Mugabe right but his 'tit-for-tat' remarks unhelpful - Eric Bloch

The speech by President Robert Mugabe at his inauguration last week very correctly identified some, but not all, of the critical economic issues that need to be urgently and constructively addressed if the magnitude of unemployment and poverty are to be substantively reduced and for Zimbabwe's economic potential to be realised.

However, if those objectives are to be attained, some substantial perceptions and policy-intents from that speech, and in Zanu PF's pre-election manifesto, must be pursued differently.

Mugabe stated: "We seek friendship across geographies … we seek partnerships with all nations of goodwill."

This is both very commendable and most necessary, but a few days later he undermined his good remarks by making threats of "tit-for-tat" against the West over sanctions.

"They have companies here and we have not imposed controls or sanctions against them but time will come when we will say tit-for-tat. You hit me, I hit you. You impose this on me, I impose this on you," he said.

That was very unhelpful.

In his inauguration speech, he again alleged Zimbabwe "has been ravaged by illegal sanctions imposed on us by the West". This is a very widely held perception, but over and above that, legal experts dispute the contention that the sanctions are illegal, and in reality, their economic repercussions are minimal.

The embargoes created by the sanctions apply only to Zimbabwe's government and its underlying enterprises and to less than 200 named government officials as well as businesses owned by them, or by their families.

Save for those constraints, hardly any substantive sanctions have been imposed, there being no curbs or restrictions imposed upon private sector trade and travel.

Zimbabwe's private sector is in no manner barred from trading with any of the countries applying the sanctions, be it by way of imports, exports, sourcing of investment, motivation of residents of those countries to patronise Zimbabwe's tremendous tourism opportunities, or otherwise.

Admittedly the state and other specified enterprises cannot obtain loan funding from the countries applying the sanctions, but even if those sanctions did not exist, such funding would not be forthcoming because of the magnitude of Zimbabwe's national debt, most of which has not been serviced, and is grievously in arrears.

In an indirect reference to the need for restoration of good international relations, the president stated: "Internationally and diplomatically we remain friendly and well-disposed towards all nations. We seek friendships. We seek partnerships. We seek to diversify our relations to encompass new emerging regions in the world." But he then qualified that statement with the phrase: "Principally, we continue to look East." If Zimbabwe is to maximise opportunities and ensure growth, it must not be narrow-visioned.

Instead of focusing only on the East, Zimbabwe should be looking North, South and West. Cultivation of harmonious international relations will substantially beneficiate Zimbabwe, its economy and the people.

Referring to agriculture, he contended that because "we regained control over land our people are happy. Today they revel in the ownership of that land … They are beginning to use it profitably … They have become key players in agriculture, proving that they are as good farmers as any in the world, once they have access to key inputs". But, in reality, ownership of rural lands vests wholly and exclusively in the state, and not in the hands of individual farmers.

As a result, they have no collateral to access essential working capital. Hopefully, following enactment of Zimbabwe's new constitution, the farmers will soon be able to offer their leases as collateral, but as yet, the majority of the new farmers have naught, but offer letters.

Mugabe was right when he said that: "Our dominion goes beyond the land. It extends to all those resources found in and on our territory, including those lying beneath our land, principally minerals. And nature has been generous, prodigal in fact, granting us oversized portions of almost all minerals that matter on earth. It has been a generous serve."

Recognising this reality, he added: "The time has come for us to extend our dominion to all those resources." Very convincingly and undoubtedly it should be so. He expounded on the potential of the mining sector as a key foundation of Zimbabwe's future economy and of national well-being.

He said: "The mining sector will be the enterprise of our economic recovery and growth. It should generate growth spurts across sectors; re-ignite that economic miracle which must now happen. The sector has shown enormous potential, but we are far from seeing its optimum. We have barely scratched our worth, even in the sense of merely bringing above ground what we already know to be embedded in our rich soils.

"We need to intensify the exploitation of existing deposits. More mineral deposits remain unknown, unexplored. We need to explore new deposits, developing new greenfield projects in the mining sector. Above all, we need to move purposefully towards beneficiation of our raw minerals."

None can convincingly refute these very correct presidential perceptions made before his "tit-for-tat" remarks. But those advices were thereafter unwisely countered by his stating: "We need a share, a controlling share in all ventures that exploit our non-renewable natural resources. Where we can, we can go it alone. Where we cannot do so, we seek partners on a 51/49% shareholding principle. Genuine partners should find this acceptable."

Tragically, continued pursuit of such a policy is a barrier to achieving the extensive potential of the mining sector, and hence of beneficiating the totality of the economy.

None can realistically contemplate that investors will provide the considerable funding needed for exploration, mine development and operations (over and above providing very substantial technological inputs) if, over and above the mining ventures' diminution of earnings through massive licensing, royalties, and taxation payments, the investor does not have authority over the enterprise and its operations.

Essentially, government is saying to the private sector, at home and abroad: "Provide the bulk of the funding, the necessary technologies and access to markets, but have no authority and be the recipient of the lesser portion of earnings."