Piece-meal austerity without reforms a wild goose chase

AUSTERITY measures introduced by Finance minister Mthuli Ncube under the Transitional Stabilisation Programme (TSP) will have a devastating effect on the economy and is at variance with Zanu-PF's electoral promises and its traditional pro-intervention politics.

TSP, like its equally destructive predecessor, the Economic Structural Adjustment Programme (Esap), is also bound to flop because it is not supported by solid political and economic reforms demanded by Western governments.

TSP, again like Esap, is premised on the philosophy of liberalism which the celebrated American thinker Francis Fukuyama postulated at the end of the Cold War in 1989 that it was the final form of political organisation in his famous treatise The End of History and The Last Man in which he framed the international mood for the subsequent two or so decades.

He argued that globalisation was the vehicle by which liberalism would spread across the globe.

Rule of law, good corporate governance and property rights - aspects which President Emmerson Mnangagwa is not too keen to reform - would supplant power politics while supranational bodies like the World Bank and the International Monetary Fund (IMF) embodied those ideals.

Ncube belongs to this school.

But there has been a seismic ideological shift over the past decade, threatening the liberalism concept and forcing everyone, including Fukuyama himself, to think it over.

Now, in the midst of a backlash of right-wing nationalism on both sides of the Atlantic, at a moment when liberal democracy seems to be in crisis across the world, Fukuyama, too, wonders about its future.

"Twenty-five years ago, I didn't have a sense or a theory about how democracies can go backward," he said in a recent interview with the Washington Post.

"And I think they clearly can," he said in the wake of rising populism in both the US and Europe.

Clearly, there are parallels in today's austerity and the structural adjustment programmes of yesteryear.

One need only listen to Ncube's framing his transition in words such as "pain" to recall Bernard Chidzero - Zimbabwean finance minister when the country adopted Esap in 1990 - talking about tightening the belt.

As has been seen before and is manifesting now, austerity has never led to prosperity anywhere, it breeds instability and tends to spawn authoritarianism.
So catastrophic was Esap that satirists bastardised the contraction to "Extreme Suffering of the African People".

Like Esap before it, Ncube's TSP framework contains the standard features of the World Bank and IMF economic reform strategies.

The TSP has the same five prescriptions which in the end produce a neo-liberal society: deregulation, devaluation, reduction of government expenditure by retrenching civil servants, withdrawing subsidies and privatising some state-owned companies.

These measures are from the school of philosophy known as the Washington Consensus.

Already, the disastrous effects synonymous with Esap are manifesting in shortages of basic commodities, rising prices of goods and services, the general suffering of the majority and a ballooning national debt; issues that have alarmed analysts.

What has also come out very clearly is that Mnangagwa's administration is in a dilemma in terms of trying to balance between its traditional interventionist policy and the neo-liberalist backbone of non-intervention.

Another classical observation would be that Ncube's austerity measures are being implemented at a time when all that matters to an impoverished populace is the next meal - a fall from grace for a nation that was once feted as Africa's breadbasket.

"You can draw parallels between those policies. They both emanate from neo-liberal principles against Zanu-PF's policy of pro-intervention. The problem with austerity is that it has had to be balanced with the Zanu-PF interventionist policy.

"We saw it not long ago when transport problems arose as the market responded to liberalism and fuel prices rocketed. They had to introduce buses to push transport costs down," University of Zimbabwe political science lecturer Lawrence Mhandara said.

"So the government is split between interventionism and neo-liberalism; it's policies are geared at reforms meant to attract support from the international community, without which they won't succeed. At the same time they realise that politics is a game of numbers and, once you lose the majority, you are out of the game. So that's why they will have to mix," he said.

Public policy expert Tawanda Zinyama sees no light at the end of the dark austerity tunnel, principally because it is being viewed from a narrow prism which does not address Zimbabwe's problems in totality.

"There is no departure from Esap because at the heart of it was emphasis on market-driven economy, liberalisation and reforms. These are the very same principles that reoccur in TSP. The liberalisation of prices has worsened things and, what we have seen is shift in income distribution patterns," Zinyama said.

For political economy analyst Ibbo Mandaza, the TSP does not address the problem, it only tinkers with it.
"Our misguided yearning for investors is killing us in that we are a clear hostage of the Bretton Woods. Pick any policy of the new dispensation and you are sure to find the perfect version of the Washington Consensus; privatisation, marketisation, devaluation and austerity," he said, adding that protests that have been seen in the country in recent times were a direct result of the austerity measures.

"The worst interpretation of the January protests was that they were fuel protests. No. They were a rebuttal of proven and repeated failures of neo-liberal systems foisted upon developing countries by the IMF and World Bank."

The sum total of the argument appears to be that the problems Zimbabwe is facing as a country cannot be solved by Ncube's piece-meal austerity measures and his attempt to balance Treasury books without being accompanied by major reforms necessary to attract new money into the economy.

Otherwise, his liberal austerity measures are bound to build into a Fukuyama-style anti-climax with catastrophic consequences as was witnessed during the Esap days.