Yamamoto: Battle of the two Patricks

Yamamoto: Battle of the two Patricks – NewZimbabwe 03/04/2016

The older Patrick belongs to the “crocodile” faction, which the Europeans and Chinese have chosen to view as reformist, while the younger Patrick belongs to the “underwear” faction. The underwear faction is very ambitious, and has Plan B replacements for ministers in the crocodile faction in case they are removed from their positions.

The underwear faction has earmarked the younger Patrick to replace the older Patrick, who by many accounts has performed extra-ordinarily well for a country where $15 billion worth of diamonds are stolen under the president’s watch. It is for this reason that the younger Patrick has been more and more presenting himself as someone who has a deep understanding of economics.

IN my last contribution, I posited that Mr. Mugabe never misses an opportunity to miss an opportunity. His trip here (Japan) was a golden chance to engage with the world’s third largest economy by squeezing hard bargains out of Mr. Abe in return for foreign policy support – something the Europeans like to call quid pro quo.

Given the dire need for investment in Zimbabwe, there is more benefit Zimbabwe could have wringed out of Japan for mutual benefit. Instead Mr. Mugabe did not even bring his ministers of finance, industry and trade. With his delegation of over eighty people, the good news for the people of Zimbabwe is that trip was fully paid for by us, the Japanese taxpayers – that is minus the Singapore detours. How this trip could have been planned and effectively utilized is something I will write about on another day.

It is amusing however that instead of making a post-mortem of this lost opportunity for future effectiveness, while Mr. Mugabe was still here, a new sideshow was brewing in Zimbabwe. It became so important that a cabinet minister, who should be busy doing more serious work, had to hold a press conference. A day after Mr. Mugabe arrived here, Mr. Abe arranged a joint news conference after a summit with Mr. Mugabe. Reuters news agency released a video in which Mr. Mugabe was dozing and struggling to stay awake on his feet. The press conference created a further debate – was he dozing or nodding?

It’s clear in the video, and it did take aback officials here that Mr. Mugabe was pretty much sleep walking. Yet it’s understandable here because we have lots of old people in Japan. What boggles our minds is that Mr. Mugabe should be handling matters of State at that age. It is also understandable given that he had a very punishing schedule here, moving from one serious meeting to another, and moving between Tokyo and Kyoto, cities that are 500 km apart. This is unlike at home where he sleeps often if there are no meetings to be done. What is funny is that a whole Minister had to issue a press statement to deny that his boss was dozing, when in fact he was. Mr. Mugabe was dozing, not nodding. It’s quite an unnecessary debate given that Mr. Mugabe is always sleeping at many international meetings.

This matter reminded me of a case here in 2009 when then Finance Minister Shoichi Nakagawa at the G7 Summit in Rome was filmed at a press conference appearing to be drunk, slurring his speech and closing his eyes repeatedly as if dozing off during a press conference with the Bank of Japan governor. For his conduct, Mr. Nakagawa resigned from his post.

Foreign investment

While in Tokyo, this is what Mr Mugabe told Japanese firms: “Zimbabwe doors are open to the Japanese investors and they should look forward to a mutually rewarding relationship with us.”

Most Japanese firms that have taken an interest in Africa have pretty much a lot of data about issues on countries they have interest in. Where they lack information, they stay away. Generally, the companies that go in first are the sōgō shosha – firms like Itochu, Mitsubishi, Sojitz, Toyota Tusho, Sumitomo, etc. Each of these firms are Fortune 500 companies employing on average 50,000 employees globally and averaging over $80 billion in sales per year. They don’t really need to be in Zimbabwe, but it’s just nice if they are. These firms are aware of Zimbabwe’s indigenisation policy confusion and mess.

While Mr. Mugabe was here, foreign firms had been given a deadline to comply or ship out by Patrick Zhuwao – Mr Mugabe’s nephew. The shipping out was supposed to commence on April Fool’s Day for non-complying firms. Many did not. At the same time a battle that should not be happening was taking place. This battle was between two Patricks: both are cabinet ministers – one responsible for indigenisation and youth empowerment while the other is in charge of the ex-chequer.

In an article early this year, the Japan Times covered the factional politics in Zimbabwe, which gave a picture to people here of the zero-sum political games going on in Zimbabwe. The story was about Zimbabwe politicians arguing over crocodiles and underwear theft. It’s undeniable that the effective running of the Zimbabwean state is now crippled by the factional disintegration of Mr. Mugabe’s party.  This disintegration is inevitable and irreversible, but that is a matter for another day. The battle between the two Patricks needs to be understood in this light. Let’s explore more on this issue.

Battle of the Patricks

Perhaps the most hardworking minister in Mr. Mugabe government today is the older Patrick. Patrick Chinamasa has been a feature in the Zimbabwean government for over a decade. He has his fair share of political controversies. Mr. Mutumwa Mawere accuses him and his colleagues of disempowering him by creating a law specifically dispossessing him of his business interests in Zimbabwe.

Chinamasa also became infamous for chiding his predecessor when he pointed out that diamond revenue was not being received into the ex-chequer. It did not take long before this older Patrick received his comeuppance as Mr. Mugabe thrust the finance ministry upon him. It was a sobering expedition! He soon started singing his predecessor’s refrain on diamond money not finding its way into treasury. As noted by Mr. Mugabe recently, $15 billion worth of diamonds were stolen from impoverished Zimbabwe under his watch. But the real hard knocks for the older Patrick is that he is damned. He has the hardest job in that government. He must find money to make things work, or the military will start giving problems.

