Big Saturday Read: Pillars of Success
It has often been said that criticism without propositions is only half the job. It has also been asked what ought to be done to transform and make the nation a better place for its citizens. The most common retort is that Zimbabwe must change its politics, which is a fair point. The country’s economic performance is a mirror image of its bad politics. This point has been argued before in these pages. Nevertheless, it is important to go beyond this broad proposition, because clearly, there is a lot more beyond changing the politics that can make for a success story.
This BSR considers these factors in some detail. Using the metaphor of “pillars of success” the BSR is a set of propositions on these factors that, the politics being settled, can be the drivers of progress in Zimbabwe or indeed other countries that are similarly placed. It is a non-exhaustive list of pillars upon which to construct a more prosperous nation. It is hard to imagine that the present regime has the nous or will, but still these are matters for consideration now and in the future.
All successful nations have, at some point during the formative years been blessed with leaders who had a long-term vision. They laid the foundation for success because they had a vision. It’s not that they were all democratic, no. Indeed, some of the modern-day success stories such as South Korea and Singapore began under regimes that could hardly be called democratic. However, the leaders had a solid vision which helped transform their nations from decrepit states into highly developed, successful and more open societies.
A comparison is often drawn between the two Koreas - North and South, one which makes the list of the poorest in the world and the other, which is a highly developed nation. In their celebrated book, Why Nations Fail, Acemoglu and Robinson ascribe the difference to the existence of “inclusive” political and economic institutions in South Korea and what they call “extractive” institutions in its poorer cousin. The origins stem from a difference of leadership - South Korea was able to transform itself from the extractive type to a more inclusive regime.
A few weeks ago, we observed how, among other factors, Botswana benefited from its visionary leadership of its founding father, Sir Seretse Khama and his successors who remained consistent. Other countries with similar or even more resources have fared poorly partly because they have not been favoured with visionary leaders. It is true that many more factors account for success, but the critical role of good leadership should never be understated.
Zimbabwe is in need of a leadership which is forward-looking, open and in sync with modern-day demands. It cannot progress with a leadership which is mired in the past, always looking back and applying the same tired methods instead of looking and going forward and pushing the boundaries of progress. The leadership must not be paranoid towards its citizens, arresting and detaining people at every turn.
Instead, it needs a leadership that is compassionate, understanding and appreciative of the plight of its citizens. Good leadership priorities things that matter to the people, instead of focusing on personal profit and accumulation or even retention of power at all costs.
Rule of Law
Centuries ago, in Western Europe, societies found the courage to challenge the despotism of the kings and queens. The Glorious Revolution in England happened in 1688, ushering a new system of government in which the monarchy was subject to a constitution and the supremacy of parliament was firmly established. The French Revolution was a momentous, history-changing process in 1789, although it wasn’t until nearly a century later when the Third Republic emerged and democracy took root.
Across the Atlantic, the American Revolution also challenged rule by a monarch thousands of miles away in England, establishing an historic constitution which has stood the test of time for more than 200 years. It established the foundations that have contributed to making it the most powerful and advanced nations in the world, with strong political and economic institutions.
These revolutions had multiple causes and consequences and they have shaped the course of history across the world, but a key element in all this was the establishment of the rule of law over the rule of man. These revolutions are mentioned not because they are the only ones that have challenged despotism but because they mark important early moments in the history of humankind when arbitrary rule was seriously challenged in order to promote the rule of law.
The rule of law is the antithesis of arbitrary rule. There are two types, a formalistic rule of law which is concerned with the application of laws as they are, whatever their quality or content and a substantive rule of law, under which the law must respect human rights and international law. The latter naturally is more preferable. The former is easily favoured by dictators for whom the law is an instrument to justify repression rather than a limitation of their powers.
In general, nations that respect the rule of law tend to have more sustained success. The rule of law matters to economic actors, who are important in development. It ensures the protection of property rights as well as an effective dispute resolution mechanism which means any commercial or contractual disputes can be easily, fairly and expeditiously dealt with.
The rule of law also means every person, regardless of their station in life is treated equally and fairly under the law. Therefore, if a minister should violate a traffic law, he would be punished just like an ordinary citizen flouting similar rules. Applied in this manner, the rule of law is a great incentive for public officers to comply with the law. Lawlessness grows when public officers, by virtue of their positions, feel that they are above the law. Likewise, selective application of the law is a serious violation of the rule of law because it undermines the principles of equal treatment and fairness.
