THE ECONOMY
The significant manufacturing base of the Zimbabwean economy appears to be in contradiction with the general stagnation and lack of development in ‘third world’ countries. At the time of independence because of this base, there were great hopes among the bourgeois that capitalism in Zimbabwe could show the way forward to the crisis-ridden and impoverished states to the north.
The relative development of the economy, however, cannot be seen independently from the South African economy which dominates the whole region.
The development of the manufacturing sector took place most rapidly during the war for independence, in reaction to international sanctions. But the consequence was that the economy became dominated by the South African monopolies. This advanced integration into the South African economy has meant that the Zimbabwean economy generally follows the lead set by the dominant partner.
Recently, this has appeared to be contradicted by the movement of the economy in a direction opposite to that in South Africa. While the South African economy has been in the midst of a sharp downward phase, in Zimbabwe there has been a burst of economic activity. This has given rise to renewed optimism about the prospects for ‘independent’ development in Zimbabwe—yet in reality this trend will be overtaken by the fundamental tendencies of capitalism in crisis
The upturn in Zimbabwe was partly due to the effects of a devaluation of the Zimbabwean dollar, which has resulted in better earnings (in local currency) for the same volume of mining exports. But mostly it has been because of a good rainy season with a sharp increase in peasant production.
In Zimbabwe agriculture still makes the greatest contribution to the national economy and to exports. Despite the development of mining and manufacturing, tobacco is still the main single foreign exchange earner. In such a relatively underdeveloped economy, small economic changes, such as good rains or a new investment project, can have quite an important effect.
In 1985/6 the peasants delivered a record 900,000 tonnes of maize to the Grain Marketing Board—which is an increase 10 times greater than the best record prior to independence. Overall the l985/86 crop delivered to the GMB is 1,8m tonnes, 80% higher than the poor figures of the previous year, a year of drought.
The fact that Zimbabwe is one of the few countries of Africa which are able to feed their own population, and the rapid increase in peasant production, is causing western journalists to bubble over with excitement at this capitalist miracle which is a ‘model for Africa’.
The dramatic increase in peasant production has come after years of droughts during which production has been very low. The good crops have been the result of large-scale state intervention—the very policies which the IMF have brought to a halt in Africa in the drive to cut budget deficits.
The government provided the peasants with fertiliser seeds, and the possibility of plugging into a state ploughing scheme. Most importantly loans to peasants have been made by the stare Agricultural Development Bank (some Z$40m over the last season). The state Grain Marketing Board has expanded its depots into most peasant regions, thus eliminating the ‘middle men’ and ensuring a predictable income from the sale of grain in a reasonable time.
All this is an argument for more state intervention, not for less!
The crucial factor, however, has been the fact that unlike most of black-governed Africa, Zimbabwe has a manufacturing industry capable of turning out stylish clothes, radios and batteries, bicycles, and most importantly, agricultural implements, seeds, and fertilisers. The availability of these goods locally (without eating into foreign exchange) is a tremendous incentive to the peasantry to expand production for the market.
Thus the upturn in the peasant areas in Zimbabwe results from: organised state support for peasants, and the possibility of peasants buying consumer goods with their earnings from the sale of their products.
In the same way, the prospects for continued agricultural growth are entirely bound up with the prospects for the development of industry. Yet it is here, on a capitalist basis, that the prospects are most limited.
The capitalists themselves acknowledge that Zimbabwe is undergoing only a ‘moderate upturn’ and that manufacturing—the key sector for development—is dragging behind agriculture. The transport equipment industry, for example, has not seen an increase in production at all!
Despite the general upturn in the economy there is, according to the Minister of Industry, Callistus Ndlovu, a crisis in manufacturing. This is not only caused by a lack of confidence in the future by the capitalists. Although by African standards Zimbabwe is relatively prosperous, there is a very limited market by world standards, and no good prospects for exports.
It is this, fundamentally, which limits the prospects for local or foreign capitalist investment in Zimbabwe. Even where decisions have been made to invest, the capitalists face the problem of a shortage of foreign exchange to pay for the imported machinery and raw materials needed for production.