When Japan was evolving from the ashes of the second world war, rising exponentially from being a developing country into the second largest economy in the world, the most powerful ministries in government were Tsūshō-sangyō-shō  – Ministry of International Trade and Industry (MITI), and the Zaimu-shō – Ministry of Finance. It may actually serve Zimbabweans better if they configure their government this way.

Clearly, the older Patrick is the one who has the serious responsibility of not only sorting out the finances of Zimbabwe, which is technically insolvent, but should also pay huge debts, keep the financial sector stable, pay the large number of government employees, and help Zimbabwe hunt for FDI. He has a very difficult day job. Very few people would want to deal with the headaches he has to deal with.

It is in this context that the older Patrick, while Mr. Mugabe was here, issued a press statement designed to shock-absorb international banks from the ripples and moral hazard arising from marauding storm-troopers from the indigenisation ministry. He basically said that he is happy with the level of indigenisation compliance in foreign-controlled banks. There are few international banks in Zimbabwe, many of which have been scaling down. But they have played a key role in that economy for many years.

Zimbabwe is presently facing a cash shortage, which is likely to get worse over the months. It is in the older Patrick’s interest, and indeed Zimbabwe’s, that the banking industry be protected from destabilising harassment. Confidence in the banks is indispensable to everything in any economy. Everybody knows what happened to Zimbabwe’s neighbor when Mr. Zuma played around with the finance ministry.

When the older Patrick issued his statement, the younger Patrick was livid. He was beside himself with anger. This was despite the fact that his indigenisation rhetoric in the run-up to April Fool’s Day had to be toned down. To fully understand the dynamics, it’s important to connect the dots. We have to go back to the fights about crocodiles and underwear referred to by the Japan Times.

The younger Patrick, Patrick Zhuwao, is an interesting man. His claim to fame is that he is a nephew of the President. The companies he used to run with his older brother can safely be called failed companies. Since then, apart from taking government jobs doled out to him at the whims and caprices of his uncle, he has been a perennial student hoping from studying one degree to another. Recently, he claimed to be running an institute of economics. It is on this ground alone that people would assume that he would have a sound understanding of the effect on investment of what he has chosen to focus on as a minister.

In normal economies, it’s strange to create a whole ministry with employees working from 9am to 5pm just dealing with empowering youths and indigenizing foreigner-owned businesses. If it is necessary at all, it would be a mere department in the ministries in charge of the economy. But Zimbabwe being Zimbabwe, the younger Patrick was fished from wherever he was to keep himself busy with some ministerial perks. It’s a typical developing country story.

Instead of busying himself with youth empowerment, which has a much larger bearing, seeing as millions of youths are at best street traders and, at worst, jobless in Zimbabwe, such a focus would be more transformational. On the contrary, the younger Patrick has busied himself with trying to takeover shareholding of a couple hundred companies owned by ‘non-indigenous’ persons, some of them Zimbabwean citizens. There is precedent that such a move will benefit a few connected individuals. But the repercussions to the Zimbabwean economy are huge. And this is why the older Patrick is stepping in. The two have clashed before – issuing different press statements on this matter last December.

Another dimension is that the two Patricks belong to different factions in their party. The older Patrick belongs to the “crocodile” faction, which the Europeans and Chinese have chosen to view as reformist, while the younger Patrick belongs to the “underwear” faction. The underwear faction is very ambitious, and has Plan B replacements for ministers in the crocodile faction in case they are removed from their positions.

The underwear faction has earmarked the younger Patrick to replace the older Patrick, who by many accounts has performed extra-ordinarily well for a country where $15 billion worth of diamonds are stolen under the president’s watch. It is for this reason that the younger Patrick has been more and more presenting himself as someone who has a deep understanding of economics – running an economics institute. He previously inserted himself using influence-peddling in a failed deal to take over a mobile network operator. But he has greater ambitions – to be finance minister.

Given what he is doing now in his indigenisation program, the younger Patrick will actually destroy the little confidence left in Zimbabwe if at any point he is ever made finance minister. Its economics 101 that national income is a function of consumption, government expenditure, taxes, investment and net exports (Y=C+G+I+X-M). It’s one thing to read it from a book and another to apply it commonsensically in an economy and in a day job. That is the difference between people who are educated and those that are learned.

Educated people acquire knowledge only while learned people apply knowledge acquired to advance society. One can acquire an education by hoping from one degree to another – very easy! But learning requires certain basic instincts that help make a difference, and it’s continuous – thats what we call kaizen. It should therefore be obvious to the younger Patrick what his policy is doing to investment and consequently national income and the well-being of the Zimbabwean economy.

The older Patrick has learnt – the hard way I might add. I have written about his learning here http://bit.ly/1RqSLME . Zimbabweans – the younger Patrick included – need to learn as quickly as possible the lessons the older Patrick has learnt!

Ken Yamamoto is a research fellow on Africa at an Institute in Tokyo. He researches and travels frequently between Uganda, Kenya, Rwanda and Zimbabwe. You can email your views to him on yamamotokensan@gmail.com