[DEBATE] : (Fwd) Zim's financial Gonorrhea

[Patrick Bond]

(I must confess that a decade ago, when I finished my PhD revision as a 
book, "Uneven Zimbabwe: A Study of Finance, Development and 
Underdevelopment" [available free as a .doc if you email me offlist], I 
had no idea that from the inevitable Exhausted Neoliberalism, prez 
Mugabe would zigzag himself silly into the swamp of the world's 
worst-ever inflation. My assumption was that the tone set by the 
upstanding Washington puppet Bernard Chidzero might reassert itself. But 
no way, Exhausted Nationalism plus a touch of welfarist populism, a very 
strong dose of crony capitalism, and latent securocrat fascism together 
generates this wonderful castle in placid Borrowdale Brook. Economic 
violence for the millions seems a long way away, from either Gonorrhea 
or the Washington Consensus. Can Zimbabweans shake off both diseases? In 
our lifetimes??)

Sunday Times (UK), 21 December

Lavish life of Mugabe’s looter-in-chief

As starving Zimbabweans face their bleakest Christmas ever, the head of 
the state bank puts the last touches to his 47-bedroom palaceJon Swain, 
Harare

In the rich and leafy northern Harare suburb of Borrowdale Brook, Gideon 
Gono, who as governor of the Reserve Bank of Zimbabwe is President 
Robert Mugabe’s right-hand man and financial adviser, is having the 
finishing touches put to a lavish mansion that he started building 
several years ago. The castle-like house has 47 en suite bedrooms and a 
glass swimming pool with underlights, a gym bigger than many good houses 
in the Zimbabwean capital, a mini-theatre and landscaped gardens. His 
house is one of the biggest in Harare - bigger, in fact, than Mugabe’s, 
which is nearby, hidden behind a high wall and guarded by soldiers. No 
one except Gono knows for sure how much the mansion cost, but the 
architects originally said they expected it would reach more than $5m on 
completion. This is enough to build and equip at least four primary 
schools in Zimbabwe.

Gono is not ready to move in just yet. Extra security sensors were 
recently installed on the outside perimeter and biometric iris 
recognition and finger print authentication systems were fitted in the 
interior, but he has yet to be convinced that it is entirely safe. 
Whether he moves house or not, Gono is hardly facing a miserable 
Christmas, unlike the millions whose lives have been wrecked by the 
once-prosperous country’s economic meltdown. They are coping with 
constant power and water cuts, food shortages and now the terror of 
cholera. The disease has struck because the government has spent so much 
money corruptly rather than investing in a clean water supply for its 
people. More than 1,100 have died in the epidemic, nearly 21,000 have 
been infected and there is no end in sight.

"Where is the joy this Christmas?" asked Mercy Gunda, a housewife, as 
she stood in a long queue at a bank to withdraw money last Friday. "The 
city is full of people queueing at banks. They are not doing Christmas 
shopping. If there are any Christmas presents to be bought for the 
children this year it will be school uniforms." Last week I met Palimaga 
Malani, a 67-year-old blind widow whose task this Christmas is to look 
after seven children whose parents have died of Aids. They live together 
in Bulawayo in a house hardly bigger than a walk-in wardrobe in Gono’s 
mansion. Somehow she makes sure that with the donations she receives 
from a local church the children are neatly turned out and fed. "I am 
very well really, but I am hungry," she said. The cataracts that caused 
her blindness are curable but she cannot afford the operation to restore 
her sight. A few streets away was another family of orphaned children, 
the youngest two being cared for by a 15-year-old girl, Anyanga. They 
survive by selling ice lollies on the streets.

Gono, however, has plenty of houses and several farms that were seized 
from white commercial farmers over the years. Zimbabwe was the 
breadbasket of southern Africa and one of the world’s top exporters of 
tobacco until 2000, when Mugabe started seizing white farms under the 
guise of redistributing them to black Zimbabweans to right the wrongs of 
the colonial past. But he gave them largely to his cronies and 
entourage. This chaotic land reform programme, plagued by violence, was 
condemned as racist by five African judges in southern Africa’s regional 
court in a test case bought by 78 farmers, a ruling that Zimbabwe has 
refused to accept although it is bound by treaty to do so. The land 
seizures have created chronic food shortages and a crisis that has led a 
third of the population to flee abroad and half of those remaining to 
depend on food aid to survive.

As Mugabe’s right-hand man, Gono is a beneficiary of the crisis. "He has 
been looting big time," said one of his many critics, a once wealthy 
Harare businessman who had crossed swords with Gono several times. 
"Mugabe has just reappointed him governor of the Reserve Bank of 
Zimbabwe [RBZ] for another five years, so it must be great for him. Any 
loot that comes in he grabs. It is no longer the Reserve Bank of 
Zimbabwe; it is a bank reserved for him and the president's cronies. If 
Mugabe has a degree in violence, which he has often said he has, Gono 
has a degree in corruption." In fact, Gono, who started out as a tea boy 
at the central bank, has a doctorate in strategic management, but it is 
from a nonaccredited American university. Some of Gono’s farms are not 
in working order - far from unusual among Mugabe’s entourage, who have 
so many farms that they sometimes do not know what to do with them.

Take the case of Elias Musakwa. A stalwart of Mugabe’s Zanu PF party, he 
is a gospel singer at night with his own recording studio, a banker by 
day working with Gono in the upper echelons of the RBZ, and an 
occasional farmer at the weekend on a farm he seized. Last year he 
grabbed a dairy farm that once supplied 2% of Harare’s milk. It now has 
four goats and a few sheep, while hundreds of cows that produced the 
milk have perished. "If you do not have a sense of humour you don’t 
survive here," said one Zimbabwean, who told of government officials 
using their posts to steal fuel, pay their children’s school fees and 
fund the inflated wages of their gardeners and maids, all for a few 
hours’ work a week. "Everything is weird in this country," he said. 
While so much is collapsing all around, one of Gono’s biggest farms near 
Norton, 50 miles from Harare, where he has installed two white managers, 
is fully functional, a glaring example of how he and the powerful men 
around Mugabe abuse their power. When it is dry, the farm draws water to 
irrigate the fields though a pipe-line linked to a reservoir 25 miles 
away which Gono installed at vast expense. The reservoir water is 
supposed to be for the people of Harare. The city has minimal municipal 
water of its own. In the poorest suburbs, where houses are made out of 
tin and plastic, children were playing in pools of untreated sewage last 
week and families were still collecting water from broken pipes. Cholera 
has killed 224 people in Harare, with more than 9,000 suffering from it. 
Many affluent parts of the city have no municipal water but survive on a 
system of privately dug boreholes.

In 2003, when Gono took office, inflation was 619%. It is now well in 
excess of 231m%. A police inspector’s Christmas bonus last week was 
worth one American cent on the widely used parallel black market. Little 
wonder that, on Friday, anger against Gono spilt into the streets of 
Harare for the second time in a month. A mob threw rocks at the Reserve 
Bank building. Many were low-grade civil servants such as prison staff 
who had been trying to get money for Christmas, only to find that the 
banks had run out of cash despite the introduction that morning of new 
Z$1 billion, Z$5 billion and Z$10 billion notes. "We have fallen into 
the abyss," said a friend. "Economically we were teetering on the edge. 
Now we have fallen over and it is demonstrable for a number of reasons. 
You go into a shop and if you don’t have US dollars you starve. People 
don’t want Zimbabwean dollars. They are worthless." He pointed out of 
the window into a grubby lane below where people had dumped thousands of 
banknotes which had become redundant.

There are many heroes in Zimbabwe still trying to make the country work. 
One is a 28-year-old male nurse at a Bulawayo hospital who was 
struggling this weekend to care for a ward of 63 children on his own. 
Unable to obtain their wages from the banks because of the shortage of 
banknotes, many of his colleagues have given up coming to work. It was 
too burdensome and expensive for them to travel or they have moved to 
South Africa to try to earn a living. Behind the male nurse was the body 
of a two-year-old boy lying under a sheet on a table. He had died that 
morning from severe malnutrition and septicaemia from sores on his body. 
"We survive by so many ways," the nurse said. "We adjust; we barter. I 
have been tempted to leave like many of my colleagues so many times, but 
I need to look after my mother, father and young brothers and sisters." 
Looking at the small bundle beneath the sheet, he said: "This boy should 
never have died." "When you meet somebody like that young man you feel 
that is why there is still hope in this country," said Stella Allberry, 
health secretary of a faction of the opposition Movement for Democratic 
Change who has been jailed before. "The one God-given thing we have is 
hope. And the one thing I don’t want Mugabe to take from me is hope."

Hope for too many has disappeared, however. At a cholera clinic near the 
Mozambique border, a 23-year-old mother was watching her seven-year-old 
daughter die of cholera and malaria on Monday. It had taken her almost 
12 hours to bring the child to the clinic on foot. Others were carried 
there in wheelbarrows. As the country crumbled, Mugabe’s ruling Zanu PF 
party was desperately trying to put on a show of unity at its annual 
party conference. Even before it began, the facade of unity was 
cracking. The party is increasingly riven with factionalism, shown by an 
unprecedented outbreak of fighting at its Harare headquarters on Monday 
night. Police had to use water cannons to break up a pitched battle over 
the election of a new leadership for Harare province. This internal 
party violence followed the mysterious wounding of Perence Shiri, the 
powerful air force chief, in an alleged assassination attempt, and the 
arrests and abduction of opposition members, human rights activists and 
journalists who have vanished without trace. The government charges that 
the opposition has set up secret military training camps in Botswana to 
overthrow it, aided by the West.

Zimbabwe is entering an unpredictable, unstable and dangerous phase. In 
the next few days Gono is expected to head off for a holiday in 
Malaysia. Mugabe would normally go there, too. Apart from a holiday, 
both men have assets in the region in the aftermath of western sanctions 
and it is a favourite destination. But diplomats last week wondered 
whether the 84-year-old president would risk leaving Zimbabwe at this 
time. He has been in power for 28 years and is outwardly still defiant. 
"Zimbabwe is mine," he said on Friday, rejecting calls to step down. "I 
will never, never sell my country. I will never, never, never 
surrender." Nor, say many suffering Zimbabweans, are they going to 
surrender hope for change as they celebrate the bleakest Christmas of 
their lives. In Bulawayo, 1,000 people, black and white, turned out for 
a candlelit carol service in the rundown amphitheatre of a once 
beautiful park. The children were delighted. There was a nativity play 
and a brass band played. "It made the children happy," said a mother. 
"When it came to the end we prayed for them. Our prayer was that the 
children would not be hungry next year."

