Many countries today have citizens disgruntled by the inheritance of poor policy making of the past, which has compromised current fiscal outlooks and shortchanged public services. The era of austerity across continental Europe resonates with this incidence. In Africa, the continuous strife of debt, though at one time much of the continent was granted debt forgiveness, remains prevalent today. Even looking ahead, a disconcerting trend is that with Africa projected to have more citizens than China within the decade, economic growth as measured by GDP remains proportionally lower than population growth in most countries. Who will take care of all the babies?
The underlying theme here is one of inter-period equity. Inter-period equity is a government’s obligation to disclose whether current year revenues were sufficient to pay for current year benefits, or did current citizens defer payments to future taxpayers. That is the rigid governmental accounting description of it. But, the concept can be expanded to structural policy making that is not referenced in annual expenditure versus benefits. For instance, as Brexit approaches, many UK politicians at the core of pushing for British separation from Europe have since left government, but many personally retaining the very same benefits impending to be cut out for UK citizens. Nigel Farage, for instance, reportedly retained his 73,000 pound EU pension. Nigel Lawson of Conservatives for Britain has since moved to live in France. The effects of Brexit may not be accountable to current year revenues and expenditures, but the structural separation obviously has future implications.
It is crucial for citizens everywhere to rely on a metric that places each dollar and policy decision, in context to the welfare of each citizen today and in future. A suggestion advanced by some of the world’s leading economists is one of performance based salaries and pensions for politicians. These can be benchmarked to outcomes such as employment, public service provision, citizens’ asset valuations, and other outcomes derived directly from a policymaker’s decisions on the job.
Currently, Finance Minister Ncube, is pushing a mantra of “austerity for prosperity”. At no point has he suggested a direct cause and accountability framework for why the Zimbabwean citizen has to endure a painful fiscal regime that has seen living standards depressed by over 150% within the quarter. Much of the civil unrest that has confronted Ncube’s program is not due to citizens’ misunderstanding of the need for austerity. They understand its necessity. Instead it is due to dissatisfaction that no politicians in a regime that left fiscal resources dry have to pay their share as well. Moreover, there is intentional bad faith in interpreting the inherited consequences meant to deflect accountability from culprits. For example, what is being shifted as citizens’ poor savings culture is in fact a consequence of repressive political intellect. Less than 10% of Zimbabweans contributing to savings is not a poor savings culture. It is due to repressive illiterate politicians that insisted employment numbers were above 90% when citizens really couldn’t find gainful employment for years.
Minister Ncube’s TSP is empty of interperiod equity. It has current and future citizens paying for inept policy decisions of the past, and it enforces that a rampant culture of corruption has all of its culprits escaping back door under a pretext of bygones being bygones, even daring to blame citizens themselves for residual economic outlook. But, in fiscal matters, the world is not tolerating the bygones pretext so easily. While the TSP may pass through disempowered citizens, foreign investors and donors are steadfast to demand accountability of past funds.
Aesthetics of handshakes, cordial smiles, or affirmation by the IMF of the TSP are far from suffice to settling legacy debt issues, particularly with the World Bank, and African Development Bank. Ncube portrays a misunderstanding that no matter the structural reforms approval by the IMF, it constitutionally cannot offer a financial package to the country until the World Bank and ADB arrears are resolved.
Minister Ncube should focus on back work tracing the debt stock to each project financier under the World Bank. In cases where cause of default or arrears is identifiable, Ncube should offer legitimate concessions to financiers. Indeed the notion is not to restructure those loans per se, as many of those developmental projects may not be viable in modern project dynamics or country needs, but rather aim to reach an agreement of progressive compromise with financiers. The dividends of this strategy are two-fold; internal and external.
In regards to foreign financiers and donors, this strategy goes beyond showing a mature empathy to multilateral creditors who had funds lost in Zimbabwe, but it also conveys sincere intent to reform the debt management culture in Zimbabwe under Ncube’s fiscal regime. This builds goodwill and confidence for mutual progressive relations. Currently, the World Bank and its agencies such as the International Finance Corporation (IFC) are carrying out advisory and consultative work in Zimbabwe as per the country’s shareholder rights. These reports advise that a huge impediment is that government has not shown any greater astuteness to financial structuring because of the legacy culture still in government.
Ncube and his fellow administration are also not helped by association with the fire breathing brand of politics akin to ZANU PF. A visible and unapologetic toning down of anti-sanction rhetoric by President Mnangagwa’s administration to the party and its public relations in media is necessary. Clumsy politicized stunts like War Veterans marching to the US Embassy to demand repeal of sanctions do not bode well either. As long as the Mnangagwa administration cannot come completely transparent, and enforce serious reprimand to the corruption and patronage that sank financier and donor funds intermediated by the World Bank, IFC, and other credit agencies, there is not much of an argument the administration’s political supporters can legitimately raise to gather multilateral support to repeal sanctions.
Internally, a back work program of financed projects and their contribution to Zimbabwe’s debt stock by Minister Ncube would help bring greater transparency for local support of a reformative fiscal program like the TSP. Ncube cannot carry on a path which covers up for past corruption and misappropriation, with burdens that now deprive local businesses and citizens of an easier environment to prosper. When the government speaks of arrears and debt, what are businesses and citizens suffering for? What took place, and how? There has to be clear evidence of which projects and companies received publicly guaranteed funding, along with the causes of default or arrears. More importantly, is there persuasive evidence of reprimand and an inflection in how national guaranteed debts are managed moving forward?
Oddly, such as program would reveal detail like Germany holding the greatest debt stock in Zimbabwe. So while political exertion seems focused on a sanctions battle with the USA, perhaps a wiser approach would be for Ncube to lead a technical resolution on German debt. After that, government can then be a mere conduit to German and Zimbabwean businesses on well structured, viable developmental initiatives. Not only will this build greater internal and external confidence, but it will then create a more potent strategy to then confront sanctions with US Congress. Bygones will not solve anything, back work may.