Volume 5, Number 124
7 June 2005

Editor's Note:

We are fortunate to have as our correspondent this week a distinguished economist from South Africa, Dr. Norman K. Reynolds, to continue our series on Zimbabwe.

Norman Reynolds worked for a decade in India and South Asia as the Rural Development Officer for the World Bank, and then for the Ford Foundation. He was chief economist for the government of Zimbabwe from 1981 to 1986, during the era that followed independence. He has held fellowships at Harvard, Cambridge, and Cape Town Universities. He currently works as an economic adviser on national, city, township, and rural issues.

The imminent collapse of Zimbabwe raises serious questions for the world. Intervention in failed states is particularly difficult, not merely because many mechanisms of government have ceased to function, but also because any form of strong international trusteeship necessarily bears an uncomfortable resemblance to control by foreign colonial powers.

Some have advocated a strong UN intervention, involving a takeover of many functions of government. Others want a more traditional approach, using loans for development and macroeconomic stabilization. The former carries enormous political risk, while the latter will likely fail due to rampant corruption and governmental incompetence.

Norman's plan involves neither troops nor stabilization. Only certain limited functions of the Ministry of Finance would be placed under Trusteeship. His plan channels economic assistance directly to small businesses, on a competitive basis, avoiding the central government altogether. It is innovative, perhaps even radical, in its reliance on business investment and competition at the local level. It too carries risk. — Loren Cobb, Editor.

Zimbabwe: A Trusteeship Plan

by Norman K. Reynolds

Dear Friends,

Zimbabwe (in red)

The situation in Zimbabwe has become critical. The nation is suffering an economic, health and social implosion. After three fraudulent elections, a chaotic land redistribution program, the "cleansing" of small informal businesses selling daily essential needs on the black market, and the bulldozing of informal homes, President Mugabe has lost any chance of engaging civil society or of turning the situation around (IRIN, 5/31/05). People feel defeated and powerless. As they undertake the grinding daily search for the means to survive, citizens have to deal with an army of spies and oppressive agents of government. Government is now at war with its citizens.

Zimbabweans have also to accommodate the longest-running genocide in fifty years, created by the monumental incompetence and malfeasance of the central government: the HIV-AIDS epidemic. With a 35% infection rate amongst adults, 80% unemployment, and mass poverty and food scarcity, HIV turns quickly to AIDS and AIDS to death. No international authority has yet named this genocide, and no agency has yet taken responsibility to stop it!

Political Paralysis

The current danger is that, with Mugabe weak and old, the field is ripe for new demagogues to take over.

Zimbabweans do not see, and thus do not agree, on what to do next. The Mugabe government does not have the ideas or the integrity to persuade the international community to rescue the country it governs. False statements by the Mugabe government have led to even the World Food Program having no legal mandate to rescue millions of Zimbabweans from imminent starvation (GPF, 7/20/04). The main opposition party, the MDC, has yet to fashion a recovery program that can attract both local and international support.

Now, at last, a senior member of South Africa's ANC party, Cyril Ramaphosa, has stated that South Africa should intervene in Zimbabwe. He, however, did not say how.

The Role of the International Community

It is a certainty that, over the next ten years, the international community will have to pour large amounts of money into Zimbabwe, if only as humanitarian aid. Immediately, Zimbabwe requires at least $818 million (IRIN, 4/26/05) for the urgent importation of grains and cereals that it does not have. [All figures in this letter are in US dollars. — ed.] Over the next five years the total cost of "relief and recovery" for Zimbabwe will likely come to at least $15 billion!

What terms should the international community, including South Africa and the African Union, set for the use of this money? How can aid be provided that will not be drained away by corruption?

This is the key question and opportunity for Zimbabwe's recovery and the return of human rights and citizen economic security. South Africa could play a lead role in this effort, and in so doing could restore the promise of NEPAD and the African Union. It has a unique opportunity to create a "failed state" program based on limited international trusteeship.

I believe that to be successful, a recovery program must be built upon the quick realization of economic and social rights. People must be treated as competent immediately, not after prolonged "training" or "management". The plan must give them the financial means and the right to make their own economic decisions, to look after themselves and their families, and to contribute to their communities.

The management of foreign exchange in any such plan is critical: it must not be diverted into the pockets of corrupt officials or used to pay off the debts of the Mugabe government. Instead, it must be highly strategic. It must pass directly from the trusteeship to economically productive industry and businesses.