***

Uneven Zimbabwe
by Patrick Bond

CHAPTER SEVEN
FINANCIERS AND BUREAUCRATS

Introduction

This chapter explores the exercise of power over the Zimbabwean economy 
by financiers and financial bureaucrats. On the surface it is easy to 
pose of the financial system a question that emerged from the previous 
chapter, namely why did underdevelopment of a section of the population 
persist in a sector of the economy overseen by a new breed of ostensibly 
radical bureaucrats? After all, more than any other sector, finance was 
permeated with tight regulation, state ownership and high overall 
visibility amenable to ZANU’s populist rhetoric.
But the 1980s bureaucrats were not the same breed as the technocrats of 
the mid 1960s, steeped in monetary and financial interventionism, who 
with Ian Smith so effectively bottled up capital to serve the new 
national project, UDI. Instead the Finance Ministry was led initially by 
the hot-headed populist Enos Nkala. Bank nationalisation had been mooted 
even by UNCTAD’s major economic study, and the 1981 “Growth with Equity” 
framework included a commitment to greater state intervention. Mugabe 
asserted at one point, “We reject a policy which accepts money from the 
peasant farmers, the small traders, and the cooperatives so it can be 
re-directed to the big corporations” (Herald, 14/4/84). Yet ultimately 
that is precisely what happened within the banking system, and with the 
active participation of the government.
Unlike the economy as a whole, finance was a high-growth sector, 
particularly during the late 1980s when speculative tendencies were 
rampant. Most branches of the financial system benefitted from extremely 
rapid asset growth. In the first decade of independence national income 
tripled in nominal terms (inflation ran at approximately 15% annually), 
but was far outpaced by the assets of financial institutions: commercial 
bank assets increased by a factor of 6; merchant banks’ by 5.5; and 
finance houses’ by 7. The profits of financial institutions, in relation 
to other companies, were very healthy throughout. Unprecedented 
escalation was witnessed in stock market share values and real estate 
prices, and was mainly concentrated over an even shorter period 
(1984-91). The stock market was the world’s fastest-growing from 1987-90 
(and again in 1993-94).
To comprehend all of this requires not only analysis of the economic 
“structure” and its contradictions, but also of “agency,” which I take 
to include extreme institutional (and perhaps personal) biases within 
the system, and too, the failure of state bureaucrats to correct these 
biases in spite of having formidable powers at their fingertips. This 
requires a study of how, concretely, bias operated, and of the scope for 
action of leading state personnel. What freedom and power, in other 
words, did the Finance Ministry, Reserve Bank and other national-level 
agents possess? What personal interests and ideological influences 
intervened to prevent them using that power to change the system in line 
with official pronouncements?
We cannot conclusively answer these questions, of course, without 
considering the constraints imposed on local actors by international 
financial power (the subject of Chapters Eleven and Twelve). 
Nevertheless, a review of some central issues of financial sector agency 
─ discrimination in lending and employment, corruption, and the rise of 
a black financial petty bourgeoisie (amongst whom the figure of Finance 
Minister Bernard Chidzero towered) ─ must be undertaken, prior to 
returning in later chapters to a structural analysis that seeks 
explanations of the role of finance in speculation and uneven 
geographical development.

Bias in the financial system

During the immediate post-independence period, financial institutions 
managed to carry on business as usual, expanding their depositor base 
while maintaining tight control over the direction of flows of funds in 
the economy. State intervention was aimed in part at buying a small 
piece of the banking system for the emergent black financial elite, 
rather than transforming it for the country’s majority. Various 
researchers have compiled adequate institutional descriptions of the 
numerous public and private sector financial institutions in Zimbabwe, 
and these need not be repeated here (Chimombe, 1983; Clarke, 1980b; 
Makgetla, 1983; Seidman, 1986; Whitsun Foundation, 1983). Instead, we 
consider how credit distribution was affected by Zimbabwean financiers’ 
institutional biases.
In early 1981 the government bought Johannesburg-based Nedbank’s 62% 
share of Rhobank (for “a very fair price”) and renamed it Zimbank 
(Makgetla, 1983, IX,20). Six months it later bought 47% of a new local 
subsidiary of the Bank of Credit and Commerce International (BCCI). 
(BCCI went bankrupt in 1991, and its Zimbabwe subsidiary apparently 
suffered such severe financial problems that the government was able to 
purchase the remaining 53% of the shares for less than Z$1 million ─ and 
then changed the bank’s name to Commercial Bank of Zimbabwe.) Thanks to 
official patronage (including, we shall see, turning a blind eye to 
fraud), Zimbank and BCCI vastly increased their share of commercial and 
merchant bank deposits during the 1980s. The government also gained a 
leading stake in Fidelity Life Assurance of Zimbabwe in 1988, following 
the sale of shares by Legal and General Society of London through the 
state-owned Zimbabwe Reinsurance Group.
In addition, the Zimbabwe Development Bank was initiated in 1983, 51% 
government-owned, to make loans to medium- and large-scale businesses. 
The Industrial Development Corporation, once responsible for the 
initiation of major industrial expansion (in the days of Rhodesian state 
capitalism), was given continued support by the new government. At the 
low end of the market a Credit Guarantee Corporation supported, in a 
half-hearted manner, small businesses by offering collateral to their 
commercial bank lenders. In addition, a Small Enterprise Development 
Corporation (SEDCO) was founded and immediately given good access to 
international loans and financial expertise (although as noted below, 
the attached conditionality may have been more harmful than the assistance).
But in achieving ZANU’s economic objectives ─ especially broadening 
ownership of the means of production to black entrepreneurs ─ these 
myriad state interventions failed miserably. SEDCO’s ineptitude was 
reflected in, among other statistics, an administrative costs/total 
assets ratio of 39% in the mid 1980s, and by 1990 a low loan/job cost of 
Z$14,500 (on the basis of Z$36 million in loans to more than 1,000 
borrowers) (World Bank, 1986, 9; FG, 10/8/91). In the rural areas, the 
Agricultural Finance Corporation also proved broadly ineffectual for 
both peasants and small commercial farmers, who defaulted on their debts 
at record rates, as Chapter Ten shows.
Attempting to support an emergent petty bourgeoisie through making 
credit available or through financial sector employment was not the only 
basis for government intervention, of course. Just as important, though 
even less successful, was the concerted effort of bureaucrats and 
financiers to expand the actual boundaries of the money economy. But if 
─ as the Herald (29/7/84) reported ─ “IMF experts believe that the base 
of taxpayers should be widened to create awareness of the cash economy 
and monetary constraints,” they soon had to come to grips with limited 
buying power. Typical was this sad refrain from Financial Gazette 
editorialists: “A great deal was said in the previous budget of the need 
to add the informal sector to the tax base by the end of the 1993/94 
fiscal year. Nothing much has been done about it despite the tight 
financial problems faced by government” (FG, 28/6/95). As Norman 
Reynolds (1988, 73) ─ formerly a World Bank official and chief economist 
in the Finance Ministry ─ concluded after extensive attempts to enhance 
rural savings and credit, “The fact is that in Zimbabwe cash hardly 
circulates outside of the cities.”
Raising access to formal credit for urban residents through building 
societies (see Chapter Nine) and for small farmers through the 
Agricultural Finance Corporation (Chapter Ten) remained a priority of 
government economic development strategy. However, to qualitatively 
expand the money economy ─ both geographically, and socially, across the 
class (and ethnic, gender and generational) spectrum of Zimbabwe ─ would 
necessarily entail more than just the introduction of new financial 
mechanisms, incentives and institutions. There were apparently still 
severe racial biases (especially lending and employment discrimination) 
in Zimbabwean finance, and these were never effectively addressed.

Lending and hiring bias

Bank discrimination against small entrepreneurs has been recorded across 
Africa (Iliffe, 1983, 68), and in a country like Zimbabwe where 
financial acumen was relatively high, its persistence long into the 
independence era was easy to identify and rebuke. Black access to 
business finance was a long-standing problem. Even as free 
enterprise-oriented reforms escalated in the late 1970s, the credit 
barrier proved nearly insurmountable. Over a four-year period through 
early 1983, bank credit to black entrepreneurs amounted to a meagre 414 
loans for Z$2.25 million (most for the retail trade) (Chimombe, 1983, 
109). There was not much improvement during the 1980s, as Professor Tony 
Hawkins noted in the Financial Times (21/8/89):

While the money markets are awash with funds and the banks underlent, 
investment levels are inadequate to the task of maintaining the capital 
stock intact, let alone generating the 200,000 new jobs needed each 
year. The banks deny that they are turning away potentially viable black 
entrepreneurs simply because they lack collateral, the most frequent 
complaint levelled by black businessmen... [Yet] official figures show 
that only 3% of bank lending goes to black Zimbabweans (emphasis added).

The Reserve Bank ultimately ordered the commercial banks to increase 
their black borrower ratio from 3% to just 5%, or face punitive reserve 
requirements (Zimbabwe has a 99% black population so this should not 
have been extremely difficult). Responses ranged from the defensive 
rebuttal that “banking returns do not reveal the full extent of actual 
lending to blacks” (Girdlestone, 1990), to the acknowledgement that ─ as 
the chief executive of Standard Chartered put it ─ “Banks have been 
criticised, not entirely unjustly, for perhaps being overly cautious in 
their lending policies. This caution has to a large degree arisen 
through a lack of understanding of the exact nature of the requirements 
of the borrower operating outside what has become known as the formal 
sector” (Herald, 1/11/90).
Government officials such as John Nkomo often tried to explain bank 
discrimination in terms of foreign control: “I am well aware that most 
banks in Zimbabwe have their roots and still maintain links with parent 
head offices in the industrialised countries of the west and their 
work-methods and perspectives derive from there. In other words, in 
assessing and determining courses of action and prospects for expansion, 
their judgement is largely influenced from outside” (Zimbabwe Department 
of Information, 1988). But even government-owned Zimbank, one Member of 
Parliament (J.C. Kufandada) alleged in 1990, “has a very good reputation 
of being anti-black. The statistic speaks for itself. It is clear and I 
think we now begin to understand why there is a certain species of 
Zimbabweans that is given priority when it comes to loans in our own 
bank” (Hansard, 15/8/90, 1472).
According to commentator Matthew Chandavengerwa (1994, 4), small 
entrepreneurs viewed banks as a whole as “arrogant, obstructive and 
insensitive.” Specific complaints were that “too often banks raise 
invoices late, impose interest charges without notice and usually in 
retrospect and keep their operations under constant conditions of fear 
and uncertainty by threatening to call in their loans at any time.” The 
role of the banks’ solicitous black spokesperson (Barclays’ Isaac 
Takawira), the increase in black bank managers, and the opening of small 
business bureaus were all viewed by Chandavengerwa as tokenism: “simply 
an attempt to keep indigenous enterprises at bay.”
At one point, even the Financial Gazette (28/10/93) was moved to 
editorialise,

It is increasingly becoming difficult to do business when one is black 
in Zimbabwe. Financial institutions, most of which are white-dominated, 
have used their economic power effectively. They have pulled the plugs 
on corporations headed by blacks and imposed onerous conditions to keep 
the financial tap flowing to the same executives. The effect of this has 
been to thoroughly humiliate black executives, most of whom have been 
caught by the current harsh financing environment. On the other hand 
handsome rescue packages amounting to spoon-feeding have been put in 
place to whites in similar positions. White mismanagement and general 
financial problems have been tolerated and encouraged through an 
unlimited and unconditional availability of loan funding. The banks and 
the white community will vehemently deny that there is racism. But this 
is a futile exercise. If they deny its existence then they clearly do 
not understand the predicament of their black countrymen.

