MAY 1996 · VOLUME 17 · NUMBER 5

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I N T E R V I E W

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Multinational Monitor: Why has Zimbabwe's allegedly socialist government not resisted the structural adjustment program?

Morgan Tsvangirai: There is no option. There were serious financial deficits, so the government had to go to the World Bank and IMF to obtain bridging finance. That meant also swallowing the medicine from World Bank and IMF, which is structural adjustment.

MM: Why was there such a substantial financial deficit?

Tsvangirai: Immediately after independence, there was a lot of investment in the social structure, in education and health. And the destabilization from South Africa also contributed to the huge defense expenditure. The size of government exceeded the inflow of resources, and the deficit problem began to emerge.

MM: What have been the major elements of structural adjustment in Zimbabwe?

Tsvangirai: There have been five major elements: trade liberalization; public sector reform; deregulation of labor laws and prices; fiscal policy reform; and monetary policy reform.

MM: How have each of those elements affected poor and working people in Zimbabwe?

Tsvangirai: With trade liberalization, a number of our companies were expected to be competitive, especially in the clothing and textile sector. But unfortunately, trade policy liberalization has seriously affected a number of those sectors, and they have had retrenchments [layoffs]. Many have nearly died.

On public sector reform, government is embarked on a number of cost recovery measures, in health and education, and has also sought to reduce the civil service. That of course has affected the lower end of the work force.

With deregulation, the government used to subsidize a number of basic commodities. With the removal of basic commodity subsidies, prices just went up through the roof. The protection against unfair dismissal was also removed, with the result that unbridled retrenchments have sometimes taken place.

On fiscal policy, the reform has to do with discipline. Some form of discipline has to be instituted in the way government spends money, but the reform has had negative effects, because the government has cut back on certain valuable and important expenditures.

Monetary reform included the devaluation of the Zimbabwe dollar, which has had a negative effect on the poor, in terms of the dollar's value and in terms of prices; with devaluation, the price of imported goods has risen sharply.

Those are the areas generally, and structural adjustment has led to a general deterioration of the standard of living of workers. It has been even worse for those who have nothing to fall back on.

MM: What is the effect on employment from this set of policies?

Tsvangirai: The restructuring has affected every industry. The result is that instead of creating employment there have been massive retrenchments.

MM: What is the current rate of unemployment in Zimbabwe?

Tsvangirai: In Africa, it is difficult to determine the rate of unemployment. There is always a rural-urban linkage, and people survive on subsistence agriculture when you would consider them unemployed in Europe or America.

In any case, officially, the unemployment rate is 40 to 50 percent.

But again, unemployment as defined in the North does not mean anything here. In Europe it would mean you don't have a job. In Africa, it means a totally different thing.

MM: If structural adjustment is hurting so many businesses, how have they responded to it?

Tsvangirai: Five years ago, private businesses were at the forefront of agitating for opening up of the economy. Today, they are at the forefront of agitating for protectionism.

MM: Is that true of all businesses, or is there a split between the smaller local businesses and the bigger multinational ones?

Tsvangirai: There could be pockets that have benefitted. Maybe the tourism sector, to some extent. Maybe the mining industry. But the manufacturing sector is not happy. The Confederation of Zimbabwe Industries is calling for holding of the brakes [on structural adjustment].

MM: What are the essential elements of the ZCTU alternative to structural adjustment?

Tsvangirai: We have to take in consideration the historical imbalance in our economy; 70 percent of the population lives in the rural areas. To allow for the uncontrolled market forces to reign supreme is not helpful to those 70 percent. What we are saying is that government has a role to play in bridging the imbalance between the rural and urban sectors. But we are saying that a government involved in that intervention must be transparent; and it must intervene to empower, not intervene to control.

The other element is that the formal sector, which is very enclave in nature, is not developing linkages with the rural sector. We have to develop those linkages in order to expand the economy. We are not opposed to macroeconomic stability measures -- what we are opposed to is allowing market forces to reign without any control. That has been the argument all along.

MM: What are some of the ways the government is exercising a controlling role?

Tsvangirai: The government has been intervening in the rural areas as a means of controlling, but not as a means of empowering, taking advantage of the opportunities and the initiatives that individuals can take. There have been a series of handouts from government, and that tends to create a patronage system. That is not helpful, because you create a dependence syndrome, rather than building self reliance in the rural sector. And a lot of resources have been wasted through that process.

MM: How would you like to see the government intervene to empower people?

Tsvangirai: The government must provide avenues for disadvantaged areas to access those resources in a much more transparent manner.

One way is through land reform. We would like to see the land reform being pursued. But the problem with "land reform" is that it means different things to different people. We would like to see the most productive land given to those that can utilize it with extension services, with facilities to access resources, fertilizers and implements, because here there are also environmental questions to consider.

Secondly, we are talking about developing the productive skills of the rural sector. It can be in a small-scale area of activity or in a bigger way, collectively.

