Looting of State resources to blame for economic crisis

Posted by Ben Hadley on 2018-10-11 06:42:00 | Views: 4 |

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Looting of State resources to blame for economic crisis

THE Zimbabwe economic malaise can be traced to the political elite in the ruling party who loot and strip public funds from institutions such as the Reserve Bank of Zimbabwe, among others.

The looting of State resources implies that citizens are regularly financing the lavish lifestyles of politicians, with little money left for investment in water treatment facilities, construction of sewer systems, maintenance of roads and the provision of public services.

Until the governing party stops the looting of resources in the name of public projects, Zimbabwe's malaise will continue and the domestic and international debt will increase without any meaningful investments to show for it.

Below, I give a first-hand account of the problems of looting of government resources in the name of development programmes.

In late 2000, as a recent graduate of the University of Zimbabwe, I was fortunate enough to get hired as a trade economist in a government department in the Agriculture ministry.

Among other things, I was also responsible for working on a number of task forces that monitored the implementation of government schemes such as the crop and winter wheat inputs, and importation of grain from South Africa.

I was, therefore, intimately involved in witnessing some of the looting of State resources by the political elite and the powerful. The looting took many forms.

When I joined the government, the Japanese government was sponsoring a farm mechanisation programme that provided smallholder farmers with tractors, combine harvesters and other farming equipment at subsidised prices each year.

In order for an individual to qualify for the programme, they had to be a certified member of the Zimbabwe Farmers' Union, and provide proof that they were indeed a smallholder farmer.

While a few farmers benefited from the programme, the majority of the beneficiaries were the Cabinet ministers, Zanu-PF senior officials, senior civil servants, security services chiefs and their relatives.

Most of them did not even own an acre of land. They just sold the tractors on the open market and pocketed the money without batting an eyelid.

In early 2002, there was a projected shortage of winter wheat. The government released around ZW$30 million then to support the newly resettled farmers to grow the crop.

As soon as the programme was announced, one senior military official called and demanded that he be allocated inputs from the programme worth about $12 million. My colleagues had to bend over to ensure that the official was allocated the funds promptly.

There was neither a mechanism in place to monitor if the funds were used appropriately nor plans to ensure that the beneficiaries repaid government after selling the wheat. The beneficiaries were given a blank cheque to be repaid by ordinary taxpayers.

Similarly, during that period, government, through the Grain Marketing Board (GMB), embarked on a nationwide crop inputs scheme. Although the scheme targetted poor farmers in the rural areas, most of the beneficiaries were senior party officials and the politically-connected at provincial, district and ward levels.

The leaders boasted that it was a public programme and ignored the repayment obligations to the GMB. Indeed, the majority of beneficiaries did not have an incentive to use the inputs, they just sold the inputs and pocketed the proceeds.

Between 2000 and 2002, the official exchange rate was about US$1 to ZW$80, while the parallel market was about US$1 to ZW$1 000.

Most of the programmes that were financed by the donors were paid through foreign currency accounts held with either the central bank or local banks. In order for government departments to undertake projects, they would withdraw funds from the accounts and then change the forex into the Zimbabwe dollar.

Most Cabinet ministers, senior government and Zanu-PF officials took advantage of this loophole by bullying staffers and forcing them to withdraw from foreign denominated accounts in which they received US$1 in exchange for $80 in local currency to fund foreign trips.

After the foreign trips, the same politicians would exchange the foreign currency they bought at US$1/ZW$80 from a foreign denominated account on the parallel market at a rate of ZW$1 200, earning a profit of ZW$1 180. This was a broad daylight robbery of the resources meant for the poor.

Between 2000 and 2002, there was also rampant farm invasions. Well-connected politicians got information about farms around the country. Some invaded the farms, stripped assets and looted irrigation equipment, pumps and other machinery and sold and then abandon the farms.

Others invaded the farms, mostly during the harvesting period, confiscated and sold the produce and kept the gains.

Private businesses in the country were victimised under a scheme where disgruntled workers contacted the ruling party officials who went to the business owners and extorted money from them in the name of settling labour disputes.

Although the land reform was noble in addressing the imbalances, most of the land was allocated to the political elite and well connected, with some politicians and their relatives benefiting up to 21 farms. These beneficiaries were the ones who had bought multi-million dollar homes in posh suburbs such as the Borrowdale. Most of the qualified smallholder farmers with master farmers certificates were denied the land. As a nation, it boggles the mind why no one ever asked how we could transfer such enormous resources to the rich and powerful who could afford it.

I resigned because I was not serving the people of Zimbabwe, but I believe that there are many who witnessed looting in government as well. While the programmes were very noble, by their design they were meant to transfer resources to the elite and politically connected, while the public was left to pay off the attendant debts.

One such programme is command agriculture. As long as these programmes do not have a credible repayment measures, they are just a sanitised way of looting State resources.

To encourage future development, government-supported programmes should have a credible monitoring and repayment mechanism which ensures that the beneficiary has an incentive to put the resources towards the intended purpose, and that the programme is sustainable in that a revolving fund could be used to sustain the programme.

This can be achieved if the government provides funds through commercial banks which have a good credit monitoring and recovery records, provides guarantees and demand that the loans be repaid.

For Zimbabwe to recover, it is time that the government put the needs of its citizens ahead of the privileged and politically connected politicians. That way, it can truly build an inclusive economy that can become a beacon to the rest of the world.

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