Such a plan, if successful, could then be used elsewhere around the world. It would fit the needs of Afghans, for example, to wrest competence from war lords and ideologues. It has lessons for South Africa's long marginalized township and rural areas whose non-working local economies still hold the majority of citizens as economic prisoners.

The Plan

The following is an outline of the plan that a colleague and I put together in 2003, at the request and with the agreement of the Zimbabwe Country Team of the United Nations. It stands in stark contrast to the usual IMF macroeconomic stabilization program, based on controlling deficits and the balance of payments. Briefly, here are the main points:

  1. All foreign aid is to go into a special account in the Zimbabwe Reserve Bank, without exception.
  2. The equivalent in local currency would be transferred into a Zimbabwe Economic and Social Rights Trust, controlled by persons appointed by the UN.
  3. A customized foreign exchange system would be implemented under UN supervision.

The Economic and Social Rights Trust would use the inflow of foreign aid to provide "Child" and "Investment Rights" to all citizens who register and act together under Community Trusts formed at the village, neighborhood, and street levels.

"Child Rights" would be set at $60 equivalent per child per month up to 18 years of age. The monthly inflow of funds would be used first to buy locally produced food for daily child feeding. The payments for the food goes 30% to pay the school fee until paid off each term, 10% to the Community Trust, and the balance to the parent / local supplier. In this way, the money will circulate locally three to four times, activating and rewarding local economic production and building community cohesion and common purpose.

"Investment Rights," worth $300 per adult per year for five years, would be paid to each Community Trust per registered resident adult. These funds would be used jointly at the local level to build or restore community productive capacity such as community gardens, irrigation systems, improved grazing and woodland, rental housing and other infrastructure, and to finance individual crop production, food processing etc.

For the reconstruction of Zimbabwean society, it will be essential that the funds be employed not only at the communal level but also at the individual level as well, so as to provide the means to rekindle the private small- and micro-business sector so decimated by the Mugabe government.

Impact of the Plan

By design, each Community Trust converts a politically and economically dysfunctional village or neighborhood into democratic property companies, with modernized rights of access to and ownership of land. They become asset holding, investing and managing bodies. Women become equal owners, the most important gain possible in Africa. These "investment" monies will be more than matched by local equal member/ owner labor contributions since there is now a community body that can turn investments in cash and labor into member dividends.

We anticipate that Community Trusts would join with local government and business to form regional periodic market systems, community banks, production and service companies and the like.

The total cash infusion per year into a community of a thousand adults and a thousand children under 18 would be $670,000. To this, the adults would add around $456,000 worth of labor. The local income multiplier should rise from around a pathetic 1.4 or so at present to between 3.0 and 4.0. The total annual local economic activity generated per year would be around $2.4 million, or $4,900 per family of four. Total investment would be $760,000 per year, or $1,500 per family.

This surge in unlocked local energy and economic investment would then drive the national Gross Domestic Product at least 3% per annum higher. It would also generate tax revenues equal to 60%+ of its cost because of the high total national multiplier, which will be around 9. Just as importantly, when compared to the IMF balance of payments route, it would first build local demand to reward the revival of neighborhoods and then of companies, ultimately encouraging all Zimbabweans to become active participants, both locally and nationally.

Foreign Exchange

Under the plan, all foreign exchange ("forex") provided by the international community would be sold for local currency to business and industry through a series of forex "windows." The first window would be limited to exporters, because export industries like mining, tourism, and agriculture generate forex through their international sales, thus multiplying the amount of forex available. By giving priority to exporters, guarantees for foreign loans would be easier for them to obtain, further swelling the pool of forex available.

Any forex surplus in the first window would be passed to a second window through which national essentials like fuels, medicines etc., are bought. This would act to keep the cost structure of the economy, and inflation, down.

Any further forex surplus would go to a third window that would auction its available forex for use by domestic business and industry.

The Reserve Bank of Zimbabwe could amalgamate any forex it might have, but without the right to determine the rules or prices of this internationally supervised scheme.

Balancing Localization with Globalization

The use of economic and social rights programming in this plan, employing a strong "localization" model to balance "globalization," would allow Zimbabwe to come under an innovative form of UN / AU Economic and Social Trusteeship. It would provide the means for all citizens to quickly become economically active and secure, it would ensure a better than minimum level of schooling and health for all, and it would build communities and local economies, thus laying the foundation for national reconciliation, rapid economic recovery and a broad-based growth in citizen ownership of their country's productive base. We anticipate that this will result in a rapid restoration of an active and participatory democracy.

