ESSAY | The administering of wealth: why Zimbabwe’s ‘middle income by 2030’ is a fantasy

(pic: Roel Burgler)

By Chris Chenga

“By 2050 more than 40% of people on the planet will live under severe water stress. 20% will be exposed to frequent floods. Assets at risk of floods could reach $45 trillion. Even as availability becomes more scarce, water pollution is increasing.”

This is a passage in a report by the Organisation for Economic Co-operation and Development (OECD).

When a friend asked me who I would vote for in the 2013 presidential elections, I posed the question to him as a counter inquiry; whom did he presume would offer a sound strategy for the country to this impending global scenario? We settled that such a topic was perceived as too abstract in Africa’s political contestations, and as such, was not important in evaluating a suiting president.    

Every nation has the right to choose its imperatives; that is one virtue of sovereignty. Industrialisation, however, sort of has other ideas. It brings with it relative outcomes to universal imperatives. Modern industrialisation has increased the pace and comparability in which individual nations contribute to global challenges. Those that offer the most useful industrial resolutions secure better outcomes than the ones that do not, and vice versa.

This implies that as long as topics such as the risk management of water scarcity remain too abstract to certain countries, it is those countries that face a more dire fate in 2050. By embracing this universality of concern, the phrase “the world is flat” sounds a little more neat, and “man, those are first world problems” increasingly an oxymoron.

This is an effective perspective to have of industrialisation, and Zimbabwe could use one! In August 2019, the country’s Ministry of Industry and Commerce published an uninspiring National Industrial Development Plan. The plan lacks real world pragmatism and time conscious strategy; strange, for an administration that is adamant on raising average welfare to middle income by 2030. But it may be misguided to critique the document’s flat inspiration by assessing the present administration alone. A broader inquiry is necessary that perhaps, lack of industrial curiosity by Zimbabwe’s governance traces back to the perceptions of wealth before and after transition from colonial oppression.

How has wealth been administered?

Andrew Carnegie, in The Gospel of Wealth, reflected on the administration of wealth in America in 1889:

In former days there was little difference between the dwelling, dress, food, and environment of the chief and those of his retainers. The contrast between the palace of the millionaire and the cottage of the laborer with us today measures the change which has come with civilization. Much better this great irregularity than universal squalor. Neither master nor servant was as well situated then as today. Formerly articles were manufactured at the domestic hearth or in small shops which formed part of the household. The master and his apprentices worked side by side, the latter living with the master, and therefore subject to the same conditions. Today the world obtains commodities of excellent quality at prices which even the generation preceding this would have deemed incredible. It is in the manufacture of products we have the whole story…”

A year after losing the 2013 race to Robert Mugabe, Morgan Tsvangirai lamented that a beer was more affordable in colonial times than under ZANU PF’s governance. This remark is better understood as evidence that social re-construction itself, does not bring about welfare gains even for those that have experienced upward social mobility. The error by the governing party has been to focus on social re-construction, disregarding the industrial imperative that would produce comparable or better commercial propositions, such as beer, to the entirety of social stature. This is misgiving which many other countries in Africa are rhetorically exposed to. Carnegie would be dismayed.  

In Zimbabwe, wealth has been administered along social constructs that are centered on political organization. Focused on a partisan epicenter, wealth is then administered broadly through structures of governance. What this created is a competence premium for patronage and rent seeking. The elusiveness of affordable beer, for instance, is an outcome of one’s direct or indirect failure to figure out obedience to the patronage and rent seeking system that guides wealth accumulation.   

“…solving poverty should not emphasise on imposing limits on the haves…”

Carnegie argued that wealth must be administered along industrial competence; invention, ingenuity, and toil. Under this guidance, whatever social constructs, of which democracy would retain choice of design, would inevitably derive a higher standard of living for the greatest number of people. The manufacture of products and delivery of services, at their most desirable, efficient, and competitive, would result in unprecedented material development felt by rich and poor. Carnegie’s stand out condition, for all social constructs, was only for industrialists to be due greater motivation to the manufacture of products and delivery of services.

His convictions still exist today, though less audible than the postured ethos of empowerment fashionable on the continent. Many western, and increasingly eastern governments, share this preference of administering wealth. They believe that solving poverty should not necessarily emphasize on imposing limits on the haves, but rather motivating dividends to those who industrially apply themselves to bring more economic growth for all.

Indeed this is why the regions doing the best to raise people’s standard of living are also the ones doing their best to motivate industrial curiosity. Registry of marketable patents is a reasonable measure of an environment’s appetite for invention, ingenuity, and toil.

It is the growing poor who will least miss empowerment models 

As Carnegie warned, social re-construction will only have squalor to share unless there is motivation for people to be industrious. Over 70% of Zimbabweans are estimated by ZimStat to be below the World Bank’s International Poverty Line. Since 2011, Statistics South Africa says three million more citizens have been pushed below the poverty line. Yet, both governing parties have advanced empowerment models that provide upward social mobility. So Carnegie’s perspective should probably command some consideration here.

Zimbabwe’s once emotive land reform will likely see its natural reversal after just twenty years; a fifth of the lifespan of a typical commercial 99 year lease.

Many owners will soon regress to partners on the passage of impending leasehold legislation. In no time, lack of industrial contribution will nullify their partnership equity, and take them a step down to laborer again. But all the while, due to the sheer force of industrial application on land, food prices and availability for all social stature will improve.

