‘Zim loses US$20bn through cartels’
Zimbabwe may have been prejudiced of US$20 billion over the years through corruption due to the acrid relationship between politics and economics that has seen the entrenchment of cartelism in the country.
According to a new report titled Cartel Power and Dynamics in Zimbabwe by South Africa’s Maverick Citizen, a supplement of the Daily Maverick newspaper, Zimbabwe may be losing up to US$5 billion annually due to operations of the cartels that now run its politics and economy.
“Zimbabwe’s institutions for regulating property rights, law and finance have been ensnared, and are actively abused to facilitate rent-seeking by cartels. The study finds three types of cartels: the first being collusive relationships between private sector companies; the second being abuse of office by public officeholders for selfenrichment; and the third and main type being collusive relationships between public officials and the private sector.
The Maverick Citizen report has reinforced the findings of other global organisations that have condemned the Zimbabwean economy to junk status.
American financial services firm, Fitch Solutions, says Zimbabwe has the highest political and economic risk in Southern Africa, reflecting a deepening crisis in the country.
In a report titled Fitch Solutions February 2021 Southern Africa Monitoring, Zimbabwe scored 37,7 on the financial services firm’s political risk index — way below the regional average of 59,6.
The damning Fitch report comes a week after the United Kingdom’s Minister for Africa James Duddridge said British investors were shunning Zimbabwe due to a poorly managed currency, arbitrary property rights and legal concerns.
Further, data from the United States government’s Bureau of Economic Analysis of the US Department of Commerce shows investments from the world number one economy were also on a decline.
Zimbabwe scored 20,6 on the Fitch economic index for the short-term, failing to match the 36,3 average.
On its long-term projection, Fitch gave Zimbabwe 42,8 and 21, respectively, on its political and economic indices. This is below the political long-term average index of 58,1 and the economic average of 41,4.
Zimbabwe scored poorly even against Mozambique, a neighbouring country historically one of the poorest countries in the world which is also languishing in the throes of a deadly terrorist insurgency.
In that regard, on Fitch short-term projection, Mozambique scored 51,7 and 37,3, respectively, on its political and economic
indices. On its long-term projection, Mozambique got 49,8 and 43,8 on the political and economic indices, respectively.
Scores are awarded from 0 to 100.
The symbiotic relationship between politics and economics has weighed down on Zimbabwe’s overall gross domestic product growth prospects.
The Maverick Citizen report concludes that the continued relationship between politics and economics has cost the economy over US$20 billion.
Estimates from the report show that corruption costs the economy nearly US$5 billion, annually.
“From this study we find that there is consensus across political parties, academics and wider society that cartels go against the public interest, and they are characterised by collusion between the private sector and influential politicians to attain monopolistic positions, fix prices and stifle competition,” reads part of the report.
It said case studies in the transport, mining, energy and agricultural sectors show how Zimbabwe’s political patrons are at the heart of almost all cartels — enabling public officials loyal to them and private sector companies from which they benefit to acquire illicit profits.
The report noted that the cartels impact Zimbabweans in several ways. These include entrenching their patrons’ hold on power, retarding democratisation, destroying service delivery for citizens and creating an uncompetitive business climate — which leaves Zimbabweans the poorer.
This means the close relationship between politics and economics deprives the economy of money that could be used for investing in the economy.
Experts from the African Development Bank, say Zimbabwe needs an investment of US$3 billion annually to attain middle income status by 2030, a mantra President Emmerson Mnangagwa uses as the byline of his economic policy.