“The Zimbabwean economy, back into the mid-1980s, had always been a strong economic regional anchor. As such, a number of large companies have ongoing investment programs in Zimbabwe. A number of the more recent investments are continuation plans by these large companies,” comments American economist Raymond Gilpin.
In June, Anglo American, one of the largest mining conglomerates in the world, decided to invest a further $400 million in Zimbabwe’s platinum mines. The London-based Lonhro mining group is also planning to invest about US$66 million in the country this year. But economic observers say it’s mainly South African mining operations that have been injecting investments into Zimbabwe.
Gilpin says it’s “very difficult to say” if this foreign money has benefited “ordinary” Zimbabweans. “One could hypothesize that at the household level there might be some benefit in terms of employment, in terms of availability to some services provided by large companies.”
MDC officials have previously blamed some big international companies for “propping up” the Zanu (PF) government with cash, and have said that many of the Mugabe administration’s abuses wouldn’t have happened without the money provided to it by certain foreign enterprises.
But Gilpin says it is “important to distinguish between the excesses of the Mugabe regime and their mismanagement of the economy, and private sector enterprise.”
It’s the Mugabe administration, and not international big business, that’s ultimately to blame for human rights and financial abuses in Zimbabwe. A number of the companies doing business in and business with Zimbabwe do not do business directly with the Zimbabwe regime. To that degree, there has been some degree of welfare benefit to the people.”
Gilpin says the informal economy that’s sprung up as a result of the poor economy has saved the country from complete economic devastation.
“Households and firms have developed mechanisms to go around the frightening inflation rate.”
Frank Young, the vice-president of one of the largest international for-profit government and business research and consulting firms, Abt Associates, explained how citizens and businesses had developed “imaginative and extremely agile strategies” to survive because “the Zimbabwean currency has lost value as a medium of exchange.” For example, the barter system has re-emerged.
The briefing concluded: “The failure of financial institutions to attract deposits and provide credit has forced Zimbabweans to adopt mechanisms to avoid the costs and perils of doing business via official channels. The practically worthless currency has been replaced with innovative means of exchange, like petrol coupons and non-perishable groceries. Savings are widely held in US dollars and South African rand. The ‘official’ economy is irrelevant and a number of informal, barter systems have developed, based on strong community networks. They allow groups to purchase and barter essential commodities (like food and fuel) while hedging against inflation and currency depreciation.” – VOP
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