Countries do not go bust, they sag at the knees – Eddie Cross

Countries do not go bust, they sag at the knees by Eddie Cross  21st March 2014

The country Manager for Zimbabwe at the World Bank is a good friend and colleague. He knows Zimbabwe well having lived and worked here off and on for over 30 years during his long career with the Bank. He retires in May and we will miss him as a country, behind the scenes he has done more for us than most in the past decade.

I was in near despair last week over the state of the economy and could see no way out. I expressed the view to him that I could not see how we could carry on like this for much longer. He laughed at me and said, “Countries do not go bust; they just sag at the knees”. Well, let me tell you, we are sagging, big time, again.

During the liberation war when it really looked as if a compromise was impossible and the struggle would end with our cities burned and our economy destroyed, I went to my Chairman at the time; a remarkable man called Bill Margolis, and asked him for advice, “What can I do to help resolve the situation?”

He thought for a while, then he said to me, “Eddie, the best you can do for your country is to come to work in the morning and do your job to the best of your ability.” I was a bit disappointed, I had expected something a bit more activist and dramatic, but I went back to my office and followed his advice. I became Chief Economist of the AMA, then the largest business organisation in the country and was later on appointed the CEO of one of our major subsidiaries. When I got there the war was at its height and the sense of crisis, all pervasive. Our staff were pensive, what future was there for them and their families?

At my first management conference I spoke to the entire management team (we employed about 3 500 people) and said that if we were to help our country through the political and economic crisis we were in then, we had to get out there and do our jobs to the best of our ability. At the time we delivered fresh milk to every home in the country, provided a small sachet of milk to every child in school. I said “we are going to rattle the milk bottles outside every home, every day and let people know that life goes on even in the toughest times”.

In one incident, a military unit was protecting a major bridge in the lowveld and was attacked one night with heavy weapons and mortars. They were weary and shell shocked at dawn and were resting in their bunkers, when down the road to the bridge came one of our vendors with fresh dairy products and ringing his bell. They could not believe their eyes or ears. It was a small promise to them that life goes on even in the toughest times and that we were there.

We got through Independence and as one of the most senior economists in the country; I did make a small contribution to the changes in the country by helping the new government settle in and understand the economy they were taking over. I also helped organise the first major donor’s conference in Harare and went on to head up another, larger corporation and then the Beira Corridor Group.

I still do not quite understand how we survived the struggle up to Independence in 1980, but we did. Then we went through the decade from 1997 to 2008. Hyperinflation at record levels, a failed State in many ways, the fiscus unable to fund even the essentials. Three quarters of our population on food aid; 3500 people dying every week, millions fleeing the country as economic and political refugees. Stores and filling stations empty, people buying even the most basic things in neighboring countries. How on earth did we survive, but we did and even now we look back and say how did that happen?

And now yet another full blown economic and political crisis; from 2009 to 2012 we saw the economy bounce back – GDP recovered, the informal economy emerged and the revenues to the State surged – doubling in 2009, again in 2010 and then growing by over 50 per cent in 2011 and 2012. Then the election campaign and the hope of change and perhaps a period of rapid economic growth and recovery fuelled by new confidence, changes in leadership and policies and the engagement with the global community.

It was not to be and on July 31st 2013, Zanu PF emerged with a two thirds majority. The President appointed a Cabinet without a single new face, the same old tired crew that brought us to our knees in 2008 and which had steadfastly failed to deliver growth and stability in the previous 34 years. The same team that gave us Ghukurahundi and Murambatsvina. The markets reacted instantly – the stock market fell by a third, investors sold equities and took their money out the country, cash fled from the banks to safer havens and in a matter of days it was clear that the banking sector was in dire straits.

By December the economy had begun to contract. Nearly 100 companies a month were going into liquidation and this situation was not helped by the rapid depreciation of the South African Rand, resulting in the country starting a slow evolution towards deflation – for those who do not understand such terms, this is a situation where prices are falling in real terms while costs continue to rise. Many manufacturers were unable to cope with the flood of cheaper products from South Africa and abroad.