The Indigenisation and Economic Empowerment requirements disappeared faster, though less visibly, than land reform. They did not survive a decade until their almost discrete removal, covert to the ones that they were most promised. Repealing started off in the banking sector, and then mining, and subsequently what were initially labeled protected sectors. These policy casualties will not be grieved with physical lament, as livelihoods will materially improve. They will further fail to withstand critique that brands them reductive, as larger numbers truly were drifting towards the scourge of deprivation, regardless of the upward social mobility governance once implored them to appreciate.

Empowerment models do not motivate wealth creation, but economic instability

The administering of wealth along social re-construction did not motivate growth. In fact, we are learning that it breeds the wrong sort of ambition; the kind whose claim to capital is patronage and rent seeking. What is the difference? Ingenuity, invention, and toil create value. They attract capital. By solving problems, and focusing on providing commodities of excellent quality at increasingly affordable prices, these industrious exploits present greater return for capital.

This is a recipe for exponential growth, the kind felt across all social stature. On the other hand, emphasis on social constructs, derived from political organization, offers no value proposition for capital. It breeds economic instability.

Underlying Zimbabwe’s economic instability is constant disruptive social tension. This tension occurs in every place where peoples’ impulses to be industrious are restrained by elements that enforce confining order. Think about it for a moment.

Shakespeare coined them “rude mechanicals” and Thomas Edison branded them as “muckers”; of which the former likely sounds more pleasant reference. These are people who are generally curious, and are always seeking the edge of ingenuity, invention, and toil. These traits expand industries.

“…Partisan chosen laggards are jetted overseas or into multinational boardrooms, only to offer little value proposition…”

Rude mechanicals, however, also have an extremely low propensity to conform to enforced social constructs, especially industrially restraining ones. They will never be content with a social construction that exalts laggards. Patronage and rent seeking not only fill laggards all over the place, but grants them privileged social mobility.     

Consider the partisan grooming of industrialists that has largely failed Africa. Partisan chosen laggards are jetted overseas or into multinational boardrooms, only to offer little value proposition to financiers, except the claim to owning resources. They are often primed to engage capital on the equity of their indigenous stake. This is a failure to understand industrialisation itself. There is hardly a single value chain, where ownership of deposits is of greater value than the intellectual property that solves how to provide commodities of excellent quality at competitive prices.

Other empowerment models insist on board appointments based on ethnic representation. Without careful selection this practice easily becomes reductive as boards accumulate laggards who contribute nothing, except satisfy the patronage and rent seeking that allows entities to operate. A disruptive social tension will always confront this political organisation. As economies contract, dissatisfied rude mechanicals will always protest the imposed social construction.

But laggards do not budge easily, as just like rude mechanicals they have a self-awareness of their industrious aptitude, theirs being short. So the fear of losing their social privilege motivates entrenchment; a desire for permanence of a social construct regardless of its inability to create economic growth.

Undoubtedly, the social construct of patronage and rent seeking has made a few people fabulously rich! But, there are no evident gains to broad standards of living. Actually, at its most yielding, patronage and rent seeking creates the astonishing counter-intuitive circumstance whereby a tycoon makes handsome earnings at an extent that destabilizes the entire nation’s monetary system!

Believe in people’s willingness to contribute

There are many reasons why people migrate; income, safety, cultural attraction, and all sorts of personal motivations. But a less considered reason is the potential, or lack thereof, to contribute! You have to believe in people’s willingness to contribute. And if it is not there, encourage it. A crucial driver of the country’s economy has been the diaspora, quantitatively evident in remittances.

“The best ones always want to solve world problems. This is the inspiration that the Government must tap into”

In November 2017, there was a buzz, an energy, an enthusiasm if you will, which permeated across borders. Many folks in the diaspora considered coming back home. They enquired about returning. President Emmerson Mnangagwa’s administration can attest to this.

Government had an influx of professionals volunteering their services, at discounted compensation, or for free, for an opportunity to be directly involved in building the economy. Government actually went on a campaign, engaging Zimbabweans at its global embassies.

Carnegie suggested that people do not apply themselves just for monetary fulfillment. They also have an innate yearning to contribute to the welfare of others. Rude mechanicals have to be implored to scrape their minds for industrial resolutions. The best ones always want to solve world problems. This is the inspiration that the Ministry of Industry and Commerce must tap into. It must engage the nation’s rude mechanicals, locally and internationally.

“There should never be a surplus of industriousness” – worker at a Harare plaster factory (Reuters)

Notice that a stark difference between advanced and developing economy is the level of formalisation of economic activity. These are signs of failure to capture ingenuity, invention, and toil within current industrial capacity. There should never be a surplus of industriousness. A Utopia would be eventual full employment; where there is enough industrial curiosity for every new job seeker to apply themselves to.

The fact that some global imperatives seem too abstract to developing economies shows just how behind they are at offering resolutions. Middle income by 2030, implies a relative measure of real wages and standard of living based on Zimbabwe’s value contribution to global challenges then.

What is Zimbabwe’s future under current administering of wealth?

In 2050, the wealthiest Zimbabwean will be a water magnate.

Without exceptional insight of their own, they will secure licensing rights to conservatory infrastructure patented in Sweden. Their competence will have been to appease patronage and rent seeking to clinch a service provider deal with ZINWA; brokering an arrangement where water shall be a commodity rationalised by income.

Government’s fiscal budget will be strained to subsidise at least 50 liters a day for the most vulnerable, with intermittent supply cuts. But partisan officials and businesses will have privilege to reserves from ZINWA, sold at a premium. Most economic value will be extracted by annual patent fees to Sweden. Government will merely get a universally comparable corporate tax, as game theory will dictate rates cannot be higher than taxes levied by other African markets, equally stressed for every drop of water.

The rude mechanicals of the time will apply their minds to an informal sector, digging diverting canals from public water sources and designing household entrapments for erratic rainfall.

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