWD account holders. One only has to deposit $10 into the account for it to be active – the same swipe card, account number and pin number apply.

One can imagine an economy in which shops again started offering point of sale services – for customers to swipe their USD account bank cards. Schools could offer their account details for both local and Diasporan Zimbabweans to pay school fees directly into their accounts. Relatives could make other purchases, for example for electronics, equipment or other investments directly into the supplier’s bank account.

Morgan Tsvangirai recently estimated that rebuilding Zimbabwe will require at least US$ 5 billion. The revised 2009 budget stands at about US$ 1 billion – and most of that is for running the country, not rebuilding it. And whilst Zimbabwe is asking for aid, Mugabe’s and Zanu PF’s assets remain untouched. Zimbabwe needs financial help – but it needs this help to solve its problems, not create new ones or compound the existing ones. It’s time to get creative about how we finance our future – and depending on donors to bail us out isn’t the only way.

Shout shout, let it all out

del.icio.us TRACK TOP
Saturday, March 28th, 2009 by Bev Clark

If the response that we get from Kubatana subscribers is anything to go by, its quite clear that Zimbabweans need ways in which they can make their grievances known and know that their concerns are being heard and being addressed. Emails are flooding in from people who have a variety of things that they want to Shout Out, like . . .

The pressure must be kept on all persons involved with the future of our people. Decisions that are made by those in power must be looked at and either commended or criticised from now on. - Lionel

May you kindly open a new column/platform where we can air our grievances on unfair load shedding by Zimbabwe Electricity Supply Authority (ZESA). We are subjected to excessive load shedding whereas there are some areas which are enjoying at our expense. In other words, we are subsidising other areas that do not have load shedding. We are all bearing the pain of paying high bills in forex and the problem of power shortage is a national problem therefore it should affect every citizen without sparing anyone. 1. We need a fair load shedding timetable. 2. We need an explanation on why some areas are free from load shedding.
- Alan

Is there any action on protesting about the NetOne bills that we are getting from NetOne and First-tel. 90% of the time there is no network for Netone in Beitbridge. - Priscilla

Sorry to say these parastatals are milking people dry to pay off there salaries. We should not fund the expensive life styles of corrupt officials. They are not accountable to anyone other than themselves and their political bosses. We are sick and tired of patronising these people since 1980. - Wellington

I think serious Zimbabweans should shun from giving information, giving their opinions or commenting on various subjects when asked by ZBC or NEWSNET journalists. - Oliver

No reform, no lifting of sanctions

del.icio.us TRACK TOP
Saturday, March 28th, 2009 by Bev Clark

Don’t lift any sanctions, say Jenni Williams and Magodonga Mahlangu, the leaders of Women of Zimbabwe Arise (WOZA). A pom pom and more than a few cheers should go their way for saying so clearly what others are too timid, or too diplomatic, or too optimistic to go near.

Arrest the police

del.icio.us TRACK TOP
Saturday, March 28th, 2009 by Bev Clark

I was pleased to read that Morgan Tsvangirai our new Prime Minister (is there any power in his “p”) is promising that farm invaders will be arrested. I suggest he starts with the Deputy Commissioner of the Zimbabwe Police, the invader Veterai.

Set a new election date

del.icio.us TRACK TOP
Saturday, March 28th, 2009 by Bev Clark

An article titled Stimulus for Zimbabwe by Tom Woods and Roger Bate writing for The American suggests that Zimbabwe takes a leaf out of Liberia’s book when it comes to the reconstruction of our country.

According to the authors “Liberia faced a similar challenge in 2005. Strong bipartisan and international support for assistance existed, but the transition government had its hand in the proverbial cookie jar. The United States pushed for the creation of a Liberian Governance and Economic and Management Assistance Program (GEMAP), which controlled diamond, timber, and other revenues coming into the government’s coffers so that funds were fully accounted for and could not be embezzled to Swiss banks or allocated to corrupt activities.”

So Woods and Bate recommend that Zimbabwe adopt a Zimbabwe Economic Management Assistance Program (ZEMAP) similar to GEMAP to get us back on the road to recovery.

Here’s an excerpt from the article:

Zimbabwe’s power-sharing arrangement should be viewed as an imperfect and temporary solution to a profoundly unstable political and humanitarian situation. Transparent and internationally monitored elections should be pursued in the shortest timeframe possible and should be linked to any foreign assistance.

Dangerous desperation

del.icio.us TRACK TOP
Saturday, March 28th, 2009 by Amanda Atwood

According to ZimOnline, Zimbabwe’s Finance Minister Tendai Biti believes that “The consequences of it (unity government) not working are drastic, it will lead to a failure of the state, a collapse of the state and all the civil unrest that follows the failure of a state.”

Anyone would agree that Zimbabwe’s economy is in dire straits. All sectors of the economy, from business, agriculture, industry and mining to education, health care and sanitation need more money, more support and more stability if the country is to recover from the downward spiral of recent years and again be able to provide prosperity and development for Zimbabweans.

I appreciate that Biti may be deliberately presenting worst-case scenarios to pressure foreign governments and aid agencies to give more generously to Zimbabwe. He’s saying that if the unity government collapsed because it was short of finance, it would cost even more to clean up the mess that would create.

But I question the desperation inherent in Biti’s statement. It implies the potential to cling to a non-functioning unity agreement, because one is afraid of the alternatives. To date, Zimbabwe’s democratic transition has been a story of imperfect, negotiated settlements that we are urged to accept because “what other option is there.” Painting our current interim government as “make or break” just adds to the feeling that we must accept this deal, however flawed, because the alternatives are too ghastly to contemplate. And it stifles criticism of the deal, because who wants to be a spoiler if this really is out best hope?

But settling for a morally bankrupt compromise solution is what is most ghastly. Rather than clinging to blindly to our imperfect agreement, politicians should be encouraging all of us to open up the space in which to contemplate our alternatives more positively and proactively.