Dr. Norman Reynolds

Land Reform from the Bottom Up

Financially and organizationally competent communities would be able to soon enter the land market if they wished to expand their land base or to move into particular crops or to be nearer to markets. This form of economic rights programming takes the state out of the driver's seat of what has become a too politically charged matter, and creates what amounts to full agrarian and land reform, led by the people from the bottom up.

Finally, if implemented and fully funded, this recovery plan would attract back the three million Zimbabweans who have fled in the last four years and who have considerable skills and much needed experience.

Thanks for your attention,

Norman Kudawana Reynolds

Editor's note: Click here to download more details on Dr. Reynolds' plan.

Readers' Comments:

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Bravo! This is creative and revolutionary stuff. Has anything like this been tried before, and, if so, are there any measurable results? This appears to require a massive organizational and cooperative effort by the international community — and a massive surrender of national authority by the recipient, while empowering local entities. It may be a way around systemic corruption on the receiving end, and military, nationalistic, and corporate corruption on the giving end.

One major question, however: how would the international community get the national government to agree? Does the UN just declare a country inoperable and move in? Does the region (African Union, in this instance) bring the case forward? In any event, the politics at the UN would be immense. This would probably need a very big carrot to implement — and perhaps a big stick to enforce. Would it work? I don't know, but I would love to see it tried.

— Norval Reece, Newtown (PA) Friends Meeting.

As I recall, Mugabe led a successful, long-running guerilla war against the British to gain independence. Are we to assume there would not be other Zimbabweans who would resent imposition of such an outside "trusteeship," and express this opposition violently? If so, what then? Recent experience in, say, Iraq, makes me feel this is a possibility not to be slighted in planning, as it seems to be here. The record also suggests that miscalculation in such matters can be quite costly, and in more than money.

— Chuck Fager, Director, Quaker House, Fayetteville, NC.

The solution proposed here is expensive and the outcome uncertain. I would prefer to put resources and effort into helping the people empower themselves by lending large amounts of expertise and resources to a nonviolent effort to confront the government. There are organizations that could begin to develop local nonviolent resistance, such as Friends Peace Teams and Peace Brigades International. There must be others.

To be sure, organizers and resisters would face personal danger, but so did the Indians in Asia when they sought independence from the British, and so did Civil Rights workers in our South. This kind of solution is unlikely to occur any time soon, but if we're trying to think creatively, this would be my recommendation.

— Virginia Flagg, San Diego (CA) Friends Meeting.

Reply by Norman Reynolds to the above three comments:

The Trusteeship proposed deals only with the method and uses of foreign assistance. There is 'no moving in' to a country. In doing so, of course, it sets out to create a whole new citizen rights arena and a strategic use of the provided foreign exchange.

I work on 'economic and social rights' but the use of foreign aid came to me when, four years ago, the "Drop the Debt" Campaign reached a climax. At the time, I was working in Zimbabwe, Zambia and other southern African counties and it appeared that most citizens wanted Debt Releif and thereby more funds for education etc., but that many did not want the resultant extra government funds to go to government! They saw that being wasted or corruptly used. Some did not want Debt Relief at all on the grounds that it would ease the accumulation of wealth by a nefarious few in power. How then to help a poor country so that only citizens benefited?

My formulation was a 'citizen to citizen' program between the rich and the poor countries operated through a Trust — much as here. This idea was well received, notably by rich country citizens who saw in the method reasons to support more generous Aid programming. Now, with the G8 meeting upon us, this formulation, independent citizen routing and social and economic rights programming, comes to the fore, and not just for Zimbabwe.

Anyone approaching a bank manager who has mismanaged their affairs will expect the imposition of special if not onerous conditions on any further loans. Mugabe's government is in that position. As pointed out by both Norval and Chuck, the international community has to agree to speak and act as one re Zimbabwe. Given the illegitimacy of Mugabe's regime, it is time that the international community spoke directly to Zimbabweans, explaining the proposed approach. That would do much to give citizens hope and strength to demand that government not block the proposed trusteeship. Businessmen would do the same, as they urgently want monetary and forex reform. I believe that government would have to cave in or face a revolution on the streets.

As for Iraq and Afghanistan, I see this approach as dynamic and able to avoid war. It would open up spaces for debate and dialogue within government, military and other bodies but especially it would give citizens the knowledge that the world cared and was active on their behalves. Four years ago, I wrote that if Mugabe blocked such rights programming, Zimbabweans should know that, if they left the country, they could establish 'enclaves' within neighboring countries where they would receive these rights, look after and improve themselves, including further education, and prepare to return with the knowledge and experience as to how to run citizen rights programmes under any old or new government. The proposal is for a start to a global reform of AID.

