Financial Gazette (Harare)
Shame Makoshori
31 August 2008
Harare — Zimbabwe must not confine itself to one market through its controversial "Look East Policy", but widen its thrust to include all the other world markets if it is to entertain any hopes of turning around the economy, a senior World Bank (WB) economist said.
John Panzer, head of a group of WB economists responsible for economic analysis, dialogue and development policy in 12 southern African economies said it would be suicidal for developing countries such as Zimbabwe to turn their backs on the rest of the world only to focus on the Far East.
Following sharp policy differences with Britain and its allies, Zimbabwe has been working flat out to improve its economic relations with China and other Asian states.
The International Monetary Fund (IMF), which together with the WB form the Bretton Woods institutions, stopped releasing critical balance of payments support to Zimbabwe since the late 1990s.
The so-called "Look East Policy" adopted after the IMF and other multilateral financial institutions switched off the tap has however, failed to rescue the country's economy from the brink of collapse.
On Thursday last week Panzer told a conference convened by the American Business Association that, what would work for Zimbabwe is an all-encompassing policy.
He said: "I think the policy of the country must be to begin to look North, South, East and West. You are a small economy, you must look everywhere. You have goods that go to Europe and some that cannot go into that market. So you must look everywhere."
Zimbabwe's "Look Policy East" has largely focused on trade with China because key economic blocs have slammed their doors on the country's products due to a 10-year diplomatic stand off with the west.
The pace of Chinese involvement with the rest of Africa has also accelerated.
The value of China's trade with the continent hit US$29,6 billion in 2004, up from US$2 billion in 1999.
But trade statistics indicate that Zimbabwe suffered a trade deficit with China in 2007.
China's financial and humanitarian aid to Zimbabwe is nowhere near that of the west, but its biggest advantage is that the Asian country offers room to negotiate favourable terms.
But Panzer said the carrot being dangled by China had serious pitfalls.
"If looking east means you are not going to reform because there is a country that is not demanding (certain conditions before trade) then that policy is a bad policy," he emphasised.
"This is a country that is rich in natural resources. You can start by exporting natural resources, then if you open up to the rest of the world and bring technology you will move up," added the Chilean born WB economist.
Speaking at the same conference, Brazilian academic and economic researcher Caio Megale pointed out that that the road to economic recovery in Zimbabwe "will be long", but added the solution to the country's problems lie with Zimbabweans.
"It is a long road, you bring hyperinflation down and other things come up, and you have to deal with them one by one," Megale said.
"Only Zimbabweans can help themselves. This happened in Latin America in the 1980s and it is happening in Zimbabwe now. Nobody knew that Latin America would have the levels of economic development of today's proportions," the Brazilian economist stressed.
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