Zimbabwe has to adopt smart ways in achieving economic nationalism instead of doing it crudely, as that will have serious implications on the economy, UN under secretary-general and Economic Commission for Africa (ECA) executive secretary Carlos Lopes has said.
BY NDAMU SANDU IN ADDIS ABABA, ETHIOPIA
Lopes told NewsDay on the sidelines of a conference of ministers meeting on Saturday that only a smart way would remove the perception of protectionism.
This came after Zimbabwe’s Youth Development, Indigenisation and Economic Empowerment minister Patrick Zhuwao gave foreign companies including banks up to April 1 to present their indigenisation compliance plans or face a forced shut down.
This has set Zhuwao on a collision course with his Cabinet counterpart Finance minister Patrick Chinamasa after the latter said the financial services sector had submitted credible plans.
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“Economic nationalism is not something that is specific to Zimbabwe. It is practised in much more aggressive ways by many other countries in the world. You can’t do it in a crude way, meaning if you are perceived in today’s world as just being protectionist, you are immediately blamed. You have to practice smart protectionism. You have to be extremely cautious in the way you deal with this nationalist protection desire,” Lopes said.
He said countries in the European Union have for a number of years dished out agricultural subsidies to its nationals, a move that was resisted by African countries and other parts of the world who argued it was in violation of the World Trade Organisation (WTO) rules.
Lopes said these countries have not moved away from giving support to agricultural sector or farmers despite the tough stance by the WTO. Instead, Lopes said, they were doing it in a different way.
“So it doesn’t really appear as subsidies. They will call it insurance premiums, environment protection of the landscape and you name it, a number of very sophisticated ways of dishing out the same money to the farmers in forms of subsidies but by having it in a much more nuanced and presented it in a different way. This is what I mean by smart protectionism,” Lopes said.
“You have to be capable of making rules work for you by outsmarting what are standards in your own interests but you cannot do it crudely because if you do it crudely, you will be immediately perceived as just ideological. A number of countries will do further than Zimbabwe but that’s not the way they present.”
Analysts see the policy as scaring away potential foreign direct investment inflows needed to reboot the economy. They see the policy as another avenue for plunder by the political elites like what happened during the land reform programme.