Even at the beginning of the upturn, the more intelligent bourgeois commentators admitted that the boom could not last because of the shortage of foreign exchange. This shortage will inevitably lead to the recovery faltering, and will result in shortages both of intermediary and consumer goods.
The problem of foreign exchange
The main cause of the cuts in foreign exchange allocations so vital to ensuring continued growth is the growing burden of foreign debt. With the stagnation and decline in world commodity prices, Zimbabwean exports have not been able to earn sufficient foreign exchange to pay off these debts.
Since independence, a surprising Z$580m has been spent in repaying existing foreign debt. To meet the demands of the foreign bankers the government has been forced to cut essential spending of foreign exchange on machinery and raw materials.
The Mugabe government strategy is to gamble everything on attracting foreign investment. After imposing a ban on profits and dividends leaving the country, a relaxation was announced, apparently at the insistence of the IMF. The government now hopes that, having won the favour of the IMF, it can ask for further loans to finance the outflow of capital in the form or profits and dividends!
Wriggling in the grip of finance capital, the government is hoping that its demonstration of ‘good faith’ in allowing the export of profits will encourage a big inflow of foreign investment.
As a RAL economic review pointed out: “if the current economic upswing is not to be aborted … the active rather than the passive encouragement of foreign investment now seems to be about the only viable solution”. This would ease the foreign exchange problem, as investment would be made in ‘hard’ currencies. Both the government and its capitalist advisors are grasping at a straw!
There has been no significant foreign investment since independence and there is no reason why the capitalists should start investing now.
Although in 1984 there was the first balance of payments surplus since 1979, this ‘surplus’ has been built up on devaluation, the temporary increase in raw materials exports (particularly to the US), and ‘creative budgeting’. According to one bourgeois economist the current account balance is “very much the same as it was at the end of 1983 when a deficit of $450 million was incurred”. (Herald, 28 March 1985)
The shortage of foreign exchange, more than any other factor, is marking the limits to the development of manufacturing — the cutting edge of change from an undeveloped to a developed economy.
Prospects for the economy
A recent article in the Financial Times (21 August 1985) exposes some of the reasons for the doubts of the capitalists about the economic future of the country. Bourgeois commentators are worried by the vulnerability or the Zimbabwean economy both in relation to South Africa and in its long-term prospects generally.
The possibility of counter-sanctions by a desperate South Africa with its back to the wall is raised as a question mark over Zimbabwe’s future economic prospects. Undeniably there must be some thinking on these lines by the Botha regime. But what has held back the showdown at present is a recognition of mutual economic dependence. As well as the trade between them, South Africa has enormous investment in Zimbabwe, while Zimbabwe desperately needs secure trade routes through South Africa to world markets.
This recognition has led to a brittle but diplomatically ‘correct’ relationship between the two governments, although the growing Zimbabwean military intervention in Mozambique to secure the transport route to Beira against MNR attack shows Mugabe’s desperation in trying to break free from the southern stranglehold.
All hopes in an alternative to economic links with South Africa through SADCC and the Preferential Trade Agreement or Southern and Eastern Africa are, however, illusory. The economies of Botswana, Mozambique, Zambia, Malawi, etc are either insignificant, or devastated by war and low world commodity prices, and provide no realistic alternative market.
Mutual cooperation between them is also constantly threatened by trade barriers and a lack of foreign currency. The crash of the rand has, paradoxically, strengthened South Africa’s grip over the region, as its exports are now much cheaper.
A country whose economy is so dependent and dwarfed by South Africa can hardly hope to grow steadily when the economic giant of Africa is a sick neighbour. Already key markets for Zimbabwean manufactured exports (which are encouraged by the Preferential Trade Agreement between Zimbabwe and South Africa) are being cut off by tariff barriers and by the higher value of the Zimbabwean dollar in comparison with the rand. This fall off in exports is not being compensated by significant opportunities on the world market, as the major capitalist powers are either experiencing economic decline or slow growth.