Nor did non-bank financial institutions accomplish much in opening their 
doors to black businesses. Fifteen years after independence, the chair 
of the National Reconstruction and Development Board, Elton Mangoma (a 
chartered accountant and former group financial director of the Hunyani 
paper/packaging conglomerate), complained, “Blacks are being 
marginalised on the [Zimbabwe Stock] Exchange, and are being told they 
are not good enough. The few companies that have a majority of black 
members are so heavily discounted on the stock exchange, reinforcing the 
same sentiment that blacks are incapable as big business managers” (FG, 
2/2/95). In any case, black board members were rare. Ticharwa Masimba 
(1994, 4) points out that of 62 companies registered on the Zimbabwe 
Stock Exchange (ZSE) in late 1994, the boards of just five were 
majority-black (Delta, Mhangura Copper Mines, Wankie Colliery, Zimbabwe 
Financial Holdings and Zimbabwe Newspapers). About a quarter of the 
ZSE-listed companies had no black board members and the remainder had 
just one or two. Cluff Resources ─ which Masimba accused of draining so 
many millions from Zimbabwe ─ had only one black out of a dozen board 
members.
As discussed in more detail in Chapter Ten, gender discrimination was 
also a standard operating practice of Zimbabwe’s financial institutions, 
partly because of slow legal changes which made it difficult for women 
to gain housing and land title rights. The World Bank (1991b, 18) noted 
that “An adequate legal framework for lending to women still has not 
been created.” Banks seemed to ignore the fact that women made up the 
bulk of the 5,500 savings clubs established in Zimbabwe between 1970 and 
1985, and thus had something of a collateral and regular payment record 
to fall back on (Nowak, 1989, 71).
Seen from below, discrimination was a devastating experience. As 
Rasmussen (1992, 226) concluded in an exhaustive study of small-scale 
enterprises in two outlying towns (Murewa and Gutu), 39% of respondents 
used their local banks for savings (an equivalent number use the Post 
Office Savings Bank), yet “Most small enterprises state that capital 
access is a problem, and, evidently, the enterprises would not mind 
obtaining a heavily subsidised loan without presenting any collateral 
security.”
But in Zimbabwe, the government was unsuccessful in assisting banks to 
meet such needs. Even state-owned banks (such as Zimbank and BCCI) and 
“indigenous financial institutions” proved either as biased as the 
expatriate banks in their lending, or too small to be effective. For 
example, the Zimbabwe government inherited a Development Finance 
Company, founded with R$3 million in 1979 to make loans to black 
small-scale enterprises, but which “dissipated its resources during the 
regime immediately preceding independence by making 
politically-motivated loans, many of which had to be written off,” 
according to the World Bank. This initiative was formally shut down in 
1984 (World Bank, 1986, 5).
The post-independence state, which was able (for a full decade) to 
bolster an emergent middle class through civil service employment and 
welfare spending functions, was ultimately unable to carry off a 
sustainable credit-based expansion of the commercial petty bourgeoisie 
(which instead resorted to mark-ups on retail pricing that, by 1994, 
were so high as to invite direct competition from wholesalers and even 
manufacturers) (FG, 19/5/94). SEDCO was provided a Z$1 million capital 
base in 1983, and about 90% of the first batch of SEDCO loans were to 
merchants, with a small percentage to emergent industrialists. Half were 
in urban areas, and cooperatives received a quarter of the initial 
loans. Loan terms were generally two years and the average interest rate 
was 14.3%. However, World Bank conditionality subsequently raised this 
to 18% for urban projects and 16% for rural areas.
Indeed Bank conditionality on SEDCO was extensive. The need for SEDCO 
credit was greatest in rural areas, and according to the Bank (1986, 
18-27), “Government has indicated that it would like SEDCO to assist, on 
a selective basis, cooperatives and Small Scale Enterprises in rural 
growth points with limited infrastructure. Government and SEDCO, 
however, are keenly aware of the potential risks of such lending to 
SEDCO’s financial integrity and its cost to Government.” The Bank 
therefore insisted on controlling this process through a different fund, 
and in the negotiations over a US$10 million loan to SEDCO in 1986 noted 
that “Bank supervision missions would also closely monitor SEDCO’s 
performance.”
The Bank decided that the root of the rural loan problem was that “Rural 
businesses cannot offer title deeds as collateral for bank loans because 
land in the communal areas is not privately owned,” and mandated that 
title deeds in Growth Centres be made available. Moreover, SEDCO was 
told it must “not modify its policy statement without prior consultation 
with the Bank.” SEDCO was promised Z$500 million in government funds 
over a five-year period in the mid 1990s, but in 1993/94 it received 
only Z$40 million.
Notwithstanding continuing financial support from government, Rasmussen 
(1992, 226) reported, “The knowledge of SEDCO as a possible supporting 
institution is not impressive in the district centres. Only half of the 
potentially eligible small enterprises know what SEDCO is.” The Credit 
Guarantee Company was even more obscure and ineffectual. Loan insurance 
functions, supported by the Reserve Bank, reached a level of only 150 
loans per year because, as the World Bank concluded, “Despite the 
increasing demand from the emerging short-term as well as medium-term 
credits, the banks remain reluctant to significantly expand their 
lending levels.”
Other private sector small business development funds of an earlier 
generation ─ Anglo American Development Corporation and the Industrial 
Promotion Corporation of Rhodesia and Nyasaland, and a Zurich-based 
development finance agency, EDESA ─ had been introduced by international 
capital in part for politically-motivated reasons, and were just as 
ineffective at getting credit to the black petty bourgeoisie. A 
subsequent World Council of Churches small business credit fund 
administered through the Zimbabwe National Chamber of Commerce (ZNCC) 
demanded loan repayments in hard currency, which carrying an offshore 
interest rate of 9% in 1994 translated into 30% in local terms, 
according to the ZNCC, compared to the 5% then being charged by the 
Reserve Bank for an IBDC loan fund (FG, 5/5/94).
Under such circumstances it is easy to see why credit remained an 
emotional issue. When the Indigenous Business Development Centre was 
established in 1990, a key priority was to gain better access to small 
business loans, and the IBDC rapidly collected a membership of 4,000, 
doubled it to 8,300 by early 1994, and made itself a highly visible 
lobby group (Raftopoulos, 1991, 16; FG, 13/1/94). In 1992, the World 
Council of Churches Development Fund advanced a Z$30.6 million loan (and 
Barclays advanced Z$40,000) (FG, 20/6/92). But controversy arose over a 
government budget allocation of Z$100 million to the IBDC in 1992. In 
the words of the then secretary-general of the IBDC, Strive Masiyiwa, 
“There are certain non-indigenous people who are frantically lobbying to 
be part of this money. But we will fight tooth and nail to ensure that 
they won’t get any cent from that money since it is us who solely went 
to the government begging for that money as far back as February.”
Masiyiwa was given assurances by Chidzero that “government would ensure 
that the funds would be exclusive to indigenous businessmen” (FG, 
27/8/92). Yet Chandavengerwa (1994, 4) insists that instead, the banks ─ 
given responsibility for managing the Z$100 million ─ partially 
redirected the monies into paying off the outstanding loans of members 
of the IBDC. This “created a great deal of anguish,” for even after the 
loans had been paid off, “some banks were not prepared to extend working 
capital facilities.” Chemist Sibiza (then IBDC president) agreed that 
“the Z$100 million credit facility made available through the commercial 
banks never benefitted IBDC members” (FG, 13/1/94).
Finally in January 1994, the IBDC was appeased when Z$400 million was 
reserved by the Reserve Bank for black small-scale business credit, to 
be administered through the Credit Guaranty Company (CGC). Offering 
loans at 5% interest, the CGC quickly took in more than 6,000 
applications worth Z$165 million, and granted 4,583 loans worth Z$142 
million. Ordinarily, the CGC processed 800 loan applications per year, 
up from just over 100 during the 1980s (FG, 12/1/94).
Masiyiwa was also a vigorous campaigner when commercial banks were an 
issue. In mid 1992, he publicly accused Standard Chartered Bank of being 
“the most conservative bank when it came to dealing with indigenous 
people,” arguing that a century “was a very long time for the bank to 
start considering localising part of its external shareholding.” 
Masiyiwa demanded that Standard Chartered Bank appoint a black chief 
executive: “Certainly this would be a good time for some serious 
management changes. Do we have to wait another one hundred years before 
they make a commitment to black advancement?” (FG, 13/9/92).
Due to the objective conditions imposed by overaccumulation, it was 
possible for there to coexist excessive flows of funds into financial 
markets, a limited market of local borrowers, and a lack of prospects 
for international expansion ─ alongside well-structured, time-honoured 
discrimination which appeared pervasive in the business norms and 
practices of Zimbabwe’s banks and bankers (both expatriate and 
indigenous). Even the few exceptions suggest the levels to which 
entrepreneurs had to sink to gain access to capital. In the late 1980s, 
for example, Isaac Takawira of Barclays and Willie Ford and Fanuel 
Muhwati of Merchant Bank of Central Africa (MBCA) together bought a 
South African-owned company ─ Flexible Packaging ─ for which they were 
financed by MBCA, leading one Member of Parliament to comment, “It would 
appear to me that there had been what is termed overseas as some form of 
insider trading.” Employees of Flexible were expecting to buy 25% of the 
company as it became the first black-owned listing on the stock market. 
But according to MP Byron Hove, “The employees felt cheated, and felt 
that the big sharks, as it were, grabbed the cake from their very lips” 
(Moto, May 1992).
A few new financial institutions emerged out of the black petty 
bourgeoisie’s frustration. Yet aside from the single area of short-term 
insurance, penetrating the well-established and tightening financial 
markets appeared next to impossible, as big capital simply continued to 
ignore black entrepreneurs. With the state unable or unwilling to force 
banks to change their lending policy, by 1990 the situation was so 
desperate that the CZI stepped in. Purporting to support the development 
of a petty-bourgeois manufacturing class (ie, its potential 
competition), CZI chief economist (Mike Humphrey) firmly advocated less 
government intervention in credit markets rather than more:

Interest rates should be decontrolled, the rigid controls on the areas 
of operations of the various types of institutions should be loosened, 
and financial institutions should be allowed to offer venture capital in 
the form of equity. It is only under these changed conditions that the 
financial institutions will obtain the resources needed, and the 
incentive, to consider financing more of the financially riskier new 
enterprises (CZI, 1990, 3).

Some of the CZI misconceptions should be countered at once. The 
incentive to invest in certain black businesses did in fact exist, as 
witnessed by the extension of some limited forms of credit by a few 
financial institutions (particularly the merchant-oriented finance 
houses), but did not extend as far as funding new manufacturing 
enterprises. Chinyoka (1988, 103) explains,

Despite the fact that some of the finance houses are subsidiaries of 
commercial banks, they tend to have a more liberal attitude with respect 
to assisting small enterprises. This might be due to the inherent nature 
of lease financing that it is self-secured. While they have yet to make 
an impact in the manufacturing sector, they have been assisting 
significantly in the service sector ─ that is commercial trucks, 
passenger vehicles, etc.

Yet when considering the cost of credit, Chinyoka continues, 
“small-scale entrepreneurs are often crippled by the high rates of 
interest charged by finance houses.” Mupandiki (1985, 143) notes that 
even the relatively mild (in retrospect) early 1980s increase in 
commercial interest rates (from 4.5% to 9.5%) “contributed to shifting 
income from the poor to the financial institutions ─ most of which are 
foreign-owned. While the large foreign-owned companies can afford to pay 
higher interest rates, their increased cost had squeezed many smaller 
would-be African entrepreneurs out of business.”
Thus the sorts of interventions the CZI proposed ─ especially higher 
rates ─ would not result in the predicted redistribution of finance, but 
would instead limit the commercial petty bourgeoisie at an earlier point 
in their business trajectory. Indeed the arrival of positive real 
interest rates in the early 1990s was accompanied by a credit crunch of 
unprecedented proportions. As the deputy minister for industry and 
commerce, Simon Moyo, observed in 1994, “Small and medium-scale 
enterprises are plagued by an assortment of viability problems including 
lack of access to finance due to under-capitalisation and limited 
development of institutions for the provision of financial and technical 
support for this sector” (FG, 19/5/94).
Racial discrimination in the banking system is a real phenomenon, though 
probably no more so than in other parts of the white-controlled economy. 
Barclays, Zimbank and Standard all eventually opened small business loan 
departments to serve emergent black firms, but such incremental 
institutional change would not make much difference. Part of the 
problem, it was alleged, was the race and class composition of 
high-ranking bank officials.
Although employment in the finance, insurance and real estate sector 
grew dramatically during the 1980s, outpacing everything else in the 
economy save public health and education, institutional power was 
maintained at the top of a very steep, white-dominated hierarchy (a few 
blacks managed to climb to higher rungs, but these were mainly 
government financial sector ladders, which tended to move personnel from 
state finance into industry, not into private finance). As the number of 
financial sector employees rose by 35%, the per capita salary of those 
employees in relation to the national economy declined noticeably during 
the early 1980s. The result was a potential for severe conflict not only 
between banks and their clients, but within banks as well.
In 1985, the press began picking up some of the allegations. According 
to the chair of the Zimbabwe Society of Bank Officials, Richard Mawoyo, 
“Discontent among black bank workers is the result of promotion 
expectations built up over the past five years” (Herald, 11/10/85). 
Allegations of bias led Barclays officials to announce that “all 
branches of Barclays Bank will have to submit to their head office names 
of all candidates considered for promotion along with those of the 
candidates they are recommending” (Herald, 30/10/85). Two years later, 
Standard Chartered employees embarked on a formal work stoppage, based 
on claims “that management was practicing racial discrimination in 
employment and other conditions of service... Employees also alleged 
that black advancement had been resisted with the result that there were 
no blacks in decision-making positions at all despite the fact that the 
vast majority of the workers in the bank were black.” The allegations 
led to an extensive investigation by the Labour Ministry, and a finding that

many of the employment practices pursued by the bank though neutral on 
their face, tended to perpetuate past discrimination while others tended 
to discriminate in practice. These practices include: exclusion of 
blacks from key decision-making organs and sensitive posts such as in 
the advancements department; absence of any open recruitment or 
promotion policy which tended to favour the insiders, friends and 
relatives, a haphazard grading structure which resulted in large 
disparities in salaries, benefits and other conditions of service 
between whites and blacks; appointing white pensioners and giving high 
salaries to security positions which could have been filled by younger 
qualified persons including blacks; the existence of an unhealthy and 
almost hostile relationship between some members of the management team 
and the Workers’ Committee (Department of Information, 1987).