These economic conditions were compounded by the decline in output from the Marange diamond fields that in 2012 had been pumping millions of dollars a day into the local economy, even after “leakages”. The mining sector had been growing rapidly since dollarization in 2009 and the State saw this as a cash cow. They slapped massive fees on the industry and imposed new royalties and conditions. The expansion of the industry slowed and then stopped. Gold production, estimated by some to have been 40 tonnes in 2013 worth $2 billion started to contract and miners, large and small began selling their gold production on informal markets.

Ultimately all these negative elements culminate in the national budget and the new Minister of Finance now finds himself in an impossible situation. Revenues to the State have been declining for some time and the proportion of state revenue that has to be spent on salaries has climbed to over 90 per cent. In desperation and in an effort to cover urgent needs Ministries have been borrowing from the private sector and are not paying their bills or their service providers. The impact of another $1,5 billion in unpaid government commercial debt on top of all the other elements has put the business sector in jeopardy.

Once again I feel desperate, what can we do as ordinary citizens to correct matters? I am back in 1976 and 2008, helplessly watching as our economy “sinks to its knees” and people go through the pain of seeing all they had built up fail and fall in pieces. I still think Mr. Margolis was right in 1976 and for myself I will go to Parliament next week and seek to do what I can do in my own small way to ensure that at least my corner of the garden is productive and well maintained. If we all do that our collective efforts will put our country back on its feet and then perhaps new leadership can start to liberate our broken land from the shackles of poor leadership and lousy policies.

Eddie Cross Bulawayo 21st March 2014

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24 comments on “Countries do not go bust, they sag at the knees – Eddie Cross
  1. Che'guevara says:

    Sure Eddie but our leadership is not that patriotic. They are infact self serving. They are out to enjoy liberation war salaries, packages and pensions for their service.

  2. Promise says:

    We are very ‘clever’ but tell you what? We do not know & understand everything. The Creator needs to be acknowledged as He has a lot to do with our salvation. People have been voting the regime out for some years now & the regime does not go… have you wondered why? Anyway, watch the space & watch God step in to effect His own change His own way. People might find it strange but I can put all I have to assure you that Democracy is our creation …not God’s way of doing things. But of course… we will argue because we believe we are clever, in charge & in control.

    • NBS says:

      Promise you are 100% correct. Gods ways are not our ways and His thoughts are not our thoughts: His ways and thoughts are much higher than ours. Zimbabwe needs to repent! Truly repent! Restoration has never come before repentance in all the stories of Scripture. And often the Lord will leave an evil power in government as judgment to a church and people that need to repent and then He will judge the tool that He chose to use as a judgment against an errant nation. Mans wisdom comes to nothing outside of God’s wisdom and for a nation that calls itself Christian we are extremely blind and deaf and hard hearted spiritually; totally undiscerning actually. We need church leaders to begin to preach the true gospel for a change for the Lord has told me, “How can a people repent unless they be confronted with their sin.” The true gospel is the message of the cross and Christ crucified NOT the prosperity message and one that dilutes the gospel and is soft on sin.

      • Reverend says:

        Amen to that…keep it up Brothers!

      • Parangeta says:

        Mugarbage and his thieves is who the priests
        need to preach to, not the people.

        The people are fine!

        • NBS says:

          Parangeta, judgment always starts in the house of God. We the people need to be clean first.

        • Reverend says:

          May as well get used to it Parangeta, or just do not bother to read our posts, as we just can not help it, and you may like to give your life to Jesus Christ and you will instantly know why we worship the Lord. God loves you.

  3. Mlimo says:

    As I posted last time to mr crosses editorial you fail to recognise the facts staring you in the face. In 1978 or 1979 or 1980 Rhodesia was far from on its knees. All you did by staying on and helping Mugabe and his cabal settle in to their new roles was to prolong the agony of Zimbabwe. While the rest of your fellow men packed up and left not wishing to support zanupf in any way you stayed on. You sow what you reap. Zimbabwe is going to fall a bit further than the the sagging at its knees. It’s going to fall over soon. Just wait till Mugabe goes.

  4. masvukupete says:

    “I did make a small contribution to the changes in the country by helping the new government settle in and understand the economy they were taking over”

    It seems they never learnt anything while you were teaching them. Monetary value and economic stability has a lot to do with sentiments. The more confidence that exists the more value you can create because people believe, both internally and externally. That is the point our government misses all the time or they know and dont care. What with all their Phd’s one would think we have all the basics covered but alas they dont have a clue. They would rather come up with high sounding strategies (Phd style) forgetting to create a base of basics as taught in a form 2 level economic course. However this is the case with our education very good at theory but not good at application 9forgetting the basics).