Finally, there is the question of providing the infrastructure, like irrigation facilities, where the majority of rural persons are exposed to droughts.

These are the positive measures of intervention that we are expecting government to do.

MM: There is no way around the fact that land reform means taking land from the rich, white farmers and distributing it to more productive, black farmers, right?

Tsvangirai: What we are talking about with land reform in that regard is that the sizes of the farms must be reduced. The underutilized land must be taken by others, and we don't only mean [transfers from] white to black; we are saying the size of all underutilized land must be reduced. The large farms are not at all economically utilized. So we have to look at those areas.

At the same time, we have to develop the necessary skills among the black subsistence farmers to be professionally productive on the land, and to use the best methods that are available to make the maximum use of the land.

It has nothing to do with taking from the whites. Unfortunately, the whites are very emotional about this issue. It is a very short-sighted approach.

MM: What sort of things do you have in mind to create linkages between the formal and informal economies?

Tsvangirai: The formal sector has all of the advantages of infrastructure. They are the manufacturing base. They supply the rural poor, who have nothing.

The linkages we are talking about are, for example, incentives to encourage the existing manufacturing base to locate in the rural sectors. That would help control the rural-urban migration, which is very, very serious. In fact, by that process, you are trying to make the maximum possible use of those rural sectors.

The financial institutions can relocate in the rural areas. The grain marketing boards should be relocated. Then the rural population could have access to sell their crops and be economically active. At the moment, the reverse is actually true. They are actually closing down grain marketing boards.

Those are some of the measures we would like to see implemented.

MM: Where do the government's proposals to implement export processing zones stand?

Tsvangirai: At the moment, they have passed the legislation, but there is a stalemate. We have severely opposed the exclusion of the labor laws in those export processing zones. The Ministry of Public Services is proposing amendments so that labor laws would apply, and the Ministry of Industry is resisting the amendments. The president supports the inclusion of the labor laws, but he has signed the export processing zone bill. So there are a lot of contradictions regarding it; we don't know what the government's position is.

All we can say is that the export processing zone board has been appointed, and the people who have been appointed are not qualified because they are either farmers or hoteliers, and this has nothing to do with manufacturing, to which export processing zones are targeted.

In fact, our own assessment is that export processing zones are 15 years too late.

MM: Why are they 15 years too late?

Tsvangirai: Because we should have used the maximum advantage at independence, when everyone was looking at Zimbabwe, to attract investment. At the moment, we have South Africa to compete with. It has all the advantages, including access to the sea; we are landlocked.

MM: Do you think attracting foreign investment should be a key goal of the government?

Tsvangirai: No, it should be one of the strategies, but it cannot be the one and only strategy. But certainly attracting investment is important.

MM: How important are foreign investment and foreign multinationals in the Zimbabwean economy right now?

Tsvangirai: Our economy is based on multinational investment from companies like Anglo American, Lonrho and BHP. They are mostly in mining and agriculture -- they are raw material producers.

MM: How do multinationals in Zimbabwe treat workers and unions?

Tsvangirai: I know of one case -- at an Anglo American sugar estate -- where they have created a company union. But it is now being resisted by the workers.

In other areas, they have not been conspicuous by their anti-union or pro-union stance.

MM: Do you think there are any emerging issues of new multinational demands from workers?

Tsvangirai: I think things are proceeding as they have been. This is a very low-wage labor regime, so I do not think we have caused them many problems. As the unions start to become stronger, and challenge some of the multinationals' practices, I think they will start putting conditions to government before investing. Of course, government is always under pressure from the multinationals in terms of repatriation of their profits and other ways to increase profits.

MM: In the formal sector, how concentrated is capital in Zimbabwe?

Tsvangirai: Capital is concentrated in mining and in some of the major agricultural enterprises. It is not very concentrated in manufacturing; we are considered just a raw material producer.

Five companies dominate the economy, five conglomerates that manufacture, distribute and market their own products. The multinationals are Anglo American, Lonrho and Rio Tinto. The domestic ones are T.A. Holdings and Delta Corporation.

MM: What effect does this high concentration of control in the formal sector have on the economy?

Tsvangirai: We have an oligopolistic system here, whereby the same company produces raw materials, manufactures, distributes and markets. You find that each company is in five or 10 different areas of economic activity. So you run from this and you are trapped with that. It has had an effect on the price levels in this country.

As a result, people have been agitating for an unbundling of these five conglomerates.

MM: What sort of proposals do you support for an unbundling or breaking up of the conglomerates?

Tsvangirai: I think subcontracting to qualified indigenous producers, to small to medium enterprises, is actually feasible. Also, making sure that one company does not do all the processes. Some of the activities of the major companies could be done by small or medium enterprises. Instead of producing raw materials, manufacturing and marketing, maybe the production of raw materials can be done by other companies, or the marketing by other companies, or the manufacturing by other companies.