With tensions throughout the financial services industry still not 
resolved by the end of 1987, Chidzero told a meeting of bankers, “I 
would like to reiterate my call made about two years ago about black 
advancement in our financial sector... Although there has been some 
positive response by some institutions, others still have to work harder 
to ensure that their management structures reflect the new order in the 
country” (Department of Information, 1987). But controversies continued 
raging at Standard Chartered and other banks over discrimination.
In addition, Anglo American Corporation’s Bard Discount House faced 
resignations by five senior black managers in late 1994, when a white 
managing director was granted a Z$475,000 profit-sharing bonus while 
many blacks received nothing. Anglo Zimbabwe chair Roy Lander defended 
the profit sharing and attributed problems to “a lack of communication 
within the organisation” (FG, 15/12/94). The Discount Company of 
Zimbabwe also lost two top black managers. As the Financial Gazette 
(5/1/95) reported, “most of the black workers in discount houses and 
stockbroking firms are crying foul over alleged racial inequalities in 
terms of promotions and remunerations.”
Suffice to say, the perception of discrimination continued even after 
the elite (eg, Leonard Tsumba of Zimbank) attained senior bank 
management positions. Protests, work stoppages and full-fledged strike 
action at Zimbabwe’s financial institutions were common throughout the 
1990s.

Corruption

If discrimination persisted, so too another form of economic activity 
prospered beyond the boundary of rational market exchange relations: 
corruption. According to Sachikonye (1995b, 183), clientelism led to 
“widespread nepotism in recruitment and promotion practices, 
embezzlement of funds and corruption.” This was not the sole preserve of 
a new government bureaucratic elite intent on personal capital 
accumulation, although this ubiquitous phenomenon must not be 
discounted. Corruption also found its way into the banks, which as a 
matter of ordinary business practice not only maintained price-fixing 
retail cartels, but regularly inflated interest charges on overdrawn 
accounts (FG, 2/6/94).
Briefly consider two of the more spectacular cases of banking system 
fraud ─ involving BCCI during the 1980s and Zimbank in 1990 ─ which 
between them suggest several telling features of Zimbabwean finance. 
According to a United States Senate Foreign Relations Committee report, 
The BCCI Affair, a briefcase containing £500,000 was delivered by a BCCI 
official to a London hotel during the course of Lancaster House 
negotiations in 1979. As another bank official, Akbar Bilgrami, 
confirmed to Senate staff, “We paid Mugabe and [Joshua] Nkomo.” Then in 
1981, BCCI Chief Executive Officer Agha Hasan Abedi, his personal 
assistant Nazir Chinoy, and BCCI officer Aluddin Sheikh went, in 
Chinoy’s words, “to the opening of a joint venture with Zimbabwe. I 
think to get permission for establishing a bank in Zimbabwe that money 
was paid to President Mugabe and to Nkomo.” Chinoy claimed that Sheikh

went off on his own to see Nkomo who was the chief opposition at the 
time, and then he went off to see President Mugabe, and when they talked 
they wanted me out of the room... Mr Sheikh carried a bag with him. At 
the time I had a suspicion that you don’t get permission as a foreign 
bank so easily without a payment. Without favours, it wouldn’t be so 
easy to get a bank that fast, especially given the opposition of the 
British banks who were already established there.

BCCI failed in July 1991 when its global pyramid-scheme of 
deposit-taking, drug money laundering and rampant bribery of 
international officials imploded, and the national railways of both 
Zimbabwe and Zambia reportedly lost Z$330 million in deposits. Member of 
Parliament Edson Ncube alleged that this stemmed from political 
appointments to the parastatal railroad: “Because of these political 
appointments, at one stage our bank account for the National Railroad of 
Zimbabwe was transferred from this one bank to BCCI. What has happened 
to these funds has not been fruitful” (Weekend Gazette, 13/12/91). 
Zimbabwe was also a prolific borrower from BCCI. In March 1991 the 
government owed the bank US$17 million, according to the Senate report, 
all of which had to be repaid, even if Zimbabweans’ deposits had vanished.
In a second case, Zimbank ─ the main state-owned bank ─ was the subject 
of a national scandal involving top politicians. A Member of Parliament, 
A.T. Mangwende, alleged “gross irregularities involving substantial 
amounts in foreign exchange, import licenses and other related 
malpractices” at Zimbank and a white-owned shell company (Lorac Pvt 
Ltd). Although the facts of the case were never conclusively 
established, the charge illustrates the power of Zimbabwe’s financial 
institutions, both materially (in their foreign currency-handling 
responsibilities) and psychologically (in their relations with small 
black businesspeople). According to Mangwende,

The unsuspecting emergent businessman goes to a bank with his import 
license to organise funding for whatever transaction he will have 
obtained the license for. In the bank, this particular bank, there are 
senior banking officials who would then direct the unsuspecting emergent 
businessman to this particular company to be funded. Instead of the bank 
doing it, the officials in the bank choose to direct the poor emergent 
businessman to this financial shark. What happens, of course, is that as 
soon as the businessman gets there and is introduced by some officials 
in Zimbank, he surrenders his license because he wants to get funds.

In other words, the Zimbank officials refused to process the 
application, instead directing the clients to their colleagues in Lorac 
(one Zimbank official was actually employed by Lorac inbetween stints at 
the bank).

What then happens, Mr. Speaker, is that after some time, the emergent 
businessman is advised that in fact, his goods have arrived and had been 
sold at a much less prices than otherwise and therefore he has a 
shortfall. The next thing when the man starts to complain, summons are 
quickly issued. I have a list of over 40 emergent businessmen who are in 
that predicament as a result of this financial chicanery (Hansard, 
15/8/90, 1460-1461).

But the chicanery came to light because Lorac itself ran into repayment 
problems and owed Zimbank Z$8 million on an unsecured bank overdraft by 
the time the scandal broke. There were also questionable political 
contacts with Lorac involving one of the country’s two vice-presidents 
and as many as seven cabinet ministers, who reportedly had received 
certain favours.
But perhaps more tellingly, the incident revealed several features of 
the institutional bias of Zimbabwean finance. Most obvious was the 
direct collaboration of white and black financiers (even in a 
state-owned bank) with a corrupt form of merchant capital (Lorac), a 
combination which served to make short work of Zimbabwe’s fabled 
exchange and import control system. But also clear in this incident was 
the role of the black entrepreneur, who willingly ─ and illegally ─ 
turned over import licenses to unauthorised dealers. The so-called 
“briefcase businessman” phenomenon was, by the late 1980s, an 
oft-criticised but well-trod path to petty accumulation, given the great 
potential in the sphere of finance for precisely these sorts of 
invitations to corruption. Lastly, there was the suspiciously passive 
role of key government civil servants and politicians. As J.C. Kufandada 
complained in Parliament,

I do not understand why the Senior Minister [Chidzero] did not institute 
enquiries when press reports surfaced and in particular when the former 
Minister of Trade and Commerce who himself reported to the Senior 
Minister of Finance, expressed concern at the racket. I wonder why such 
senior banking officers that we have entrusted with our national 
patrimony should be given such protection (Hansard, 15/8/90, 1468).

While Zimbank’s relationships with clients were spotlighted in this 
particular instance, an underlying aspect of the entire operation of the 
banking system was, in a sense, unveiled. That friendly relations 
between regulators and regulated turn quickly to corruption under 
conditions of overaccumulation crisis is nothing new. In the late 1980s 
such conditions gave way to corruption scandals involving high finance 
in Japan, Greece, Jordan and even the United States, in each case 
toppling heads of government (or in the US case, the first and third 
ranking Democratic Party officials in Congress).
The depths of visible financial corruption never plunged so far in 
Zimbabwe. But Bulawayo lawyer David Coltart testified in 1991: “From the 
evidence before me as a lawyer I believe that corruption within 
government and Zimbabwean society is rife and that the Willowvale 
scandal pales into insignificance compared to the level of corruption 
now” (FG, 19/9/91). Brian Raftopoulos (1991, 12) describes the Sandura 
Commission investigation into Willowvale as

an epic tragedy: an heroic liberation struggle, the transfer of power, 
the making of individual reputations within the broader framework of 
social transformation; and then the antithesis, of the corrupting 
influence of power, the untidy, grubby manipulations of accumulation, 
the trial, exposure and, in one case, suicide. To many analysts, this 
process represented the almost ineluctable logic of the propensity of 
the political elite to accumulate at any cost; the ubiquitous 
neo-colonial denouement of the predictable petty-bourgeois project.

Aside from complaints by white outsiders and dissident left 
intellectuals, the degeneracy of the petty-bourgeois bureaucrat was 
confirmed by the man in charge of the civil service, Eddison Zvobgo, who 
acknowledged in 1992 that there was “a high incidence” of corruption in 
a government “wrought with bribery, patronage, embezzlement and 
extortion” (FG, 25/6/92). Bribery was uncovered in ministries 
responsible for environment, tourism and construction and public works 
(FG, 24/3/94). Of note in this regard is that many of the most important 
of the emergent financial elite began their ascent from the public 
sector, especially, as Arnold Sibanda (1990, 8-9) comments, from 
parastatal managerial positions:

The reactionary petty bourgeoisie fills these management posts either 
with an incompetent element that is ideologically bankrupt in terms of 
the philosophy of socialist transformation, or that is anti-socialist 
pure and simple, and sees its appointment as an opportunity to establish 
links with foreign capital for purposes of carving a base for its own 
primitive accumulation. Corrupt appointments on the basis of “class 
friends,” “ethnic comrades,” or “regional home boys” take precedence 
over radical ideological inclination, competence and qualification for 
the job and recognition that the task is a struggle which is part of the 
general class struggle against imperialism.

