WASHINGTON, December 6, 2013 — The Zimbabwean government recently announced a widespread indigenization policy: By law, a significant share of the economy will be set aside for exclusive control by Zimbabweans. By January 1, 2014, retailing, hairdressing, farming, advertising agencies, real estate agencies, employment agencies and restaurants serving local food must all be owned and operated by Zimbabweans.
This populist move highlights the Zimbabwean government’s inability to solve the massive economic problems plaguing the country. It has decided to deflect attention from its failures by targeting Chinese and Nigerian business owners who form a significant share of foreigners who have moved into such areas as wholesaling and retailing. They are an easy target.
The government hopes that this measure will solve the economic crisis, but it will not. THis is an inward looking policy that protects the local population by putting them in a cocoon — inward looking in a bad way. Governments all over the world mistakenly think that protectionist policies will save their economies when they only do enormous harm to future generations. Governments are nobody’s parent and should stop acting like it.
Looking inward, the Zimbabwean economy will shut out the world, but also shut itself off from the world. It is over thirty years since Zimbabwe won independence, and still the government does not understand how an economy functions. Economies are a dynamic phenomenon.
Zimbabweans believe that Chinese and Nigerian retail owners undercut local retailers and wholesalers when they open up shops. Rather than figure out how these Chinese and Nigerians get the goods at low cost, then figure out how to undercut them, local businessmen demand protection so that they can continue to do business as they have been. They might go to China, learn to navigate the Chinese system — perhaps with help from the Zimbabwean embassy — and ship goods back to Zimbabwe themselves. They would now be able to compete with products from the same source, thus balancing outward and inward thinking.
A baker, using same ingredients as his next door neighbour, wonders, “why are lots of people lining up outside my neighbor’s bakery and not mine?” Rather than try to shut down the neighbor’s bakery, he should find out how to make better and cheaper bread. A successful bakery, hair salon, or retail outlet is not just a building; it is a creative process.
Looking inward is a path to stagnation and envy. It leaves a business and a country unable to learn from others to do a better job. Learning from others means society can move forward. It forces us to ask, how do they do it? How can I do it better? The only constant is change. Being protected from change leaves businesses fragile and sends an economy into decline.
How will those bakers and retailers ever learn to improve their businesses if they are cocooned by the government? In the end the society loses and consumers lose by not getting more for their money. This populist, nationalist policy hurts society in the long run.
Zimbabwe with all its problems has a lot going for it. It is blessed with enough natural resources for today’s world and for tomorrow’s world. It needs confidence to grasp the full concepts of freedom, equality before the law and the free market. To trust them in free markets is the ultimate sign of confidence in people.
Zimbabwe is in the company of the rest of Africa with its cocoon-like thinking, putting paid to the idea of the Pan Africanism that their leaders like to scream about. Pan Africanism can only work with free markets, goods and people moving between borders without hindrance. Such thinking also puts paid to regional African economic blocks, too inward thinking for them to work.
Many point to Botswana as a success story, but what has Botswana’s government done besides being prudent and not stealing public money? Botswana has tried opening up its financial markets; it could be the Switzerland of Southern Africa, something worth supporting. Switzerland is known for banking, but its quality companies also create real products. When Botswana begins making parts for Boeing or Airbus, we might be able to say that Botswana is a success story.
Africa must reject its colonial mandate as a resource supplier and become an economic powerhouse. This can only be done with true equality before the law and free markets. The more of the world that contributes to the knowledge base, the better off we all are. Forget the fears of those who say supplying resources is Africa’s only role. The Zimbabwean government has acted out of fear. Get out of the way of the people of Zimbabwe; they are not babies always needing protection. They have brains and vision, they can compete and improve themselves and improve their minds, if only they are allowed to.
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