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ZimAsset dead with corruption

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Last week, World Bank director for Poverty Reduction and Economic Management in Africa Marcelo Giugale made telling, but obvious remarks at an AMH Conversations dialogue held in Harare under the theme Leveraging Minerals for Shared Growth.Under a story headlined Mineral revenue can reduce poverty in Africa, Giugale said: “Government should identify the poor by name and share with them the revenue.”

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He said the system had worked well in Mexico and Iran, where revenue from the sale of oil was distributed among the poor. He gave concrete and current examples.
Giugale said: “Natural resources differ from tax. Nobody sees what comes from the industry apart from government and the extraction company.”

That’s most true in the case of Zimbabwe where, during the tenure of the inclusive government, the Finance ministry, being nominally in the hands of the MDC-T, did not get any meaningful remittances from diamonds. That is why different figures of production and revenue were being mentioned. That is why then Justice minister Patrick Chinamasa confidently declared that there was money to hold the July 31 harmonised elections despite protestations by then Finance minister Tendai Biti that Treasury coffers were empty.

Continued Giugale: “More natural resources mean more corruption.”

Indeed, grand corruption seems to be the order of the day in the diamond mining sector. This month none other than President Robert Mugabe himself, addressing his own Zanu PF party top brass, spoke of secret midnight landings and takeoffs at airports by syndicates smuggling diamonds and other precious minerals. This is the “natural resource curse” which Guigale warned against.

The natural resource curse (also known as the paradox of plenty) refers to the paradox that countries and regions with an abundance of natural resources — specifically point-source non-renewable resources like minerals and fuels — tend to have less economic growth and worse development outcomes than countries with fewer resources.

This happens for many reasons, including a decline in competitiveness of other economic sectors, volatility of revenues from the natural resource sector due to exposure to global commodity market swings, government mismanagement of resources, or corrupt institutions.

All the symptoms of the natural resource curse are evident in Zimbabwe. The country is now a net importer of maize, the staple grain, and industrial exports have disappeared, resulting in massive unemployment as factory after factory closes.

Without the political will to tackle corruption head-on, the much-heralded Zimbabwe Agenda for Sustainable Socio-Economic Transformation (ZimAsset) is as good as dead in the water and Zimbabwe will plunge into a banana republic whose economy is solely dependent on one fluctuating export whose price is determined elsewhere.
This is not a strong and sustainable economic foundation.

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