The most important aspect of this in relation to the early growth of the 
black petty bourgeoisie as a class was probably the briefcase 
businessman phenomenon, as noted above, but there emerged black 
financial elites who had a much more respectable orientation. On the one 
hand, bank personnel largely consist of “black people not in meaningful 
positions,” as MP T. Mudariki put it. One ironic result, already noted, 
is that black access to credit is typically suffocated by white old boy 
networks, notwithstanding the fact that today most mid-level bank 
employees (including the bulk of branch loan officers) are black.
On the other hand, however, the apparent discriminatory nature of 
banking ─ affecting primarily the black commercial petty bourgeoisie ─ 
was not able to detain a few key individuals, who springboarded ahead of 
the classical black petty bourgeoisie as compradors with domestic and 
international finance. In doing so ─ their protestations to the contrary 
notwithstanding ─ they effectively ratified the continuation of black 
petty-bourgeois subordination to financial capital. It is important, 
hence, to go beyond chronic charges of race discrimination and strong 
hints of financial intemperance, in order to search out the particular 
class orientation of changes that took place in Zimbabwe’s financial 
system after independence. Again, the point of such a study is to 
identify where personal agency, working through state institutions, has 
a material effect on the exercise of financial power.

Emergent financial elites

A poignant cry rang out in Parliament in 1990:

Our party has called for the democratisation of the banking sector 
several times but nothing so far has been done, ten years after 
independence. Is this what our heroic combatants fought for? It appears 
that there are people who are not willing or who benefit from the 
non-democratisation of the banking sector. Maybe they are benefitting 
from the crumbs that fall off the table, who knows? If you go into any 
of these banks you will find that a lot of black people are not in 
meaningful positions (T. Mudariki, Hansard, 30/8/90, 2081).

This was, a decade after independence, an increasingly plaintive 
complaint. Even President Robert Mugabe (1989, 358) openly expanded on 
the theme in his surprisingly frank contribution to Canaan Banana’s 
nationalist text Turmoil and Tenacity: “There exists among the 
membership of the new ZANU(PF) a minority, but very powerful bourgeois 
group which champions the cause of international finance and national 
private capital, whose interests thus stand opposed to the development 
and growth of a socialist and egalitarian society in Zimbabwe.” Yet as 
Theresa Chimombe (1983, 17) pointed out, it was under Mugabe’s patronage 
that this group had initially emerged: “The state is increasingly 
participating in the banks and this signifies the development of state 
monopoly capitalism. It is significant to note that after independence, 
government appointed some board members of banks to serve as directors 
of some companies.”
Political commentator Jonathan Moyo (1992, 4) expressed growing 
frustration about the demise of accountability, not (as Mugabe griped) 
because of the new elites’ hostility to the cause of socialism within 
ZANU, but simply on grounds of national interest:

In most cases, the World Bank and the IMF prefer to infiltrate the minds 
of bureaucrats in ministries of finance, trade, industry and commerce 
and in parastatals such as reserve banks as well as private financial 
institutions such as merchant banks and other influential business 
concerns. This is what happened in Zimbabwe between 1987 and 1990 when 
the World Bank started inviting Zimbabwean bureaucrats in the Ministry 
of Finance and the Reserve Bank to Washington, DC and elsewhere, to 
indoctrinate them with ESAP under the guise of “training” and 
“seminars.” Others were treated to lavish dinners and parties locally to 
give the feeling of being “important.” This is how some critical 
personnel in the national bureaucracy were baptised into ESAP... The 
result is that the politicians have lost control of policy formulation 
in the economy. That is why every ZANU central committee these days is a 
classroom for Dr. Chidzero to lecture dumbfounded politicians on ESAP. 
All this is happening because, while politicians have been reduced to 
bystanders, economic policy in this country since 1990 has been driven 
by the World Bank and the IMF, with the assistance of Zimbabwean 
bureaucrats whose hearts and minds were won years before the 
implementation of ESAP.

The challenge here is not to pose a “great person theory of history” to 
explain Zimbabwe’s biased financial system in terms, mainly, of the 
“minority, but very powerful bourgeois group” ─ which we shall term the 
emergent financial elite ─ which benefitted from bankers’ breadcrumbs 
and thus left the pre-independence system intact. Instead, it is to 
place people of the ilk of Finance Minister Bernard Chidzero, a man 
rarely understood or analyzed, yet of profound importance for Zimbabwe’s 
post-independence development, in their appropriate class and political 
setting.
Chidzero may have felt lonely, for he once commiserated, “There is a 
dearth, even near complete absence, of skilled personnel with a 
requisite grasp of policy instruments” (Horizon, September 1991). (If 
so, the logical question arises, why would Zimbabwe embark on dramatic 
changes in economic policy in the early 1990s?) In an otherwise 
unreasonably favourable report on ESAP’s implementation, the government 
conceded to the World Bank (1995a, 48) that, indeed, there was “limited 
institutional capacity” in its ranks and that “weak capacity in line 
ministries and implementing agencies led to an overstretching of 
resources devoted to policy analysis and formulation in a period when 
far-reaching policy reforms needed to be designed.”
Moreover, there were few with political credentials sufficient to make 
ESAP stick. “We fail to identify individuals with the political courage 
to successfully defend and hold back any strong and persistent 
opposition to the reform programme,” lamented the Financial Gazette 
(5/9/91) at the precise point at which interest rates were doubled and 
financial liberalisation conclusively began: “We stand to be corrected, 
but the only individuals who have shown commitment to the programme and 
hence are capable of raising a finger in support of it are, the Ministry 
of Industry and Commerce, Mr. Kumbirayi Kangai, Dr. Tichaendepi Masaya, 
the Minister of State for Finance, Economic Planning and Development and 
the Senior Minister, Dr. Bernard Chidzero.”
Another logical candidate would have been Reserve Bank governor Kombo 
Moyana. Yet by the time he left his position in mid 1993, his popularity 
with financiers had evaporated. Under Moyana, the Reserve Bank had the 
distinction, according to the Financial Gazette (17/6/93), of being “the 
most secretive, most feared and least-understood institution in this 
country... Perhaps the lack of transparency at the bank is attributable 
to the fact that it now effectively has two masters, the government and 
the IMF.” Moreover, Moyana “cultivated a culture of fear and 
intimidation in the financial sector... The Reserve Bank wants to treat 
the administration of monetary policy like guerrilla warfare. It takes 
immense pleasure in springing surprises on the unsuspecting public.”
 From corporate Zimbabwe, a few emergent, highly-respected financial 
elites stood in support of ESAP upon its introduction, including Ariston 
Chambati, Morrison Sifelani, Isaac Takawira and Leonard Tsumba. Chambati 
is worth close attention, for he was head of the conglomerate TA 
Holdings for a decade and in 1995 was named successor to Chidzero as 
Finance Minister (Chambati unexpectedly passed away within a few 
months). Previously he had worked for the US Consulate in Salisbury 
during the early 1960s, then studied in New York and at Oxford, returned 
to University of Rhodesia where he was a senior lecturer in political 
science during the 1970s, served the liberation movement at the Geneva, 
Malta and Lancaster House conferences, was elected to parliament in 
1980, and was immediately made ambassador to Germany. Later he was named 
to the Business Advisory Council of the World Bank’s International 
Finance Corporation, as well as to the advisory board of Coca-Cola Africa.
Yet in business, Chambati’s actual record did not warrant the glowing 
reputation he enjoyed as the ideal financial bureaucrat to replace 
Chidzero. According to Ibbo Mandaza (1995, 4), Chambati had started 
masterfully at TA Holdings, that corporate “laager for the `old Rhodies’ 
during the 1980s,” because “He used his political contacts in government 
to confront his enemies in TA Holdings and in the private sector as a 
whole, thereby creating a functional link between sectors of corporate 
Zimbabwe and the state into which he was slowly gravitating.” But over 
the last few years of Chambati’s reign, TA’s results were most 
embarrassing. More so than other listed companies, the company’s share 
price had plummeted dramatically beginning in September 1991 (from 410c 
to 55c two years later). The key problem was debt management, for TA’s 
1993 interest bill of Z$73.8 million was 128% higher than in 1992, which 
in turn had been 132% higher than in 1991 (interest payments varied 
between 23% and nearly 50% of operating profit).
Not only was the huge conglomerate over its head financially (even by 
1994 the debt load was still Z$350 million). Chambati’s vaunted Botswana 
hotel investments were also losing money, and TA was ultimately forced 
to dispose of its recently-acquired bicycle plant, a clothing firm and a 
motor transport company. “TA Holdings’ situation would come in handy as 
a case study for MBA students at the University of Zimbabwe,” the 
Financial Gazette (25/2/93) stock market commentator remarked sarcastically:

Two years ago, at a time when its cashflow was already encountering 
rough seas, two acquisitions were taken on, Bernstein’s clothing and 
Johnston Transport. Now, in the half-year statement for the period to 
the end of November, shareholders are told that both are losing money. 
It was clear at the time that there were not enough financial resources 
to justify the takeovers... Just what the reason was for buying the 
clothing factory was unknown. There seems to have been some vague notion 
that clothing was the business flavour of the month because of tales 
about all the export profits being made... There also seemed to be 
little relevance between clothing and the other group businesses, but 
then this is true of the whole group. TA of course is well known for its 
disastrous investment decisions. The Macey’s saga left one with the 
feeling that management barely knew what the stores did, while there was 
no real attempt to check on stockholding... Selling the tobacco floor 
has got to rank among the most memorable business blunders since 
independence. Remember that tobacco was the group’s foundation. 
Transport has never been one of the greatest successes... Despite such 
an erratic divisional performance TA saw fit to buy yet another 
transport company, doing so with borrowed money.

Chambati followed up with an ill-timed Z$100 million rights issue in 
1994 that was only 55% subscribed. Underwriters, including Merchant Bank 
of Central Africa (chaired by Chambati) had to buy the balance. Baring 
Securities reported in their October 1994 Zimbabwe Stock Market Review 
that it was only because of “the protective nature of Zimbabwean banks 
that TA Holdings survived in its existing form.” It was clear to Barings 
that TA’s executives “had never operated in a competitive environment 
and were eager to issue more scrip to cover past mistakes... In most 
other markets, the company would have been forced into liquidation” (FG, 
20/10/94).
Nor could Chambati’s trendy commitment to “vigorous implementation of 
and adherence to the philosophy of Total Quality Management” turn his 
company around, and by early 1995 he had to acknowledge that “We in TA 
have come in for a great deal of criticism in the past two years.” He 
blamed the high cost of debt for his difficulties. Yet in spite of 
having being burned not only by interest rate liberalisation but also by 
exaggerated expectations of rewards to TA from export markets and 
foreign investments, Chambati continued to support ESAP (FG, 5/1/95, 
23/3/95).
Moreover, his short reign as Finance Minister enhanced Zimbabwe’s uneven 
development, according to a Read On (November-December 1995) magazine 
commentary:

Chambati’s [1995] budget showed no mercy at all for the ordinary worker. 
Instead, his budget was more cruel than the ones Bernard [Chidzero] used 
to present... [for it] favours the industrialists and business people 
who are already rich. For example, duty on spares and computers was 
reduced. Duty on beer was also reduced. Beer prices are likely to go 
down as a result. Tough luck, children cannot feed on beer. As a result 
of the removal of subsidies and the increase in sales tax, mealie meal 
prices have gone up. A 50kg bag of ordinary roller meal, for example, 
used to cost Z$112. It now costs Z$143.

