Zimbabwe: Esap 2.0 loading
ECONOMIC Structural Adjustment Programme (Esap), yes the International Monetary Fund (IMF)-engineered economic structural programme is stealthily being brought back in Zimbabwe after a generation.
The poor and working class should brace themselves for the long and cold economic winter season.
The older generation see the term Esap as a curse word as it meant job losses, privatisation of public services like transport and health and heralded the mushrooming of informal sector and cross-border trading.
Organised labour under the Zimbabwe Congress of Trade Unions (ZCTU) fought the implementation of Esap.
It organised strikes, petitions and picketing, but it took five years to win the battle.
Esap was introduced in 1990, a decade after the country had become independent.
The State coffers were not balancing, the government was putting a lot of money into social services like universal primary health care, basic education and grants for tertiary education.
Harare had the subsidised and efficient Harare United Omnibus Company offering public transport and Parirenyatwa and Harare Central (now Sally Mugabe) hospitals were premier medical centres that were the envy of many in the Southern Africa Development Community (Sadc) region.
National Railways of Zimbabwe (NRZ) was a leading transport and freight company. It had daily passenger trains to Mutare and Bulawayo, respectively.
It also had an efficient subsidiary Road Motor Services that moved goods and parcels.
The NRZ goods train service transported coal, ore and other heavy goods across the country.
The IMF then designed Esap, an economic solution anchored on lean governments, privatisation of public services, forex deregulation and free markets.
Thousands lost their jobs. Millions could not afford basic education and access primary healthcare.
Yet thousands more students who qualified for tertiary education had to drop out, leaving education to be a preserve of the rich.
All this happened under the watch of Bernard Chidzero, a Western-trained economist, who was the Finance minister then.
A generation later, Mthuli Ncube, another Western-trained economist is at the helm of the ministry and wants to do another Chidzero on Zimbabweans.
Ncube, in his first budget in 2018 was clear about his policy of economic austerity, tightening of belts by the working class.
This was a warning shot and under the COVID-19 pandemic, he has pushed the boundaries quietly.
The economics don, Ncube, has borrowed a few things from the Chicago boys — disciples of Milton Friedman, the godfather of neo-liberalism.
It should be noted that Friedman while at the helm of IMF introduced structural adjustment programmes as a panacea to moribund economies.
Ncube also understands the use of the shock doctrine in economics management that is well-explained in Naomi Klein's book The Shock Doctrine and the Rise of Disaster Capitalism.
The Treasury czar has taken advantage of the COVID-19 pandemic to reintroduce radical economic solutions like the 1:1 US dollar to RTGS, push for privatisation of State-owned enterprises and more importantly, driving Zimbabwe towards highly indebted poor countries (HIPC) programme as a solution to the country's economic morass.
In a public debt statement tabled in Parliament in November 2021, Ncube said: “Zimbabwe is expected to remain in debt distress in the absence of a comprehensive arrears clearance, debt relief and restructuring strategy aimed at attaining debt sustainability postCOVID-19 pandemic. To this end, Treasury formulated the arrears clearance, debt relief and restructuring strategy which outlines the necessary steps towards arrears clearance and debt relief. The strategy includes traditional debt relief options, including the highly indebted poor country (HIPC) initiative, which provides maximum debt relief.”
He added: “If the window for the HIPC initiative is availed, Zimbabwe is keen to participate in the HIPC initiative process to benefit from maximum debt relief. This would require a modification or exception granted by IDA's executive board, to the World Bank HIPC initiative eligibility criteria, for the reclassification of Zimbabwe as an IDA-only country. This will also require IMF's board grandfathering of Zimbabwe to the HIPC initiative.”
It is important at this juncture to acknowledge that Zimbabwe has been toying around with the idea of going back cap in hand to the IMF.
Over the past decade, it has unsuccessfully implemented the Staff-Monitored Programme.
This is a watered down version of Esap, but each country draws its own targets and tries to meet them under IMF supervision as a prelude to accessing fresh debt.
It is critical to note that IMF conditions have not shifted a bit since the 1970s.
Among conditions for new debt is governments trimming their wage bills (a soft way of saying retrench staff), cutting back on social services spending (an euphemism for privatise education, health, water, transport and energy) and deregulation of the forex market, a simpler way of saying foreign investors must easily take away their dividends to their home countries or tax havens.
Without alarming Zimbabweans, it is important to learn from what happened to Greece recently. It has received a set of new conditions to access new debt from the IMF, especially after it elected a leftist leader.
The debts are designed in such a way that a country perpetually remains in debt and susceptible to Western influence.
It is without doubt important that Treasury should engage Zimbabweans on the way forward to address the country's debt predicament.
Introducing Esap 2.0 without consultations will create social instability in a country that has been staring on the brink for the past two decades and experienced its first coup in November 2017.
Ncube is set on HIPC and the Zanu PF government is backing him. It can only baulk from the idea if it costs it political capital. There is no doubt why they are not making noise about this initiative.
However, civil society and the opposition has a window of opportunity to stop Esap 2.0 in its tracks or acquiesce to Zanu PF.