Inclusive Political and Economic Institutions
Nations that have sustained success tend to have inclusive political and economic institutions. This is the basic theme of Acemoglu and Robinson’s best-seller, Why Nations Fail. They argue that what matters most in the success or failure of nations is not economic policies, geography, culture, or value systems, as has been argued by others before, but the nature of political institutions that in turn determine economic institutions.
Their theory is that political institutions fall into two broad types: “extractive” and “inclusive” institutions. Extractive institutions are those that are controlled by a small group of elites to extract wealth from the rest of the population whereas “inclusive” institutions are those in which more people are included in how they are governed, which reduces the chances of exploitation by elites. Thus, according to Acemoglu and Robinson, economic prosperity rests on the inclusiveness of the nation’s political and economic institutions.
Whereas in extractive regimes the tendency is to maintain the status quo and keep power which benefits the few, in inclusive regimes, there is more potential for change and adaptation. As they say in their book, “Inclusive economic and political institutions do not emerge by themselves. They are often the outcome of significant conflict between elites resisting economic growth and political change and those wishing to limit the economic and political power of existing elites.”
Acemoglu and Robinson’s theory is neither perfect nor conclusive. It follows a line of books that try to wrestle with the important question as to why some nations succeed while others fail. Each of them have their theoretical explanations. Some attribute it to geography and climate, others to culture and religion. Acemoglu and Robinson’s emphasis on political and economic institutions is an important dimension which highlights the importance of such institutions.
Without discounting the relevance of other factors, it is arguable that Zimbabwe’s fortunes will be better if it strengthened its political and economic institutions. The colonial state was an extractive regime. The independence state feigned inclusiveness with the cover of majority rule. But the new inclusive political institutions did not have a significant effect on the economic institutions which remained narrow and extractive, serving capital at the expense of labour and the working class. The white elites were soon replaced by the black elites and the patterns of extraction remained. The plunder of diamonds which were discovered in 2007 is a clear example of the extractive character of the regime, under the control of political, military and foreign elites.
Transforming the extractive institutions into inclusive institutions and strengthening such institutions is a fundamental pillar in the future success of Zimbabwe.
Human Factor: Meritocracy
For these institutions to work, it’s important to ensure that the human factor is firmly in place. Oft-times, failure is blamed on the vehicle when it should be ascribed to the driver. By focusing on both the structures of governance and the human factor, it should be possible to strike a balance that ensures progress.
The institutional structures must be strong enough but the humans in charge of them must also be honest, wise and efficient. They must be appointed on merit rather than cronyism. Public contracts must be awarded on merit rather than on proximity to or personal interests of political actors.
Successful countries, whether they are liberal democracies or authoritarian regimes have achieved that success because they entrust key roles to their most competent citizens. Citizens must be free to innovate and challenge existing knowledge systems and to establish businesses without the strict controls and direction of the state. But even where the state has an interest and a hand in business, as in China, meritocracy has to be the highest factor over any other considerations.
Some people often complain that things were better under Rhodesia in reference to service delivery. It was a deeply racist system, which discriminated against the black majority. But systems worked. For example, people could drink tap water, public roads were well-maintained and public transport ran according to schedule. People bemoan the loss of this basic infrastructure, which has deteriorated since independence.
To be sure, the colonial regime was extractive, but it is precisely this factor which caused its demise as it invited rebellion in the form of the armed struggle. But as we have observed the new state after independence has also been extractive. Scholars have referred to it as a predatory state. But whereas the colonial state was extractive, it was generally efficient, whereas the current regime is both extractive and inefficient. The difference is partly that the extractive regime is run by generally incompetent and more corrupt individuals.
The cronyism of the Mugabe regime has continued. When Mnangagwa wanted to appoint a new Prosecutor General, he rejected nominees who had been selected as the best performers in the interview process. Instead, he selected a candidate who had been behind by some distance in the interviewing process. It’s hard to see that as a meritocratic appointment.
