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Cartels killing the Zimbabwe economy

20 Oct 2019 at 23:50hrs | Views
President Emmerson Mnangagwa has promised to take out the whip on business for the current price madness. That, predictably, is a good idea.

If things go according to his plan - most of the time they haven't - he is meeting captains of industry this week for some hard talk because, as he says, he is getting dizzy at the how giddy the prices are moving.

The president might be keeping a brave face in public, but the rate at which we are rattling towards hyperinflation has a big bearing on whether or not he will be able to see out his current term. It is, therefore, surprising, that it's only now that he is waking up to the reality of how bad things are for his political subsistence and us as a country.

The idea of meeting with business is good, but the problem is that it's a good idea that may be sitting in the mud. Why? Because Mnangagwa seems to be mixing things up here. For him, apparently, business are the service stations that are selling fuel. The small-town retailers. Tuckshops, even.

In an ordinary sense, these are businesses, of course. But the business that Mnangagwa must meet this week are nowhere near there. They are the big-buck cartels. These are the animals that are practically killing the economy.

Here, we are talking of intricate webs of business entities that collude to fix prices and other trading dynamics, throw tenders and, ultimately, capture the ruling elite or powerful individuals in government and public as well as private institutions. You can only be dumb not to know this. Now, the president is a streetwise chap. Therefore, the president must know this. Simple logic.

The cartels, the biggest of which is the Queen Bee web, are omnipresent. They control the production, importation - mostly smuggling - and supply of gold, diamonds, fuel, agricultural produce and tobacco. They fix and supply basic commodities, wheat and flour included, and have convinced government to persist with the unyielding command agriculture scheme, which, in reality, is a platform for looting billions from the taxpayer's vault whose keys, sadly, they keep.

The cartels are strongly linked to the ruling elite. That's easy to understand if you mind the fact that they are the ones that fund the politicians during elections. They do it so that their preferred accomplices get into power and do their bidding. That's the genesis of what we call State capture these days. But it doesn't end there. Once their candidates are in power, the cartels persist with their bribery. They pay the politicians and bureaucrats big money to manipulate the tenders and other lucrative contracts.

So, you find their footprints at the Reserve Bank of Zimbabwe (RBZ), the Minerals Marketing Corporation of Zimbabwe, the National Social Security Authority, other state-owned enterprises, the banks and the public procurement authority. They bribe the police and judges alike. Because they are well-oiled, they have become untouchable. To the extent that even when there is clear evidence of criminality on their part, the worst they suffer is temporary or purported freezing of their bank accounts as happened in the case of Sakunda Holdings, Spartan and Croco Motors, recently.

Some of us are perennial optimists, so we gave it the benefit of doubt when we heard that the RBZ had frozen those accounts over the manipulation of foreign currency trade. It's highly likely that nothing of that sort ever happened. It's common cause that the generality of us can't have access to the records relating to the offending cartelists. If the Auditor-General Mildred Chiri can't have access to records relating to command agriculture, a public project, as has been the case, never dream about getting the privilege to know about the freezing or purported freezing of the cartels' bank accounts.

What, then, does this mean? It means that the cartels and the ruling elite are one and the same thing. Politicians become proxies of the private individuals and the private individuals also become proxies of the politicians. Some of the cartelists we ordinarily see as such are close relatives of the politicians. And some of the politicians are, in fact, prominent oligarchs in the manipulation of our economy.

That's how bad state captures gets. To the extent that even as they sit in Cabinet to discuss ways of bringing sanity back to the economy, some of the ministers are busy taking notes to share with the cartelists. And that's another very bad thing about the cartels. They are extremely divisive. In their mad chase for mega dollars, they have morphed into political factions.

One cartel supports Mnangagwa and the other his rivals in Zanu-PF. And the same cartel supports both rivals for as long as it suits the whims of the cartel. That, naturally, is bad news for the president. Because some of the cartels are working day and night to ensure that the economy doesn't work again. Not for as long as he is president. In this case, the anti-Mnangagwa cartels fuel foreign currency exchange rates turbulence so that the president becomes unpopular enough to breathe a sigh of relief, if he were to get to 2023 when Zimbabwe goes for the next general election.

But even the cartels that are loyal to him are producing the same result because they are also manipulating prices, creating shortages and fixing tenders to create virtual monopolies. And once they monopolise the market, it becomes easy for them to determine the prices.

The cartels are thinking in US dollar terms all the time they are doing their vile business. We may have decommissioned that currency on paper, but the truth is that everything is still happening on the terms of the greenback. The cartelists mark price in US dollar terms and then simply translate the value into the local currency. Then, because they control the formal and black market trade in forex, they determine what value the local currency must have against the greenback. They are the ones that can take money out of the RBZ and the banks, then heap it on the black market.

So, that's the word for Mnangagwa. This is the business he needs to meet next week. It's not like he must arrange a talking-down ceremony in a five-star hotel or something like that. He knows where the cartelists are and who they are. He must just call them to heel so that this nonsense of price hikes stops, immediately.


Source - the standard