When an undertaker is Businessman of the Year

via When an undertaker is Businessman of the Year 13 August 2014

Ominously and inauspiciously, once again in less than three years, an undertaker has been crowned the Businessman of the Year by one of Zimbabwe’s leading business associations.

At the rate at which his business is booming, aided by the deflated economy, the undertaker may hit a hat-trick of the award.

He may, however, be given a run for his money by the messenger of Court or Sheriff of the High Court. These public officials are doing roaring business, attaching residential properties from defaulting natives, pledged as security for bank loans, taken upon job losses courtesy of myopic public policies, not least selfish strategies shrouded as nationalism.

A recent article in the Financial Gazette (August 7 2014) revealed that “150 debt-ridden families lose homes monthly . . . as the economic crisis continues to dig in and disposable incomes relentlessly dwindles to unprecedented levels”. The reason for this social catastrophe has been the growing unemployment which has led households to borrow in the hope of creating new businesses for self-survivalist employment using housing stock as collateral.

Default rates on loans have, however, skyrocketed as the economic environment is not conducive to entrance into business. This leads to properties being attached at the courts to recover loans. The attachments on court orders have been so high as to leave the Messenger of Court and the Sheriff of the High Court breathless.

Infant business mortality is high for a number of reasons, among which are high interest, under-capitalisation, inexperience, lack of a grace period on loans, short-term nature of the loans, over-trading, diminishing demand and the liquidity crisis.

Even big mature businesses too, mortally wounded by hyper-inflation and finished off by the above-listed maladies, have succumbed, giving “business” to largely predatory judicial managers in most cases, before the inevitable arrival of a posse of messengers of court, the sheriff of the High Court and undertakers.

Add corruption to the mix and you have a combustible, hellish, political and socio-economic environment. The weekly quoted above further noted that “hundreds of other people lose vehicles, tractors and farming equipment [not to mention] household furniture . . . and that the affected cut across sectors and social strata including individuals, businesses – both large and small – and even churches, among other entities”.

The empowerment of natives in Zimbabwe gathered momentum upon independence in 1980. Secondary and tertiary education was greatly expanded. Progressive policies in agriculture generally ensured food security.

Primary healthcare too was rolled out resulting in falling infant and maternal mortality. In addition, as a major empowerment transaction many natives acquired housing stock in all suburbs. Property ownership is the first step in economic empowerment.

In a stable environment with progressive and/or affirmative inheritance laws, it would ensure that the second generation after independence would not start from zero economically as their parents did upon independence.

But alas, that will not be the case for some. De-indigenisation, in the form of asset losses, and disempowerment, in the form of job and salary losses, have both gathered moment. The irony, of course, is that indigenisation and empowerment are supposedly the ruling party’s policies. On the ground the exact opposite is happening. What could have gone wrong?

Straight-talking Minister of Finance and Economic Development is on the right track in fingering corruption in general and the ineffectiveness of the State Procurement Board as tools of economic transformation. While the SPB stands out, nearly all government departments and ministries may stand accused of the shortcoming. This, of course, is the so-called poor governance.

According to Finance & Development (June 2014), “the concept of governance is broad, but nearly always includes the following measurable indicators:

Voice (of the people) and accountability (by the authorities);

Political stability and absence of violence;

Government effectivenes;

Regulatory quality;

Rule of law;

And control of corruption.

According to the journal, “empirical evidence shows that, on the whole, better governance is correlated with higher (economic) growth and better development outcomes. But studies in Asia have shown that in low to medium income countries, of the six bullet points above, that are the indicators of governance, government effectiveness has the strongest correlation with per capita GDP, and (surprisingly?), voice and accountability the lowest.

Not surprising, the study by the Asian Development Bank also showed that government effectiveness is followed by regulatory quality and control of corruption in furthering economic development and job creation.

A look at Zimbabwe’s institutions and its State-owned and controlled organisations shows that the country is extremely weak in all three critical areas. Corruption is rampant and goes unchecked. Bureaucracy is high and toxic and the regulatory framework in agriculture and mining in particular, is weak. Decisions depend on considerable “discretion” by ministers, which privilege is routinely corruptly abused with impunity.

The study further revealed that weak governance in general holds back infrastructure development.

Examples that come to mind included the YTL energy generation project at Hwange that was stillborn, the recent Hwange Power Station upgrade venture with the Chinese that has suffered the same fate and the Beitbridge to Chirundu road dualisation and upgrade that remains only talk.

Then, of course, there is New Zimsteel, with nothing new, but the same old government ineffectiveness.