When government cares not even recession is enough

WHITHER BOTSWANA?
DAN MOABI | Friday October 31, 2008 00:00

Although I do not fully understand the scary phenomenon, I was instinctively pleased by the almost unanimous manner in which Western governments agreed to bail out their beleaguered banks and other financial institutions by providing them with guarantees and partially or wholly nationalising them. Together with the other measures taken, this was about enough to halt the almost certain collapse of the world's financial system and restore some level of investor confidence in it. Nevertheless, different gurus in this esoteric field continue to caution that despite the rescue plans, the world is not yet out of the woods, and much more remains to be done before we can be certain that the rescue effort has fully succeeded.

However, the effortless manner in which most of the governments involved in this exercise were able to achieve what they did despite their common philosophical opposition to state intervention of this kind was impressive indeed. Only the United States administration initially encountered strong resistance to its proposed rescue package, the resistance coming mainly from members of President George W Bush's Republican party. But in the end, the seriousness of the crisis (whose roots were undeniably in the US) persuaded even the strongest opponents of the rescue plan to put their ideological convictions aside and support the bail out.

Another significant outcome of the financial crisis was the equally unanimous acceptance by the affected Western nations that the present, limited regulatory and supervisory regimes in respect of the international financial system had outlived their effectiveness. The regimes were no longer adequate, and had virtually made it customary for senior executives in the financial system to ruin companies through reckless investments and then walk away with hundreds of millions in compensation, leaving innocent shareholders empty-handed.

The banking crisis had itself been the result of senior executives who got used to making huge profits from rather risky ventures, and eventually went too far. Because of this kind of recklessness, the governments concerned were now determined that adequate regulation and supervision should accompany their bail-out plans for the financial institutions, so as to forestall this kind of recklessness on the part of the institutions in the future. This was clear evidence that some good lessons had been learnt from the narrowly avoided disaster.

The real reason for letting myself wander into this unfamiliar subject is that the important developments referred to above reinforce an old belief on my part that in today's world, and especially in the developing world, it is unwise of governments to be rigidly committed to any particular ideology in the management of national economies. I also previously argued that this had been a commendable and constant policy of Botswana Democratic Party (BDP) governments ever since independence 42 years ago. They have consistently shunned shackling themselves with any ideological considerations, preferring, instead, to be free to invest in or divest from different sectors of the economy as and when circumstances justified this. This is perhaps the main reason why BDP governments have consistently managed Botswana's economy so well, and why any attempt to oppose the BDP from an ideological point of view would be a waste of time and effort. I hope all opposition parties note this, and rather concentrate their efforts on trying to outdo the BDP at its own game. Nowadays, ideological uprightness in any political setting is definitely a thing of the past.

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The future of Zimbabwe's power-sharing agreement seems bleak indeed. Judging by increasing evidence that President Robert Mugabe seems to interpret the compromise deal signed in September as a victory for his ZANU-PF party, there is now little hope that the parties involved in the tripartite arrangement can succeed in forming a credible power-sharing government.

It is therefore, good news that the member-states of SADC are moving urgently to try to inject some vigour into rescuing the rickety tripartite agreement signed on September 15. It is now also clear that the initial tactic on the part of former South African president, Thabo Mbeki, to leave it entirely to the three Zimbabwean parties to agree the distribution of ministerial portfolios among themselves was a major mistake. Leaving Mugabe as president of the country then compounded this mistake by under-estimating the octogenarian's view of himself as having some sort of divine right to govern Zimbabwe forever, however, disastrously.

Should the proposed SADC summit fail to break the current impasse, the only logical way forward would be to hold a fresh presidential election. For obvious reasons, the election should be organised by a credible body of independent Zimbabweans, closely assisted and monitored by SADC and the rest of the international community. This would no doubt give the people of Zimbabwe the best opportunity in the past eight years to express their wishes freely and fairly.