Enjoying nearly as high a profile as Chambati, Morrison Sifelani had 
been a key Lonrho representative, once the head of the CZI, and under 
ESAP the director of the public-private export agency Zimtrade. He also 
chaired the insurance company Fidelity Life, which was partially owned 
by government. Working with Sifelani at Fidelity was Forbes Magadu, an 
assistant general manager responsible for marketing ─ when not busy 
chairing Chitungwiza Town Council and the ZUPCO bus company.
Another ESAP-booster was Takawira of Barclays: “Contrary to popular 
opinion, ESAP is good for the country and its people ─ and it is 
working. Positive results are emerging in our sector, like the 
introduction of foreign currency accounts for individuals” (FG, 5/8/93). 
(No doubt ESAP worked for the banking fraternity and those who had 
access to forex, but as “for the country and its people,” Chapter Twelve 
provides contrary evidence.) Takawira’s background included courses in 
corporate finance at the Manchester Business School, in financial policy 
at the IMF, and in international capital markets in Sweden. In 1986-87 
he served on the Council of African Advisors to the World Bank.
A more important candidate ─ also, perhaps, “lacking the requisite grasp 
of policy instruments,” but clearly well-positioned in this small group 
of emergent financial elites ─ was Leonard Tsumba. Tsumba was an 
assistant vice president at Citibank during the 1970s and served as a 
consultant to the UNCTAD study Zimbabwe: Towards a New Order. Returning 
to Zimbabwe to become general manager of the Reserve Bank in 1981, he 
was elevated to the position of deputy governor in 1986. Tsumba later 
became chief executive of the majority government-owned Zimbank, where 
he raised his voice to demand liberalisation of financial markets, 
access to world futures markets, and the freedom to develop new 
financial products and services (FG, 27/7/91).
During the period Tsumba led Zimbank, his staff showed no great 
propensity to work in partnership with blacks in industry and commerce. 
The allegations of the bank’s racism were noted above. Just as 
disturbing, Tsumba himself allegedly fired a middle manager who 
protested internal corruption prior to the public revelations concerning 
the Lorac scandal. Member of Parliament Mudariki attacked Tsumba in mid 
1990: “What does that person do when he is appointed to that top 
position? He snubs the President, he snubs the party, he snubs the 
heroic people of Zimbabwe and he creates new criminal friends who 
subsequently baptise him in the River Jordan of corruption” (Hansard, 
30/8/90, 2081).
Nevertheless Tsumba was made governor of the Reserve Bank when Moyana’s 
term ended in August 1993. Inheriting the highest real interest rates in 
the country’s history and an economy suffering a deep crisis of 
effective demand, Tsumba kept the rates up at around 10% after 
inflation, earning flattering reviews from other financiers. After a 
year of such extreme policies, Barings Securities reminded Tsumba of his 
“mandate to maintain real interest rates and implement several reforms” 
and based on his ability to sustain the most severe monetarism in 
Zimbabwe’s history thus far, named him “one of the best central bankers 
in sub-Saharan Africa” (FG, 20/10/94). Yet Tsumba also came under attack 
when he backtracked on liberalising foreign investment policy in early 
1994, leading the usually pro-Reserve Bank commentator Eric Bloch to 
comment, “This shows that the government makes announcements first and 
then thinks about them afterwards. It is time the government ensured 
that it put its brain in gear before putting its mouth in motion” (FG, 
21/1/94).
Like Chidzero, Tsumba was not impressed with the colleagues he found 
around him, and once even blamed rising levels of foreign debt on his 
government’s negotiating teams: “It is largely true that civil servants 
involved in loan negotiations have had little or no formal training in 
this crucial aspect of debt management” (FG, 21/4/94).
Yet another financial bureaucrat of note was Xavier Kadhani, who earned 
his degrees from York and Sussex and was in all likelihood the only 
Zimbabwean economist ever to cite French Marxist Suzanne de Brunhoff in 
a published work (see Chapter Five). Kadhani then taught economics at 
the University of Zimbabwe before joining the Ministry of Finance as an 
economist. Then, as a fellow of the Economic Development Institute of 
the World Bank and the Institute of Directors, he was made managing 
director of the Zimbabwe Development Bank, and from there became 
managing director of a huge state-owned firm concerned largely with 
paper and packaging, Hunyani Holdings Ltd. By 1992, Kadhani had built 
himself a Borrowdale mansion valued at Z$15 million, but he ran Hunyani 
into debt so far in excess of company assets that his merchant bank 
creditors began preparing emergency rescue plans.
Like Hunyani, Kadhani himself faced personal financial ruin, for he 
borrowed in order to finance the personal purchase of 4.6 million shares 
of the company’s stock when it was priced at 160 cents per share. When 
the price fell to 35 cents in May 1992, Kadhani left Hunyani. Chidzero 
had mooted Kadhani for the post of senior secretary to the Finance 
Ministry, but withdrew the nomination in 1993 as the scandal mounted. 
Facing personal bankruptcy, Kadhani’s house was auctioned at a sheriff’s 
sale (the mortgagor, CABS, was the only bidder, at Z$1.3 million, but 
was requested by the Sheriff of the High Court to raise the bid because 
it was “a bit on the low side”). Kadhani was also forced to sell his 
restaurant in the elite Chisipite suburb, hence aborting an exemplary 
accumulation of capital for a former university teacher and civil 
servant (FG, 14/5/92, 21/5/92; 5/8/93; 8/12/94; 19/1/95). In retrospect, 
the route Kadhani followed may have seemed attractive but in fact proved 
dangerous: from left-wing academic, to acceptance within the community 
of international finance, to ineffectual local development banking, to 
crisis-ridden corporate management and personal luxury consumption 
brought to a grinding halt by excessive indebtedness.
Ultimately the largest black financier was Joshua Nkomo, and not merely 
because of his political office and connections to Lonrho, BCCI and 
other high-flying (and sometimes nose-diving) corporations. Nkomo also 
chaired the Development Trust of Zimbabwe (DTZ), an enormous investment 
and holding company founded in June 1989 by Mugabe with trustees drawn 
from the highest ranks of ZANU. The DTZ promptly bought the country’s 
biggest ranch (Nuanetsi) for just Z$15 million, which was said to be 
less than the value of its 26,000 cattle alone (the number of cattle had 
dwindled, by 1994, to 5,000, leading to a major police investigation). 
Often in conjunction with international investors, Nkomo began to embark 
upon projects in the Zambezi Valley (a tourist resort, tire factor and 
timber project which was subsequently canceled), growth point 
development in outlying towns, horticulture, coffee farming in the Vumba 
and the like (Horizon, January 1992).
In one 1994 deal featuring a no-competition bid, the DTZ and a Bulgarian 
construction firm won a Z$240 million toll bridge contract at the 
Beitbridge border with South Africa, to be owned and operated by the 
joint venture, which also received a government guarantee so as to raise 
financing, inexplicably, in the form of a Standard Chartered Bank pound 
sterling loan. Low-income residents of the Beitbridge area who were 
dependent upon nearby Messina, South Africa, for trading, medical and 
other services, were likely to be most detrimentally affected by the 
privatisation of the Limpopo River crossing and imposition of a US$6 
crossing fee (FG, 26/5/94), and SA’s Transport Minister, Mac Maharaj, 
was also incensed that a non-toll alternative was not offered. But the 
DTZ also drew criticism for its ravenous and insensitive hunger for land 
acquisition and monopoly control of development in several other 
locales, including Bulawayo and Beitbridge, and actually lost Bulawayo 
land options when vociferous local public opposition emerged (FG, 
22/4/93, 23/6/94).
The DTZ paralleled ZANU’s Zimbabwe Development Corporation, whose early 
1990s estimated annual turnover of Z$350 million was drawn from stakes 
in National Blankets Ltd (in partnership with Lonrho, and with US$6.5 
million in credit from the World Bank’s private sector investment arm), 
the Treger Group, Zidco Motors, Woolworths and Catercraft (Horizon, 
April 1992; FG, 18/8/94, 9/15/94). Other ZANU ministers and 
functionaries accumulated wealth through land meant for redistribution 
to peasants, as well as through state-supported commercial and 
industrial enterprises, practicing what student leader Arthur Mutambara 
(1991, 139) termed “monopolistic politics of domination, corruption and 
petty-bourgeois accumulation.” There were other leading entrepreneurs ─ 
including Mucheche of the IBDC and Chiyangwa of the AAG ─ who 
contributed financially to ZANU, which, as Iden Wetherell remarked, 
“clearly locates indigenous business advocates within the ruling party’s 
patronage network” (FG, 9/15/94).
Nevertheless, in a Zimbabwe increasingly oriented to Western bourgeois 
cultural norms, there remains a degree of social respect accorded to the 
black financial elite. Madanhire (1995, 4) argues incongruously that in 
contrast to other emergent businesspeople from both pre- and 
post-independence eras, black financiers had become the Zimbabwe’s “true 
entrepreneurs” by the early 1990s by virtue of having “worked for years 
in large conglomerates and in banks” and having succeeded “without the 
help of underhand deals or political connections. Most of them made 
their money on the money market, therefore their origins in the world of 
business are traceable. They took advantage of the liberalisation of the 
financial sector.” Leaders of Kingdom Security (Nigel Chanakira), 
National Discount House (Never Mhlanga), Intermarket Discount House 
(Nick Vingirai), National Merchant Bank (Julius Makoni), and Allied 
Capital Markets (Bigson Mpabanga) should, Madanhire suggests, “be 
brought to the fore to take a leadership role in addressing the 
imbalances in the Zimbabwean economy.”
The experiences of Finance Minister Chidzero should be instructive, for 
notwithstanding progressive social-democratic rhetoric to the contrary, 
his policies clearly led to a dramatic heightening of such imbalances.

Bernard Chidzero

Chidzero was not only Senior Minister for Finance, Economic Development 
and Planning until he formally stepped down due to ill-health in 1995, 
but was also recognised as a global political figure when he was voted 
runner-up in the race for the Secretary-Generalship of the United 
Nations in 1991 (his influence waned once illness overtook him in 1993, 
and he became an economic advisor to Mugabe). A comprehensive profile is 
warranted in view of the near-complete lack of critical material about 
Chidzero to date. Such omission is puzzling. While it is important not 
to bend the stick too far the other way by focusing excessive attention 
on a single personality, it is, nevertheless, the lack of attention to 
the roles of key individuals, of ideology, and of systems of public 
administration, that most discredits structural analysis. Such attention 
is repaid many times over in this instance, for Chidzero’s personal 
political background is of relevance to his role in shaping Zimbabwe’s 
economy. Hence we must consider how he was outwardly, over time, a 
liberal, nationalist, socialist, social democrat, and ultimately 
full-blown capitalist.
Chidzero, after all, arose from the all-pervasive racial oppression of 
mid-twentieth century Rhodesia to become arguably the most influential 
black banker in history, and this reflects not merely a substantially 
mutating international social and economic environment. More 
importantly, as the wave of ascendant finance subtly altered class 
relations within the international economic system, we must consider why 
Chidzero was so well-placed within the Zimbabwe power structure to take 
advantage of the emergent order.
On the one hand, Chidzero adapted well to the milieu of high finance, 
but on the other hand, he was also tightly constrained by international 
forces, no more so than at the height of his own domestic influence when 
a politically-unpopular structural adjustment programme was implemented 
in the early 1990s. Indeed throughout the post-independence era, the 
Finance Minister played a schizophrenic game, generally arguing for 
rational market processes within a state-party nexus that was for many 
years geared to personal and clientelist accumulation while parroting 
“Marxism-Leninism.” It will be clear in Chapters Eleven and Twelve that 
the international constraints were ultimately determinant.
But if the question is whether there was “space” available in the 
national political economy for a different economic programme, the 
answer is relatively straightforward: there was. As noted in the 
previous chapter a far more transformatory economic programme could have 
been embarked upon, centred on expansion of basic needs-related 
industries. In contrast, Chidzero’s chosen trajectory exacerbated the 
underlying processes of ascendant financial power and vulnerability. 
Indeed the broad mandate of international finance was adopted as 
official policy largely because of the promotional role played by 
Finance Minister Chidzero.
His mother was Shona, his Malawian father a farmworker then a shop 
assistant, though able, finally in the 1950s, to set up his own 
storehouse. After Bernard, six more children were reared. During 
Chidzero’s childhood, especially in the late 1940s, popular opposition 
largely emanated from working class struggles in mines and industry 
(Sibanda, 1989). Young Chidzero was fortunate, both because he was 
befriended by an early nationalist leader, Abraham Chirimuta, and 
because he managed to attain a slightly delayed but nonetheless 
illustrious education. Following a stint at a primary school in the Seke 
reserve, Chidzero gained a place at the well-known Kutama Marist mission 
in Mashonaland West, served as the drummer in a band led by 
fellow-student Mugabe, and there was converted to Roman Catholicism. He 
studied through standard six at Kutama, and in 1945 at the age of 18, 
transferred to Marianhill College in Natal, where he matriculated first 
class four years later, renowned in black education as the premier 
debater in South Africa.
 From 1950-52 Chidzero earned his undergraduate degree in psychology 
(with distinction) from Pius XII University College, now the National 
University of Lesotho. A Canadian family provided initial assistance for 
his post-graduate education, first at Ottawa University (MA cum laude in 
political science) and then McGill, which conferred on the hard-working 
student a doctorate in political science in 1958. His thesis on The 
Influence of International Trusteeship on Tanganyika was published by 
Oxford University Press in 1961, Chidzero having spent two intervening 
years at Nuffield College, Oxford. Post-doctoral research at Oxford 
focused on politics, economics, and labour relations in the Central 
African Federation. But Chidzero’s first book, in 1957, was a 
lighthearted Shona novel which, as one of just fifty novels in the 
vernacular, was used widely in schools.
Nzvengamutsvairo (“Broom-Dodger”) offers substantial insights into 
Chidzero’s early thinking, for its main theme illuminates the author’s 
own political calculations. The book is centred on the lives of three 
friends, Matigimu, Tikane and Samere, who reside in the Seke communal 
lands during the 1950s. Matigimu is an easily-influenced young peasant 
possessing little experience with white society, while Tikane, his 
mentor, has worked in the capital, Salisbury. Tikane has had brutal 
experiences with oppression at the hands of white bosses, and advocates 
anti-colonial struggle while enjoying working-class vices like petty 
gambling. Samere, a standard six student who speaks fluent English, is 
the novel’s protagonist, and urges:

