Zimbabwe has in the last five years all but given up on FDI. Instead, in an unprecedented manner taken more offshore debt than in the last forty years.
China must pay Zim cash for its exports & not offset with onerous debt under the guise of infrastructure & donations.
GOZ is awfully inadequate in understanding geopolitics & economics. For example, China grew on savings & FDI. Not debt.
FDI is important for;
(i) Technology transfer
(ii) It’s equity at risk& is more patient.
(iii) Loss is not a burden on greater society
(iv)Global supply chains
All these are ideological questions. Socialism quickly runs out of money. Leaves debt & malinvestments. Losses & Debt become a collective responsibility. A child born today is saddled or as the saying goes indentured. All they’ll produce will go to paying off their father’s debt!
So if it’s not debt from the East it’s Aid from the West. Aid is harmful.
How does the West expect GOZ to implement reforms when it has outsourced citizen welfare to the west? Aid results in inappropriate resource allocations.There is a direct link between Aid & fixed Fx rate
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Commenting on abandoning the 1:1 gedye, Eddie Cross believes it was an act of bravery. He goes on to say ED economic management is didn't from Mugabeconomics. Notice how Eddie Cross doesn't use facts &numbers? But superlatives?
Under ED the economy contracted for two years by 8%pa according to WB. The condonation bill, saw unprecedented snbudgetted expenditure under ED. Even the WB noted the ridiculous world beating expenditures.
Under Chinamasa external debt was US$9bn& he had a plan to address it under the LIMA negotiations. Now it's double. Chinamasa reigned in expenditure, cutting GMB subsidies.ED brought Zupco subsidies.Under ED the truth is a punishable offence. They even banned OMIR.Mugabe didn't!
The post covid world presents a serious challenge ahead for emerging markets & ever so for small countries like Zim. The trigger will be the rise in interest rates by the FED.
Another global headwind is China. Bail outs & rise in debt levels.
An interesting debate is on how rises in commodity prices don’t translate to extra income for commodity exporting countries in the LR. Imports increase & other industries suffer.
Small countries unfortunately can’t have diversified economies in a globalising economy. They’re simply not competitive enough.
A small nation with its own currency is a disaster when the number 1 risk in AFRICA is currency risk.
Frederic Bastiat came up with the idea of the broken window fallacy.
In simple terms, a boy breaks a shop keepers window. The distraught shopkeeper is told not to be sad, for it is good for the economy. The glazier finally has a job.
There is certainly a wave spreading across the region. It happened in the 1990’s. Some took advantage & some chose the moment to become more intransigent.
Confirmation bias means we see what we want to see. In psychology it’s the invisible gorilla experiment.
My suggestion for political parties in Zimbabwe is to engage an impartial commissioned study of what happened in Malawi & Zambia. Of course it’s not to confirm what we already know. But to make us see the gorilla.
As far as the Economies of SADC are concerned. Another moment as it was in 1990 has arrived. Zambia & Malawi missed the opportunity and remained socialist despite multi party democracy. Zim went the opposite direction into hyperinflation. SA used the moment to end Apartheid.