Public Leaders for Public Institutions
Imagine a parent who at dinner time, goes to eat at the neighbour’s or the restaurant leaving his family to eat whatever they prepared. Since he does not eat it, this parent does not have the incentive to ensure the adequacy or quality of the family meal. Why, when he shamelessly enjoys restaurant food or the neighbour’s cuisine? If this father ate the family meal, he would have a clear interest to ensure that it’s adequate and better quality.
This analogy helps us understand why public institutions can never improve as long as Zimbabwe’s political elites avoid local public institutions and rely on foreign services. When he was president, Robert Mugabe was a regular guest at one of Singapore’s premier private hospitals. His successor is a regular guest in South Africa. His Vice Presidents and Ministers also use foreign healthcare facilities. This is not the behaviour of public officers who trust their public institutions.
There may be exceptional circumstances where foreign intervention is inevitable, but seeking foreign medical facilities cannot be a habit for top public officers. The problem is of course more general: political elites generally trust foreign institutions ahead of the local ones, including health and education. It is not surprising that public officers superintending the educational system send their own kids off to foreign schools and universities. This is not limited to one political party.
While freedom of choice must be respected, the simple logic is that public officers must show more confidence in the institutions they are running. You cannot claim to know what is best for everyone and their children and yet that is not good enough for yourself or your own children. Political leaders of successful countries develop their public institutions and make use of them, instead of spending millions of dollars overseas. The money that is spent by political elites seeking treatment or educating their kids abroad could go a long way in improving public health and education facilities in their home countries.
Exploiting Competitive Advantage
Every successful country has (now or in the past) a point of strength; something that gives it a competitive edge over others and it takes maximum advantage of it. Britain led the agricultural and industrial revolution, which propelled it to world domination. For years, it was also the unrivalled champion of the seas, which gave it great advantage over rivals in world trade.
China is the current great factory of the world. Its massive population provides both cheap labour and a huge market. India has made great progress in the area of technology. Botswana makes the most of its diamonds. Switzerland and other offshore finance centres offer unique financial services which attract all kinds of money, including loot from African dictators.
However, there are many more countries that are greatly endowed with resources but have failed to benefit from them, except for the few elites. The point is that countries that have been successful have identified and made use of their area of strength and distinction. They have used this to gain a competitive edge over others. For all its weaknesses, Rwanda has been doing that. Be it technology, cleanliness, tourism, the small country has been working hard to find a point of distinction and advantage.
Zimbabwe must identify and exploit it point of advantage; that thing which gives it the competitive edge. Agriculture used to be Zimbabwe’s point of advantage. It fed itself and others in the region and exported tobacco, flowers and beef far afield. It worked, but not anymore. Manufacturing was a point of strength but now industry is moribund. Mining too was a point of strength and it has potential what with diamonds, gold and platinum reserves.
Then there is tourism, which provides a classic case of a nation failing to make the most of its unique point. The Victoria Falls is one of the seven natural wonders of the world. There is only one Victoria Falls in the world and it’s an amazing experience. The Victoria Falls are shared by only two countries – Zimbabwe and Zambia. But it is probable that South Africa has made more from the Victoria Falls in recent years than either Zimbabwe or Zambia. The falls may be physically present between Zimbabwe and Zambia, but South Africa is their financial domicile. For Zimbabwe, this is a clear case of a country utterly failing to make the most of its unique asset and therefore selling point.
Reviving “Dead Capital”
Commercial agriculture made Zimbabwe’s economy tick. It was one of the biggest employers and it fed a vibrant agro-processing industry while generating tax revenues and exports to foreign markets. Zimbabwe had a quota of beef exports to the EU. It is still renowned for producing high quality and much sought after tobacco. It exported flowers to the Netherlands. The nation could feed itself and others in the region. All this was thanks to a vibrant agricultural industry which had experience, expertise and capital.
Agricultural land was live capital because it was able to attract and generate credit. Now however, in its nationalised state, it is regarded as “dead capital” because it cannot generate credit. To revive commercial agriculture, Zimbabwe needs to repackage land in a form that enables it to attract credit and finance its productive activities. It has to create a strong and secure system of property rights. This is the production that Zimbabwe needs in order to generate exports while also reducing the import bill.