It is our country together. For us to fight with them with sticks, axes, 
spears and knives only, drunkards can say that... What surprised me, 
fellows, is that what you eat, what you put on, what gives you 
happiness, are all things of the white man... Whites are our blessers. 
It is true that they wrong us many times. Many of them think we are 
baboons with tails... We must show them that even though we are in 
darkness we are people who love the white, even if we are people of a 
black skin we are the sons of one father, we are children with soft 
hearts and kindness (Chidzero, 1957, 56-57).

While Tikane and Matigimu are initially determined to fight oppression, 
their mistaken ways are shown in the course of fruitless attempts to win 
girlfriends (Samere, in contrast, has no problem finding a mate). The 
desired girls are “broom-dodgers,” in that they neither want to work for 
the white man nor go to school; instead they need men to support them. 
This presents a problem for the two, until Samere quits school to work 
for a farmer as a “baasboy” and soon influences his boss to hire the 
others. At that point Tikane and Matigimu acquire their girlfriends, and 
the story ends with the three couples gazing romantically at the moon on 
Christmas evening. Samere’s political viewpoint is thus vindicated; he 
occupies a position between the black farm labourers and the boss; his 
salary is much higher; his smoothness and education place him in a 
position of being able to make decisions on behalf of the farmer. 
Nzvengamutsvairo is a telling piece of fiction, and it is little wonder 
the book was used by the colonial government as part of the general 
barrage of propaganda aimed at demobilising nationalist inclinations.
Two years after its publication, in 1959, the Ford Foundation helped 
Chidzero return to Salisbury. He was even offered a teaching job at the 
young University of Rhodesia and Nyasaland. But a year earlier Chidzero 
had married a white French-Canadian, and as a result of such forbidden 
racial mixing the job offer was withdrawn. Chidzero lost little time in 
reconnecting with the nationalists. He joined the new National 
Democratic Party in 1960, arguing (in the African Daily News, 8/8/59) 
that the black middle class must “realise that it has a vital role to 
play in the destiny of the Africans ─ it is the spearhead and the tool 
of the masses, and must never lose sight of the fact.” Along with 
nationalist figures like Nkomo, Takawira, Silundika and Dumbutshena, he 
succeeded in convincing the British government to retain power over 
Southern Rhodesia as constitutional evolution was underway in the early 
1960s (Bhebe, 1989). But Chidzero soon left the struggle, taking up 
employment with the United Nations in Addis Ababa in 1960 as Economic 
Affairs Officer. From 1963-68 he served in Kenya as the UN Technical 
Assistance Board representative and then as UN Development Programme 
resident representative.
Chidzero’s formative years, hence, saw him emerge quickly and 
convincingly from an environment of racial repression and ambitious 
petty-bourgeois circumstances. Shaped by the rigours of Catholic 
missionary education, an education in political science, and contacts at 
two of the world’s elite universities, he ultimately secured an esteemed 
post within the upper levels of the rapidly-growing international civil 
service. The coterie of international financial and development 
bureaucrats Chidzero joined in the 1960s would soon begin to shape the 
Third World in fundamental ways, replacing other spent forces such as 
colonialism, superpower interventions, and sundry superpower client 
dictators.
He achieved the directorship of the Commodities Division of the UN 
Conference on Trade and Development (UNCTAD) in 1968 and then in 1976 
the position of UNCTAD Deputy Secretary-General. Also that year Chidzero 
was economic advisor to both the liberation movement and Bishop 
Muzorewa’s ANC team at the ill-fated Geneva conference, and 
subsequently, through UNCTAD, chaired the group that produced the 
voluminous study Economic and Social Survey of Zimbabwe: Towards a New 
Order. The UNCTAD study was published in 1980, just as the war of 
liberation was won, in the context of intense “Marxist-Leninist” 
triumphalism and, specifically, a variety of radical restructuring 
initiatives mooted by ZANU’s Zimbabwe News. In contrast, according to 
Stoneman and Cliffe (1989, 42), Towards a New Order “was very cautious, 
analysing existing inequities and arguing for their reduction, but 
almost entirely in a spirit of reform rather than structural 
transformation.” Chidzero’s own research work during his last years of 
exile dealt mainly with education and labour skills, and did not have 
even as much bite as the UNCTAD study (Chidzero, 1979; Chidzero and 
Moyana, 1979).
Back home at last in independent Zimbabwe, Chidzero was promptly named 
Minister of Economic Planning and Development, to which was added the 
Finance portfolio in 1982, and in 1988 he was made a Senior Minister. 
For a time, Chidzero was effectively the fourth leading official in 
government, after Mugabe, Nkomo and vice president Simon Muzenda. 
Moreover, Chidzero also continued to play an extraordinary role in the 
international development industry. Among global elites, he was often 
considered the voice of reason in the Zimbabwe government, a view 
codified by political scientists Ronald Libby (1987) and Jeffrey Herbst 
(1990) in their differentiation between ZANU’s “technocrats” and 
“populists.” In Chapters Eleven and Twelve, the international 
implications of Chidzero’s technocratic approach are spelled out.
But what of Chidzero’s domestic politics? As Trevor Ncube (1995, 4) put 
it, “He was seen as a political outsider. He lacked the political 
authority to rally his cabinet colleagues around his `vision thing.’ He 
was without the political clout that would whip dissident civil servants 
into line.” His role as a Zimbabwean politician was not easy, Herbst 
(1990, 128) argues, because “he did not fight in the war and, therefore, 
had little standing on ideological issues.” In reality, Chidzero’s 
problem was not ideological flexibility. What is just as interesting is 
that as a function of playing both sides of a complex, fluid ideological 
game, Chidzero failed to sustain a solid national-capitalist support 
base within Zimbabwe. This is worth some detailed consideration. Even 
while the comprador class, in Mugabe’s words, “champions the cause” of 
national private capital, Chidzero was outwardly ambiguous towards many 
white businesspeople, and it is revealing to understand why.
Chidzero was particularly disturbed by slave-like conditions experienced 
by commercial farmworkers, and told the Commercial Farmers Union ─ which 
represents most of the white farmers ─ how “horrified he was to revisit 
a farm he had seen in his childhood only to find that absolutely nothing 
had been done to improve conditions” (Herald, 2/8/85, 24/7/88). It is 
thus ironic that the commercial farmers, on the other hand, respected 
Chidzero as if he were one of their own. “I reckon he’s a good bloke,” 
said top agricultural estate agent Pip Hutchinson. “He’s a clever boy. 
For the rest of them they don’t think” (interview, January 1991). This 
mainly reflected the farm fraternity’s confidence that Chidzero’s 
Finance Ministry recognised the importance of tobacco and other export 
cash crops to the country’s balance of trade. So although Chidzero might 
occasionally have used the white farmers as whipping-boys (as most of 
Zimbabwe’s nationalist politicians are wont to do), and even to their 
faces, he would at other times reward their self-interested loyalty by 
welcoming them into “the spirit of oneness and national unity growing 
somewhat imperceptibly, but steadily in this country” (Herald, 31/5/83).
Aside from the white farmers, major industrialists also occasionally 
drew Chidzero’s wrath, especially when they crossed him in public over 
legitimate concerns such as delays in long-anticipated ministry policies 
or plain old government corruption. Chidzero even criticized the lack of 
patriotism of white industrialists generally (Herald, 28/4/87). Indeed 
his analysis of Zimbabwe’s debilitating investment crisis was pointed: 
“It is rather unfortunate that within the private sector, there exists a 
tendency to interpret general government policy in ways that engender 
uncertainty and therefore, inhibit investment expansion” (Herald, 
10/8/83). In other words, for Chidzero it was the non-patriotic 
psychology of the ruling economic elites, not the fact that the economy 
was in a long-term overaccumulation crisis or that the stock market and 
real estate provided Zimbabwe’s investors with much higher rates of 
return, that was at the core of the problem.
Surprisingly, perhaps, the bulk of Chidzero’s public enmity was reserved 
for local bankers. He berated them, at various points, for having 
lily-white senior management, for their failure to support black 
businesses, and for their hesitancy to penetrate rural areas (Herald, 
25/1/86, 10/12/87, 5/17/90; Maliyami, 1990b). “The present situation 
where little credit is going towards rural area development is even more 
disturbing, even scandalous, when one considers that more than 80% of 
our population live in the rural areas and especially the communal 
areas, and that with the success of our agricultural policies, increased 
savings are now coming from communal farmers,” he told the Institute of 
Bankers, threateningly, in 1990. “We have one economy to expand and 
develop without being shackled by considerations of race or colour. I 
could say more but let this suffice” (FG, 3/7/90). Chidzero even called 
on national television for an investigation of bank discrimination (but 
never carried through with it) (Herald, 12/6/89). Yet at the same time, 
the institutional independence, policy-making clout and ownership 
relations that bankers came to expect in doing business with the 
government remained intact. Most importantly, with respect to the 
Reserve Bank, Chidzero insisted to parliament that “we must maintain its 
probity and keep it free of political interference” (Herald, 21/10/83).
This sort of approach allowed Chidzero to situate himself in the middle 
on thorny problems and to fit in well to the hegemonic ideology, even 
when it differed radically from his own. As a result, to conclude this 
brief biography, we must carefully consider the ideology that motivated 
Chidzero and that permitted him latitude in applying and even defending 
repressive economic policies in the midst of “Marxist-Leninist” 
political party rhetoric, for it is complex and contradictory. Indeed it 
would be a mistake to look back on Chidzero as a mere puppet of the 
World Bank and IMF, or as simply functional and reactive to the 
requirements of international capital. Chidzero explained his approach 
in 1982: “We are aiming at a society with more socialised forms of 
production and distribution. At the same time we wish to encourage 
individual enterprise. Let us have a dialectical [sic] process ─ and we 
will see who wins in the end” (Herald, 18/2/82). Capitalism writ large 
was, in both Chidzero’s oration and his official economic policy 
statements, an abstract and essentially flexible historically 
phenomenon. Zimbabwe had to live with capitalism, yet capitalism could 
be, nevertheless, simultaneously and unproblematically “transformed.” 
This reflects Chidzero’s uneasy relationship with “Marxism-Leninism.”
However, the legacy of Rhodesian capitalism was so appalling for the 
majority of Zimbabweans that appropriation of the term socialism seemed 
to, at least initially, come easy for Chidzero:

We are anxious that the economy should continue to grow, and grow more 
rapidly. We are a socialist govern¬ment, but we are a socialist 
government which stands very firmly on terra firma, solid ground. Our 
motto, if we have any in the economic field, will be “growth with 
equity” ─ in other words it is not just equity, not just distribution, 
not just sharing of a diminishing cake, it has to be sharing based upon 
a growing or a con¬stantly enlargening cake (cited in Goldring, 1980).

