The Politics of Business in Zimbabwe

zim-ren-3
“A developmental state is characterized by a government with sufficient organization and authority to drive forward its economic goals. It is a state, which provides forward-looking guidelines to society through detailed, long-term development objectives and policies. Through its main machinery, the bureaucracy, it aims to effectively and efficiently create a suitable climate for economic growth.

 
“Moreover, such states take account of and make well-deliberated attempts to mitigate the impact of conflicting and competing socio-economic interests. A true developmental state thus exists when the state has the vision, leadership, and capacity to bring about positive economic changes that benefit all groups of society within a specified time frame.”

 
Now, according to John Knight, a researcher at the Oxford University Centre for the Study of African Economies, between 1952 and 1978 the Chinese economy suffered from a relatively slow growth rate coupled with low household incomes per capita.

 
He states that between 1952 and 1978 the Chinese people “suffered from the traumas of the Great Famine and the Cultural Revolution” and that “China had neither the firmity of purpose nor the policies to be a developmental state under central planning. Politics and not economics was in command.”

 
Post 1978 Chinese Economic Policy

 
However, as of the mid 1970s the Chinese state shifted its prioritized objectives from political to economic goals for three fundamental reasons:

 
●Firstly, improved living standards of the populous would avert political upheaval and cement support for the Chinese Communist Party (CCP)

 
●Secondly, China felt the pressure of competition from increasingly prosperous Western and some East Asian countries

 
●Finally, the Chinese Cultural Revolution had distorted the structure of the CCP and had essentially diminished the party’s capacity for central planning primarily because factional conflict had taken its toll on the party.

 

 
In Light of these factors, the CCP shifted its focus to economic reform. Put plainly, the Chinese state realised that politics had to decrease, in order for business and social development to increase.However, before the party outlined its economic strategy, it initially reformed the state and the party by modernizing the leadership system, insisting on professionalism and offering incentives for the achievement of state objectives.

 
John Knight observes, “Thus the party and (the) state bureaucrats including managers of State Owned Enterprises (SOEs) were molded to meet CCP objectives, to which the achievement of rapid economic growth was central. China became a Developmental State.”

 
Zimbabwe and Zim-Asset

 
Zimbabwe Agenda for Sustainable Socio-Economic Transformation (Zim-Asset) is the policy program through which the Zimbabwean government intends to transform the economy by 2018 by focusing on (among other things) infrastructure development, food security, poverty eradication and job creation. The policy has incited mixed responses from political and economic analysts, but , if fully implemented, the policy document has the potential to transform Zimbabwe into a developmental state.

 
To date, analysts have failed to observe that similar to China’s party and state reforms in 1978, which curtailed factionalism in the CCP and consequently enhanced the CCP and the Chinese state’s capacity for central planning and policy implementation, ZANU-PF has undergone a major restructuring program, which was concluded at the December 2014 elective congress. The primary objective of this exercise was to curtail factionalism and to enhance the party and government’s ability for central planning and policy implementation.

 
Now that the country is in the post-Congress period, it is appropriate that ZANU-PF focuses on successfully implementing Zim-Asset and its developmental goals, which fundamentally rely upon Foreign Investment. However, what can the country learn from China as an investment destination?

 
Chinese Investment Environment

 
Firstly, as to precursor to China’s post 1978 economic boom, the (CCP) Central Committee decided to “substantially increase the role of market mechanisms in the system… reducing (but not eliminating) government planning and direct control.

 
“The first reforms consisted of opening trade with the outside world, instituting the household responsibility system in agriculture, by which farmers could sell their surplus crops on the open market, and the establishment of Town Village Enterprises (TVE).”

 
In Zimbabwean terms, reports that the country’s finance ministry is considering “tweaking” the indigenization laws in order to make them investor friendly are welcome. Perhaps government should play a latent role in business, but should avoid direct control.

 
Finally, China has been an attractive investment destination because of the cost of labour. In the 1980s several Multinational Corporations relocated to China, especially because the labour costs were low and the labour policies were business friendly. In this light Zimbabwe should observe that high labour costs and labour law frigidity diminish the country’s potential as an investment destination and ultimately the fulfillment of Zim-Asset.

Donate to Zimrays by clicking
the paypal button below.

Our email address is
Zimrays@gmail.com

PayPal Donate Button

 
Tau Tawengwa

Executive Director

Advertisements