— Norman Reynolds, Johannesburg, South Africa.

I was fascinated by TQE #124 — Dr Norman Reynolds' piece on Zimbabwe. Please see my article in The Gandhi Way which is based on the Trusteeship principle, which the Scott Bader Commonwealth has been endeavouring to live out since 1951 based on early Quaker Principles, even back to the 1918 Testimony. You can check our website: www.scottbader.com. This is an attempt at a Quaker Economy! Best wishes,

— Godric Bader, Northamptonshire, UK.

The recovery plan for Zimbabwe, devised by Dr Norman K Reynolds, has much to commend it, it is a document of very high quality, and given the right background it could work. But as I write [June '05], there is no one in Zimbabwe who could implement it.

The crux of the problem is that Mugawbe is a very sick man, he is a megalomaniac, and is surrounded by like minded henchmen. (My Quaker faith says that there is that of God in everyone; I agree, but when a person is afflcted with such a disease perhaps he is not responsible for his actions.)

Mugabe's actions over the decades are well documented, and do not need to be detailed here. What needs saying here is this:

All forms of diplomatic help/aid from a multitude of sources over the years have failed. Failed simply because of this man. He has refused to meet with fund officials, and others, claiming that he was head of state and would never meet with mere bureaucrats. It is certain that even if Mugabe agreed to look at Dr Reynolds plans he would either reject it, or, more probably, use it for his own ends. No matter how detailed and well thought out this plan is, it will not work under this regime; any influx of capital will fall into the wrong hands, whatever safeguards are put into place.

I believe that there was a much better case for invading Zimbabwe than Iraq.

Given that invasion isn't an option, I think serious pressure has to be applied to South Africa, which, by not openly opposing Mugabe, is supporting him.

This is where the emphasis should be. Dr Reynolds plan can then act as an excellent template, and give this great country, once the breadbasket of Africa, hope and faith for it's future.

Mewn Gyfaillgarwch (In Friendship),

— Dai Jenkins, Aberystwyth Meeting, Wales, UK.

Reply: Conditions are horrific … but soldiers and police hate what they are made to do and thus it is the last days of a pack of cards — though with the danger of a new demagogue arising. The proposal has to be announced publicly, to the world but equally to all Zimbabweans, including the 3 million who have fled in the past three or so years. Then, informed that here is an alternate plan, citizens will begin to question the further toleration of madness. Zimbabwe could, one morning, be a case of 'they called a war and no one came.' Ideas are powerful, especially if they are simple, constructive and inclusive. The opportunity could come tomorrow, but will we, the international community, be ready to fill a vacuum of power?

— Norman Reynolds.

It seems that there's going to be an importance (if not paramount, then at least really important) on separating this trusteeship of aid from overall governmental control. The new governance could indeed take shape independently of the trusteeship of the semi-indirectly-directed fund disbursement overseen by the UN appointees. The Zimbabweans are going to demand, as Fager implies, that the shape-taking of the governance be unimposed, whereas in many ways the world's nanny is going to be meddling with the aid.

How to better make it clear that this does not have to cross wires with governance overall? I think, for one, that the word has to be euphemized away from "trusteeship" and morphed into a more kind word, for one thing. But quite obviously there need to be other ways in which both the corruption is managed (the new government can't seize the money) and the reserve account management has to feel independent of how the government is emerging (which is a Zimbabwean issue for Zimbabweans to handle).

And what about governments that will want to contribute with stipulations? If Bush says we will only give if we can muck with the conditions of when and how the new government will be formed, then how will the money ever amount to enough? The UN has to have teeth the other way too, to tell the creditors that their money has to come without those strings. What's the answer?

— David Myers, Westbury Monthly Meeting, Sayville, NY.

Reply: The key idea stated by David Myers is one that several Zimbabweans have made; that the term trusteeship is too strong / problematic. The best way, and one that is understood inside Zimbabwe, is for the formation of a PPP (private – public partnership) with donor, government and civil society as the main stakeholders.

— Norman Reynolds.

Dr Norman Reynolds has an interesting approach.  It is something worth trying out on a small scale. It’s good to see people challenge conventional theories on aid and development. This per capita aid allocation model would require a very good distribution network to ensure the money got right down to the individual, and was then spent via the different channels to engender the local multiplier effect. Monitoring would be an issue and also the cost of it!