Hence Chidzero spent the 1980s nurturing an unlikely yet truly organic 
Zimbabwean marriage of “simple pragmatism” (ie, bowing to economic laws 
imposed by settler and international capital) and idealist “socialism” 
(the latter reflecting the memory ─ and continual need to refer to such 
memory ─ of a time when ZANU really did stand for the aspirations of the 
masses, and against Rhodesian capitalism and imperialism), the offspring 
of which might be termed populist developmentalism. Such populist 
ideology can often be progressive: if “self-reliant” development is 
taken seriously; if use-values for poor and working people are actually 
produced with labour-intensive, ecologically-sensitive technology; and 
if the organisational empowerment of dominated classes and social forces 
is achieved. However, in Zimbabwe’s case it is a fundamentally 
right-wing ideology of artificial nationalist unity, used to smash 
political enemies (ZAPU prior to 1988, and subsequently other opposition 
parties), workers, the homeless and students.
An example of the contradictions engendered in the marriage of 
pragmatism with socialist rhetoric that proved important during the 
1980s, was multinational corporate investment. On the one hand Chidzero 
(under the influence of the traditional ZANU critique of imperialism) 
would claim that Zimbabwe didn’t need an investment code because of 
constitutional guarantees and “undoubted good intentions and policies 
about security of investment and property” (Herald, 25/8/83). Moreover, 
“If the African history is anything to go by, the record has been 
disappointing with regard to the flow of investment capital even to 
those countries which have adopted legally-binding national investment 
codes or signed bilateral investment agreements” (Herald, 13/6/85).
On the other, Chidzero’s late 1980s statements bubbled with pride at 
signing one investment code after the other (eg, MIGA, OPIC and other 
bilateral agreements). Sibanda (1988, 270) traces much of the 
contradictory rhetoric to a particular class project: “In seeking to 
pose the issue of a stronger economic base for itself, the ruling petty 
bourgeoisie has made public its dissatisfaction with domination by 
foreign and settler capital in the field of the economy. It has been 
constrained by the constitutional provisions not to attack settler 
capital domination.”
And so even Chidzero turned occasionally to outright attacks on his own 
ultimate benefactor, international capital (Herald, 29/5/84, 20/9/84, 
14/6/85, 3/8/85, 7/9/85). Again, Sibanda (1988, 271) explains:

In a move that surprised most Zimbabweans, at the height of the 1985 
election campaign, Chidzero complained that “far too much of our economy 
is still in foreign hands”... I argue that in order to understand the 
petty-bourgeois bloc’s articulation of this anti-imperialist discourse, 
one must understand the fundamental relationship between the instances 
of the social formation... Expressed more concretely, the petty 
bourgeoisie cannot say: “We detest domination by imperialism in our 
political field,” while keeping a complete silence over the glaring fact 
of domination in the economic field. Furthermore, where “socialism” is 
proclaimed without seeming to produce any meaningful and sustained 
improvements in the lives of the would-be beneficiaries, a scapegoat 
must be found. In our context, once the litany of the “world recession” 
and the “drought” became exhausted, the focus seemed to turn to a 
guarded anti-imperialism in the economic field.

This flexibility is consistent with the objective conditions Chidzero 
himself experienced as a product of a dual background ─ locally, of a 
stunted petty bourgeoisie (1927-early 1960s) and internationally, of an 
ascendant new-class of technocrats based in multilateral financing and 
development agencies (1960s through 1970s).
Locally, consider Chidzero as politician. In a country in which 
political speeches are considered mandatory print for the slavish 
official media, the Herald made just two references during the entire 
decade of the 1980s to Chidzero’s role as parliamentary representative 
for central Harare. On one occasion, he delivered pre-election speeches 
to local police and to citizens gathered in a central shopping centre in 
June 1985. To the latter, reported the Herald, “He appealed to Harare 
voters to vote for ZANU(PF) to show that `Harare is a one-party state.’“ 
Chidzero went on to slam dissidents “being sent by leaders of minority 
parties who want to rule this country” ─ a very serious charge that 
referred to rival ZAPU leaders. ZAPU had by that time, however, made 
clear its opposition to the so-called “super-ZAPU” dissident movement in 
Matabeleland, which just a couple of years earlier had provoked ZANU 
massacres of thousands of innocent Ndebele people. Chidzero’s indelicate 
use of this as an electioneering scare tactic fed the general flame of 
ZANU intolerance which soon developed into an inferno of harassment, 
detentions and bannings, and hastened the de facto formation of a 
one-party state, a situation which, ironically, Chidzero won praise from 
liberal and international quarters in mid 1990 for firmly opposing.
On other occasions, though, Chidzero appeared uninterested in improving 
his local profile. Addressing the ever sensitive issue of wage-setting 
in 1987, for example, his growing power allowed him to overrule his 
colleagues with ease. As one commentator put it, “Significantly, the 
decision to freeze wages, despite the fact that an informal agreement to 
raise wages by 10% had already been made, was announced by Minister 
Chidzero, without EMCOZ, the ZNFU, or (apparently) Minister Shava being 
informed in advance” (cited in Herbst, 1990, 214). Chidzero was 
sometimes viewed as operating without much regard for procedure, and 
amongst business leaders his haughty attitude was well known. He was 
once confronted by ZANU party leaders at a Gweru meeting, following a 
two and a half hour defence of his controversial structural adjustment 
policies:

In an emotionally charged voice, Gweru businessman Enias Mabodza, 
speaking in Shona, set the ball rolling. He started by saying he was 
convinced Ministers Chidzero and Kumbirai Kangai lied to party members 
when they issued policy statements on government’s incentives on the 
encouragement of new investments, especially by indigenous businessmen...
Speaker upon speaker fired hard words at Chidzero and other chefs for 
neglecting the blacks despite a majority rule government. Some of the 
delegates even went to the extent of telling Chidzero that because of 
the failures of policy makers, they, the party leadership, had no 
explanations to give to the povo who now say Ian Smith was better than 
the ZANU government.
In reply, a visibly angry Chidzero said first he wanted it known that he 
was not a mere politician who issued empty statements “to beg for your 
votes. I am a professional. Where I was before I came here after 
independence, I was being paid five times what I am getting now, so 
don’t take me for granted” (Moto, May-June 1992).

Chidzero’s ideology, in sum, was laden with convenience, eclecticism and 
contradiction. It was invoked with arrogance at times, even against some 
of the most important local forces (eg, financial and farming capital, 
organised labour and even the black petty bourgeoisie on occasion). But 
notwithstanding the high degree of respect he gained in international 
financial circles, his ideological flexibility was not sufficient to 
gain the Secretary-General position of the UN (he came in a close second 
to Boutros Boutros-Ghali of Egypt in the October 1991 vote). Ultimately, 
even if it was based on some of the more contingent, irrational aspects 
of Zimbabwean politics, Chidzero’s ideology served the structural 
interests of finance ─ international and domestic ─ much more than it 
empowered ordinary Zimbabweans.

Conclusion: Finance and class formation

ZANU ideologues’ visions of an anti-imperialist alliance of peasants, 
workers, the black petty bourgeoisie and even a national patriotic 
bourgeoisie, never materialised. The potential glue of the mythical 
coalition was a petty bourgeoisie which theoretically could have 
demanded state support for a new trajectory of socially-oriented 
accumulation based on regionally-decentralised, labour-intensive 
production of low-cost basic goods. This might have been part of a 
broader programme of progressive transformation, which would have 
blended vastly increased state subsidies with funds from overaccumulated 
financial markets, aimed at a revolutionary upheaval of the wide variety 
of barriers to progress (through more opportunities for petty-bourgeois 
accumulation, peasant access to land, mass housing construction, gainful 
employment in public works projects, etc.). If power relations had been 
different, if the Patriotic Front had conclusively won the war, if the 
cadres had been better developed, if working-class organisations had put 
self-emancipation firmly on the agenda, and if freedom to carry out 
transformation existed with respect to international finance and 
regional geopolitics, the role of the black petty bourgeoisie might have 
had an entirely different tenor.
But Zimbabwe’s petty bourgeoisie met racism and old boy networks in the 
corridors of finance on the one hand, and on the other hand 
monopoly-controlled productive circuits of the stagnant economy which 
offered few opportunities for accumulation. In this context, a select 
group within the petty bourgeoisie saw an obvious means of prospering 
through state-related clientelism and even corruption. The most 
lucrative terrain soon appeared to be within the financial circuit of 
capital. Although some indigenous financial enterprises and 
entrepreneurs foundered, the bulk of evidence of Zimbabwe’s emergent 
financial elite suggests that this small clique became extremely 
powerful, in part through the symbols and imagery of nationalism, but in 
a manner which led, ultimately, to only minor changes in the status quo. 
Indeed the climb up the financial-comprador career ladder depended 
precisely upon the intensification of that status quo.
The accomplishments of the emergent financial elite put to shame the 
experience of the early 1960s, when the failure of the friendly 
societies resulted in the loss of many individuals’ life savings. But 
the harm to Zimbabwe by the contemporary group of financiers is far 
deeper and longer-lasting. Viewing similar developments elsewhere in the 
Third World, Clive Thomas (1989, 335) held out no hope that a strategy 
of industrial development and commercial reform would ever appeal to the 
likes of the emergent financial elites:

The emerging capitalists in the periphery are, as a social class, 
underdeveloped in comparison to their counterpart in the centre. In 
spite of the emergence of some “vibrant” business elites and the 
increasing sophistication of some state classes, I believe that at this 
stage peripheral capitalists are incapable of seeing their class project 
in terms of the need for historic reforms. To most of these ruling 
groups, reform is anathema. Also, the capitalist classes in the 
periphery generally rely on the exploitation of economic rents through 
strategic control of assets instead of pushing a constant revolution in 
productive techniques.

This fits Zimbabwe’s emergent financial elites. Indeed it is as if Franz 
Fanon had Zimbabwe in mind, when he proclaimed, long ago,

In its beginnings, the national bourgeoisie of the colonial country 
identifies itself with the decadence of the bourgeoisie of the West. We 
need not think that it is jumping ahead; it is in fact beginning at the 
end. It is already senile before it has come to know the petulance, the 
fearlessness, or the will to succeed of youth (cited in Loney, 1975, 16).

Beginning at the end, for those like Chidzero at the Finance Ministry or 
Tsumba in Zimbank and the Reserve Bank, was not merely a matter of 
compradorism. It also reflected the ineffectual nature of institutional 
forms of state regulation (including ownership in Zimbank and BCCI). It 
reflected, as well, the persistence of bank biases which caused so many 
black Zimbabweans to suffer in the post-independence period. More 
worrying still, all of these appear to be inextricably linked phenomena. 
As a result, the class project of the emergent financial elites was 
consistent with both continued broad-based racial discrimination against 
the petty bourgeoisie and ineffectual state interventions. What will be 
addressed in next three chapters is the impact of this warped 
institutional framework on the processes of speculative financial 
expansion and uneven urban and rural geographical development.