    Our people excel in developed economies not because they can solve problems but because they understand. Ask anyone who has worked outside the country (even if they tens of years of experience) and they will tell you they had to start like a freshman because they never utilised the basics (as taught in O level physics, managment, accounts, economics).

    We have to start and build on the barest fundamentals before we even start talking about JUICE/ZIMASSET or whatever other program. We need at least 5-10 years to get the fundamentals correct before we even start thinking of high sounding Phd type programs.

  5. apolitical says:

    There is a need to comprehend all factors in a situation and not the narrow look by Cross who lets face is a little dim.
    In the late nineties the seven best economists in the EU were given a grant by World bank, in the course of investigating in Washingtion the budding edconomists found an internal letter.
    It said if we keep Zimbabwe on track they will havec lost economic control by 2000.
    This fascinated the students and one dutch lady decided to concentrate on an evaluation of Zimbabwe – the only independent economic evaluation ever done.alke Friedrichs-Gijrath was her name and resiultant of her 3 year research paper she became economic consultant to the UN.
    Her three years research covered every avenue and final paper was second to none.
    Her comnclusion supported by taped evidence and documentation stated that no third world country could have done any better faced with an onslaught of EU economists – that no blame could be placed on the Zimbabwe government as theyb did not have the expertise to counter the economic attack by the west.
    TYhis report was accepted by the UN hence al, attempts by Britain to legalise sanctions failed.
    She visited all aid organisations- CEO’s of multinationals and public companies.
    Naturally we will have the anti government activists who don’t want to hear fact’s that their IQ cant digest. 3 years of research and hard work. Listening to opinion and analyzing, government had no idea it was being analyzed.
    It was a fascinating report in true academic fashion complete with hard evidence by taped interview and documentary – indisputable by professional economists and therefore accepted.
    What local chancers in economics don’t realize that the more they state the more they are ridiculed by trained research economists in the west.
    Unfortunately we don’t have qualified economists in Zimbabwe, just chancers!
    Unfortunately journalists and economic chancers don’t have the ability in Zimbabwe to even use a computer to research, all they know is they revert to animal like instinct irrationally saying down with government to cover their short comings. Real evidence is fascinating and worth reading.

    • NBS says:

      Good morning Apolitical. I must tell you that I was very disturbed by your apparent hatred and total lack of concern for those millions of Zimbabwean brothers and sisters in the Diaspora. It pains me that my Zimbabwean compatriots have been forced, by one reason or another, to flee their own homeland. That was yesterday. And also you seem to think that everyone else, bar yourself, and including Eddie Cross is dim. Is that not a very arrogant stance to take. The current govt have had 34 years to work things out and they have not. We actually go from bad to worse. And the reason is this: we are a sinful nation and are under God’s judgment. You look at things academically and have some fine theories but without repentance this nation will really struggle to come through. Just one glaring example of Zimbabwe’s sin is the Gukurahundi. Do you honestly think God is going to sweep that under the carpet as are so apt to do and as the government is very keen to do. No! No! He won’t and that is one of numerous horrific sins we are guilty of and especially government as they are in a position of authority and will be held accountable by a holy and just God. No! You most certainly do NOT have all the answers. None of us does except God Himself. Try being a tad humble. it might suit you.

    • Parangeta says:

      My God your grammar and sentence construct is AWFUL!
      One has to read your sentences twice or more,
      just to make sense of them!

      Where did you go to school, if at all, are you self taught.
      Not a good job then….
      By the way, your comments are hogwash!