A lot of what Zimbabwe needs is big investments in capital infrastructure. The personalised aid model in this proposal doesn’t seem to allow for this. Still, it is something to consider. A scheme to distribute the aid in an equitable manner to the people is what is required, and perhaps Reynolds model needs to be tried.

It should be recognised that unlike Saddam Hussein of Iraq, President Mugabe has the ear of many African leaders, an issue that should not be overlooked.

Do place me on your circulation list.  I worked as a field scientist in this part of the world for some four decades, have now retired and do some water related programs and community service.  I am no economist, but development issues in Africa require human relationships and psychology.

— Nic J. Money, Lusaka, Zambia [16 July 2005].

Reply: I have written to [Mr. Money], sending the SA docs. By the way, the South African government has asked that I re-write the Local Economic Development Program for them. This just as Robert Mugabe asks for a US$1 billion loan, and as the IMF expels Zimbabwe. Trying to influence the  SA response.

— Norman

Dr. Norman K. Reynolds is a learned expert in his field, and his admirable proposed solutions for Zimbabwe, in particular, would find favor in the minds of the Western world. But I am afraid to say these solutions will not work in Africa. In particular, beware of rewarding people to have more children by paying out $60 per child per month, as this will create the biggest population explosion the world has ever seen! Even a once-off $60 will have the same effect.

The debates currently waging throughout the world exemplifies the good in people trying to find solutions for the hungry in Africa. Unfortunately any assistance is looked at with suspicion. Africa is not poor because it lacks resources or money per se. It is poor because of the mindset of its people, who, as a generalization, still exist in the dark ages. People in Africa have not benefited by personally experiencing the development of the wheel, the water driven mill, etc, etc.

Economists steeped in western wisdom and knowledge are unfortunately not going to be able to have all the right answers! Where are the experts from the human sciences that can see through all the smoke to help unravel this dilemma?

What is needed first is to change the mindset of the people who blindly follow without question a leader who leads them to the brink of an abyss and commands them to jump. How is this possible? Merely tell them that they are now free, having ousted the 'oppressors' and having the vote, and that things are tough because of the previous regime.

Any such mind change will take considerable time, and in the interim the G8 will no doubt have to keep the populace alive by providing the daily bread. Humanitarian Aid however creates the danger of an "on-the-dole mentality" that will be detrimental to a good work ethic and the moral fibre of the people (see the degrading impact that this approach has had on the remnants of the Eskimo population – covered in depth on the Internet).

Fortunately next door to Zimbabwe is South Africa with a less favorable agricultural climate and farmland, with farmers who without subsidies are producing maize in excess of the country's requirements. Why is this? Past President Nelson Mandela had the wisdom to recognize the importance of retaining expertise throughout the economy, and of dissuading whites from leaving the country (regrettably many of the best brains have however left). Maize could easily be supplied across it’s borders into Zimbabwe to alleviate hunger.

However even in South Africa there are those who, without considering the consequences, would like to see the current white farmers driven from their farms and the farms handed over to black farmers who at best know how to drive a tractor. The expertise and skill required to be a successful commercial farmer is totally ignored; this leads to predictable failure after failure. This is not to say that as a natural progression black people should not venture into farming in such a way that they are able to develop over time into viable commercial farmers.

The expertise needed for farmers to succeed in Africa is far greater than that required in the US or Europe, where farmers are subsidized up to 50% of their input costs and who then compete in the same World market.

— Barry Stieger, Gauteng, South Africa.

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Publisher: Russell Nelson, St. Lawrence Valley (NY) Friends Meeting.

Editorial Board

  • Loren Cobb, Boulder (CO) Friends Meeting, Editor.
  • Chuck Fager, Director, Quaker House, Fayetteville, NC.
  • Virginia Flagg, San Diego (CA) Friends Meeting.
  • Valerie Ireland, Boulder (CO) Friends Meeting.
  • Jack Powelson, Boulder (CO) Meeting of Friends.
  • Norval Reece, Newtown (PA) Friends Meeting.
  • J.D. von Pischke, a Friend from Reston, VA.
  • John Spears, Princeton (NJ) Friends Meeting.
  • Geoffrey Williams, Attender at New York Fifteenth Street Meeting.

Members of the Editorial Board receive Letters several days in advance for their criticisms, but they do not necessarily endorse the contents of any of them.

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Copyright © 2005 by Norman K. Reynolds. All rights reserved. Permission is hereby granted for non-commercial reproduction.

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