The fundamental weakness of capitalism in Zimbabwe in developing the economy is ironically shown during the present upturn. The basis of this upturn has been the sharp rise in agriculture, even though manufacturing responded by an increase of production of 11%. But key sectors of manufacturing such as metals and transport equipment have gone against this upward trend and declined in 1985.
As significantly, the crisis in world commodity prices is now paralysing the mining industry. The volume of output has declined since 1980. World metal prices have fallen by 13% in 1985 and profits have only been maintained by a corresponding 18% depreciation in the value of the Zimbabwean dollar.
Almost all expansion has been the result of using spare capacity—even though the bourgeois economists realise that investment-led growth is the “only means of achieving real economic growth in the long-term”. (RAL, Sunday Mail, 29 September 1985)
A recent survey showed that over 60% of businesses were making no plans for investment—”an extraordinarily bleak picture” according to the University of Zimbabwe’s Department of Business Studies. Overall investment from 1983 to July 1985 was little more than the entire investment made in 1981! (Africa Now, September 1985) By refusing to invest, the capitalists are making sure the upturn will not last.
Capitalism has been unable to provide more jobs and higher incomes for the people as is shown in startling figures on the lack of jobs, low incomes, etc, both before and after independence.
Since the mid-1970s mare than 100,000 jobs have been lost in agriculture (mostly after independence), 10,000 in mining, 4,000 in furniture, 10,000 in clothing, and another 10,000 in engineering. (Herald, 2 April 1485) Only a thin layer of educated people have been to able gain the privileges of civil service employment, mainly by taking over the jobs of departing whites, rather than in new jobs.
Over the past decade per capita incomes have not increased at all: in 1985 they were little different from when Smith declared unilateral independence 20 years ago, or when independence was conceded in 1979! Despite the enormous political struggles and achievements, the dead hand of capitalism has held back material progress for the mass of the people. The bourgeois economists blame black families for having too many children, rather than pointing to the declining number of jobs.
Even if the most optimistic forecasts are accepted (and these are actually quite unrealistic), the masses would have to wait until the 1990s to get their living standards back to those of the historic peak of 1974. (Financial Times, London, 21 August 1985)
These limits of capitalism which are so clear on the general economic field are showing their effects in political decisions. The July 1985 budget showed that the state, even in times of upturn, is being forced to cut back on the advances made after independence.
Cuts
Large real cuts in spending on agriculture, resettlement, construction, and housing have been made, with smaller reductions in education and health. The investment in the public sector, the keystone of the government is approach to ‘gradually achieving socialism’, dropped in real terms by 3% in the 1985 budget!
Despite these cuts there was a record budget deficit (excess of spending over income) of Z$808m, and up to 20% of the budget is now allocated to paying back debts and loans. Increasingly, social programs are having to be financed by loans from capitalists at home and abroad.
To lessen state responsibility, local authorities are being given the task of financing new schools, and there have been calls for reducing or eliminating so-called “non-essential’ spending on such things as roads and community halls. All this means that the town councils will be under enormous pressure to increase township rents, rates, and charges generally.
As the politicians in the towns come under fire from the workers and their families so they in turn will be beating on the doors of the Ministers to get finance for local government to bail themselves out.
The present upturn is unable to last long. In the coming downturn, in will continue, and even increase. Shortages of foreign exchange can reduce supplies of raw materials, spare parts, etc, thus creating shortages of locally-made consumer goods. These are among the factors which will in due course blunt the improvement in peasant incomes and the peasants’ desire to sell their products.
With the United States economy slowing down and Europe set to follow, the prospects for continued growth in Zimbabwe are not good. Even with a good rainy season in 1985-86, according to a recent RAL report, growth is unlikely to be much above zero, and a new downturn in 1987 seems certain.
The weak upturns of the diseased capitalist system provide no solution for the basic demands of the mass of either workers or peasants. To provide a decent life for all working people, the only way forward lies in the struggle to end capitalism—to bring the big factories, banks, mines and farms into state-ownership, under democratic workers’ control and management. This would provide the basis on which peasants could obtain adequate land and the inputs needed to develop it.