  6. Mixed Race says:

    @Apolitical-you talking about the past when our economy was still very good after inheriting from the colonial government.Remember that the first 10 years the economy was safeguarded by the involvement of the colonial mps which was the part of the Lancaster Agreement.the real truth about the ruling party in economy started in the early nineties and worsened when an effective opposition was formed.Therefore, that study was done when our economy was one of the best in Africa but not now.Stop dwelling in the past and see reality.
    I want to remind Mr Cross that we know well that our private internet is being violated by those who monitor us daily but we cannot stop airing our legitimate views to improve democratic principles otherwise we may accept to die early with disgrace.
    It is funny that you achieved something with the adoption of the new constitution,I want to disagree with you.The ruling party used you to have this constitution approved because they would not arranged the election without the new constitution because SADC wanted this fulfilled before election.You were outwitted by your opponents and you want us to believe you that it was achievement from your weak party with no foresight.What has this new constitution done for the masses so far?The ruling party can amend it as they like since they majority in parliament,thanks to your shortsightedness.As we go on I am failing to separate your leadership style from that of the ruling party.Do not kill new ideas by keeping useless leaders in power because it will cost you more failures.

  7. Che'guevara says:

    On the issue of the new constitution. Ask those who understand principles of governance. Its not how good your constitution is but to what extent those in power are willing to uphold it. Constitution is a document whereas constitutionalism is a culture. Thats what we lack as Africans so dont blame these guys for that document. Its just a piece/pieces of paper.

  8. Tongoona says:

    Eddie the country is basically down the drain. If we are to hid Mr Margolis advice to you, we need to work hard to win back our democratic space to arrest the ongoing economic destruction. As Zimbabweans we must look at the 2018 vote as the vote for change socially, economically and politically.

  9. william says:

    Hello Eddie,
    I read a lot of your stuff. I don’t think you are right to suggest that in 1976 the economy was ‘on its knees’. In fact in 1972 we had full employment, and you know what that means in economic terms. To imagine that in three short years the economy was on its knees is incorrect. In fact, with the war escalating and more people leaving etc, Smith still managed to hand to Mugabe a surplus on all counts in 1980 – plus a dollar equal to the pound sterling and twice that of the rand !!
    Cheers
    Bill

  10. bruce koffe says:

    The advise of Margolis worked because you had one circumstance which was war. Working hard was for all. Now the common man is already working very hard, some even in diaspora sending money. good and services home. However the ZANU PF is busy taking the same money investing it outside in their name instead of investing back home.

  11. Joe says:

    Zanoids are sick people. When the turn happens they will run. Justice must be meted out to make sure this type of behavior by thieves does not happen afain

  12. Don Cox says:

    “How on earth did we survive, but we did ”

    A great many Zimbabweans did not survive, but died of starvation, cholera and other results of incompetent government.

  13. If you want to see a person in denial it’s Apolitical. All around him is theft and corruption. The thieves and corrupt people are even admitting it. Some like Charamba are trying to step down to run away from it. The man keeps on saying if you have IQ research. Someone rightly pointed out to him that every living human being has IQ, some high, some medium, some low but he insists on this like it’s a new word he just learnt. The thieves are reeling in money, the Police accepting bribes like they are selling tomatoes, but research the man says.The country has no coins but research the man says. Everybody else but him is dim. All the Engineers don’t know what they are doing. They need to research. The words of a man having regular psychotic episodes and living in a world of delusion.

  14. kelly says:

    Apolitical, I think you should change your name to Apocalyptical , your negative thoughts and lack of insight are destroying not only u but even those who dare listen to you.
    Your distate for your fellow Zimbabweans in diaspora makes me feel you were denied assylum in several countries yourself. U barely have any IQ yourself so if I were u I would stop posting comments.
    Just an observation!!!!

  15. Reverend says:

    PLEASE READ
    Just dont take any notice of apoliticals posts, because reading them just irritates us to the core and we will never get anything else but utter boring meaningless arrogant nonsense and he says things just to make us mad, and so I do not read his stuff but I see everyone getting angry with the fool, and we cannot descuss the matter at hand intellegently.

  16. Mixed Race says:

    I sometimes laugh at his technical theories and analysis and I enjoy discussions with him so that at the end we can exchange view points even if I do not agree with his way of expressing himself.This is why we have these debates so that we can build each other.He has used so many funny names in the past but at the end he backs down after reading my replies to him.Let him exercise his human rights and power of reasoning to the uttermost levels.Who knows what he can learn from these discussions?This is the beginning of true democracy.

  17. Johann says:

    To understand the economy/leadership and where it’s all going look North to the Congo and read “Heart of Darkness” AKA “Apocalypse Now”.

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