Most successful countries have strong systems of property rights protection. Property rights give comfort to local and foreign investors. A person with secure property rights can make long-term plans and long-term investments, certain that they will reap their rewards. Long-termism in business is good for the economy. There is much more that makes the institution of property rights a critical pillar of success in economic affairs. Most successful nations have systems that guarantee and protect property rights. Our agricultural system will experience a new revolution the moment the government starts recognising and protecting property rights in land.
If the pipeline that delivers water to a city has a leakage, it means less water will reach the users as some is lost along the way. To ensure maximum delivery, the leak has to be fixed. Corruption is the leak that affects the performance of an economy. It means public funds that are collected by the state in the form of taxes are severely diminished by the time they reach the public in the form of public goods. Most of these funds are siphoned away to financial safe havens located overseas. The funds are of no use to the people who need them the most. Instead they generate profits for handlers in those offshore centres.
No nation has achieved success when there is egregious corruption. Most surveys show that poor nations ruled by authoritarian regimes are also the most corrupt. This goes in sync with Acemoglu and Robinson’s characterisation of the “extractive” state, where a few elites control resources and extract wealth at the expense of the many. But even China recognised that it was important to take a tough stance on corruption. In some cases, corruption attracts the death penalty – a drastic measure but one which shows a sense of seriousness towards this vice.
Of course, corruption is a complex phenomenon and there are very few clean hands in the world. It is arguable that rich nations whose financial systems accept corruptly obtained money from poor nations are equally guilty of corruption. If the poor countries generate corrupt money, rich nations are enablers. The difference, of course, is that the rich nations are recipients and therefore lose nothing while poor countries experience financial haemorrhage and lose more. While rich nations should help curb the flow of illicit funds, poor countries ought to take a tougher stance against corruption. It has to be stopped at source.
Zimbabwe has suffered the burden of corruption and misallocation of resources for many years, the effect of which has been to derail the delivery of public goods. A few years ago, a businessman was awarded a contract by the national power utility company to build a solar power plant in Gwanda. The company even paid him $5 million in advance as part of the contractual arrangement. Up to now, nothing has been built. There is no solar power plant in Gwanda. Meanwhile, the businessman has been flaunting wealth on social media, claiming to be a wealthy man. When the power utility tried to get out of the contract, the businessman went to court where, ironically, he won the case and the judge ordered the parties to work on compliance.
It’s a classic case of how not to handle public contracts for the delivery of public goods. There is no way a nation can develop when it has such leakages in its systems.
Creating an enduring and inspiring myth
Myths or fictions, as Yuval Harari reminds us, are important in the history of humankind. Also known as imagined realities, myths are built by the power of human imagination. A lot of things, including the nation-state, money, human rights and the company as a person are imagined realities that exist only because we believe in them. Some myths are more successful than others because they have greater numbers of believers for a sustained period of time.
Myths that cannot attract believers die and become extinct. Hence there are religions that became moribund and nation-states that disappeared while new ones were built. Indeed, our own country provides a good example: our Zimbabwe Dollar became extinct simply because it lost believers. No one believed it had any value and it was abandoned. In other words, the myth of the Zimbabwe Dollar collapsed.
Why does this matter? Successful nations are built on powerful myths. Indeed these myths spur the nation on and make people believe in their own potential and invincibility. The “American Dream” is one of the most powerful and inspiring myths which attracts and spurs on citizens and migrants alike. Most nations that are built on powerful myths have supremely confident and self-assured citizens. They believe they can do anything and anything is possible.
We have to define our own myth; our own imagined reality – a “national religion” which unites, inspires and spurs us on. At present, we are extremely low on confidence. That is partly because due to our parlous circumstances, we have become a laughing stock in the region. Students studying at university in other nations only see Zimbabwe as an example of some of the worst things – a country without a proper currency, a country with record hyperinflation, a country which still experiences medieval water-borne diseases like cholera and typhoid, a country whose public hospitals have no running water or bandages, a country where there is egregious human rights violations.
All these hideous features destroy personal and collective confidence of a nation. To build powerful and inspiring myths, you need an inspiring and creative leadership. It is possible to restore Zimbabwe to its former glory. One of the country's greatest assets is its excellent human resources base, now strewn all over the world. It can still be harnessed to build a successful nation. To do this it is important to build an inclusive system, which recognizes all its people wherever they may be as members of the political and economic community.