Do as the English do

There are frightening statistics coming out of Zimbabwe. Many of them we have reported before, and we will take the risk of sounding like a broken record for as long as it appears that the nation — meaning the citizenry, their Government and all organisations operating in this country — is not sufficiently moved to address these statistics urgently and holistically.

Figures from industry indicate that since the migration to a multiple currency regime in early 2009, Zimbabweans have spent more than US$50 billion importing things like toothpicks, onions, tomatoes and apples. Yes, that import bill also includes items of significance such as machinery for industry as well as items that we are not — or cannot — produce.

But a lot of that money has gone to things that we simply should not be importing. We are told that in the first three months of 2016, we have already spent US$1 million on imports of apples. Another US$3 million has gone to skin care products and an unbelievable US$690 000 has been splashed on mineral water imports.

That is not the worst of it, unfortunately. Can anyone fathom how the highly educated people of Zimbabwe spent US$317 000 on importing chewing gum in just three months?

That’s right, US$317 000 on chewing gum! Recently, The Sunday Mail reported that Zimbabweans spend US$500 million on prepaid cellular phone airtime yearly.

And in 2015, this country imported cars — many of them pre-owned units — from the Far East and Europe worth more than US$500 million.

Still on 2015, the Reserve Bank of Zimbabwe has said last year, individuals externalised US$684 million as donations, investments and bank account transfers. We were also told that companies had externalised US$1,2 billion in 2015 as export sales proceeds and highly inflated management, technical and performance fees. This is money bleeding from Zimbabwe, leaving our economy anaemic and people’s livelihoods on the brink. In all, we exported goods and services worth just US$3,4 billion compared to total imports of US$6,3 billion. That was a trade deficit of US$2,9 billion.

For 2016, the projection is that exports will rise to US$3,7 billion while imports will fall to US$6,2 billion.

That improved trade deficit is a step in the right direction, but it is far from enough. We are talking here of money bleeding from Zimbabwe, leaving our economy anaemic and people’s livelihoods on the brink.

It is for this reason that we must commend Government for tightening import restrictions as a deliberate move to both retain liquidity and direct greater support towards local manufacturing.

Together with bond note-aligned export incentives and greater controls on movement of money outside Zimbabwe through the formal banking system as recently announced by the Reserve Bank of Zimbabwe, this should set our country back on the growth path and improve livelihoods. It is incumbent upon all citizens to support import substitution and to conduct themselves with a sense of national duty in their financial transactions and in commerce in general. Efforts by some sections of the media to create panic and stir opposition to import controls should be ignored for their myopia and their deliberate and deplorable attempt to advocate for further deterioration of bad economic situation for political reasons.

No country in the history of the world has ever developed its manufacturing sector without some measure of import controls. We should urgently follow the advice provided in Erik Reinert’s 2004 book titled “How Rich Countries Got Rich … And Why poor countries Stay Poor”.

Reinert set about documenting the history of economic thought over the last 500 years and his conclusion was the rich nations are as they are today because they favoured imports of raw materials and exports of finished goods.

For the United Kingdom to emerge as a European power, it simply copied the economic models of the then powerful Dutch Republic and city state of Venice.

In the 1300s, these two were far and away the economic success stories of Europe. Venice and the Dutch Republic focused on maritime trade, ship-building, naval instruments, military equipment and wool clothing. Their most important source of raw material for textiles was England, and the English were for centuries content to export raw wool to Venice and the Dutch Republic, and import clothes.

In 1728, in the book titled “A Plan of English Commerce”, Daniel Defoe noted that England’s fortunes started changing from 1485 when King Henry Vll made raw material exports to Venice and the Dutch Republic expensive.

England also made it extremely costly to buy textiles from these European powers and instead invested in its own manufacturing capacity. And when this model worked for them and many other now developed countries, these same nations started preaching free trade, well aware that our fledgling manufacturing industries would be overwhelmed by uninhibited competition. Up to today, we still have many who believe this nonsense of unimpeded movement of goods, totally unaware that it was aggressive protectionism that made Europe what it is today.

Let us remember the words of the first United States secretary of the treasury, Alexander Hamilton. He advised: “Do not do as the English tell you to do, do as the English do.”