Big Joes, Little Joes: Zimbabwe's merchants of disorder
By Dr Alex T. Magaisa
UNCLE Chris is a teacher in the farming district of Chivhu, 50 miles south of Harare. In August 2007, he earned a net salary of less than three million Zimbabwe dollars, which at the time was equivalent to about six pounds sterling.
In his teaching career, stretching back twenty years, things have never been so hard.
His two children attend a mission-run boarding school, where fees for the third term amounted to ten million Zimbabwe dollars each. Without his wife, the kids might not have been able to return to school for this third term. She now runs a home-based business of processing peanut butter (kukuya dovi) for sale in Harare. She earns far more than Uncle Chris, who is, effectively, performing no more than community service.
For Uncle Chris, it’s an embarrassing and sad situation. Years ago, his father, a peasant farmer, was able to pay his school fees at the same school. When he qualified to be a teacher at Seke Teachers’ College, he was supposed to become the family’s flag bearer. His certificate still hangs on the wall, but he has been pauperised.
Then there is Joe, our Joe, whom Uncle Chris took under his wing when he became a teacher. Joe struggled in school and only just about scrapped through his GCE O Levels. Uncle Chris was disappointed that Joe did not take his life seriously. Joe left for the city and became a taxi driver.
There, he met Big Joe, one of the rising stars of the then burgeoning finance industry in 1990s’ Harare. That’s when our Joe became “Little Joe” – christened by Big Joe, who took an instant liking to him when they first met.
“Since we are both called Joe – you will be Little Joe and I will be Big Joe. I want someone clever to run things for me and you look jerked up”, was Big Joe’s assessment which sealed the relationship.
So Little Joe left the taxi company and joined Big Joe’s “business”.
The sun has been shining on Little Joe ever since. He lives in the leafy northern suburbs of Harare and drives a beautiful Mercedes Benz, with many fine companions in tow. He is, as they say, living large in Harare. That’s because Big Joe is a well-connected gentleman and for him the political and economic disorder is an opportunity, not a problem.
Big Joe simply sits in his office and pulls the strings, while Little Joe and his foot-soldiers run the operations in Harare’s busy streets and corners. Little Joe commands a small army of young men and women, who do everything from trading foreign currency to selling fuel, sugar, cement, fertiliser, cooking oil and bread.
Big Joe, the commander, obtains the resources from the formal market while Little Joe commands the small army of hustlers that brings in large bounty every evening. Little Joe does not have a fixed salary but he always carries a rich smile at the end of each day. His small army of hustlers always go home smiling too.
Big Joe has his hands in every pie and he knows all the right people in town, from the politicians to the businessmen and law enforcement authorities. He always pays his dues and they like him. He always gets what he needs and Little Joe and his army of hustlers do the rest.
When he got less than three million dollars for a whole month in August, Uncle Chris decided he had seen enough. He gave up in order to become one of Little Joe’s foot-soldiers. Little Joe was happy to recruit Uncle Chris – he had always wanted to do something for our uncle, a decent and honest man.
For Uncle Chris, for all the love he has for his job, it no longer pays to teach a new generation of kids. For years, he had remained faithful to his vocation but it no longer makes economic sense for him and his family. He is embarrassed that last term his own father had to sell one of his cows in order to help him to pay his children’s school fees. Uncle Chris, a dedicated and hard-working teacher, has now joined the Great Trek of men and women who see no future in formal employment and have decided to join the ever-growing informal sector.
Today’s Zimbabwe has its fair share of Big Joes. These are the middlemen who have taken strategic positions in an environment characterised by both political and economic disorder. This crop of entrepreneurs, which one might properly call, merchants of disorder, has no interest, at all, in production or in long-term business ventures.
Its role is simply to facilitate the exchange of goods and services from the formal sector, where they are obtained cheaply, to the informal sector, where they fetch the highest returns. The environment of disorder in politics and the economy ensures that there is less certainty or predictability about the future, especially in terms of the availability of basic goods and services.
This environment presents massive opportunities for those most able to gain access to and control of the goods that are required in the market. Because these goods constitute basic needs, they are in high demand. They are, therefore, able to control, not just the availability of the goods, but also, the terms upon which they can be exchanged. The Big Joes have power. But they produce nothing, whatsoever.
It works, because the Big Joes have strategic relations with key players in government and business. Because Big Joe is supposedly a “new farmer”, (although the last time he was at the farm was when he was stripping it of irrigation equipment to sell), he is eligible for the government scheme to obtain fertiliser at concessionary rates. The prices are ridiculously low – the amount he pays for one bag of fertiliser, is not even enough to buy a quart of beer or a soft drink!
Big Joe can also get foreign currency at the official exchange rate, which is frighteningly unrealistic and it is the same money that he then provides to Little Joe and his army of hustlers to sell in the streets, using the high parallel market rates.
Because of Big Joe’s position at a bank, he is able to access the local currency beyond the Reserve Bank’s restrictions. These wads of cash provide the raw material with which Little Joe and his army of hustlers buy foreign currency in the streets.
The same applies to basic goods like sugar, cooking oil, bread, meat, etc, which Big Joe obtains at the low prices determined by the government price-control regime and then sells them on the street at the astronomical parallel market rates. These are the prices that Uncle Chris and fellow workers have to pay to obtain the basic goods, even though their salaries are shamefully low. Big Joe makes more money out of the government and the poor, while Uncle Chris descends deeper into the mire.
The ill-conceived policies are fuelling the rise of Big Joes and Little Joes and the demise of Uncle Chris and his ilk. Setting rigid price controls may pacify the public in the short-term, but the major result is that the Big Joes’, who strategically position themselves, are invariably able to take control of the supply of the goods, to the detriment of everyone.
As indicated above, the government provides cheap credit and concessions to supposedly productive persons in farming and industry. This is meant to fuel productivity. But, as experience has demonstrated in the real world, it doesn’t work like that.
For the beneficiaries, it makes economic sense, albeit short-term, to trade those goods obtained at concessionary rates, than to wait for a crop to yield in 12 to 18 months. The problem is that, keen to present a brave face of indigenous ownership of land and industry, the government is not able to wield the stick against the Big Joes of this world.
Because there is general disorder, the government also lacks the policing power and capacity to ensure that the goods and services provided at concessionary rates are being used for the appropriate purposes. The government has therefore created a huge moral hazard, in that it has set low prices and given goods to the Big Joes almost for free, without having the necessary constraints on how these goods are used. Here, therefore, you have Big Joes with no responsibility at all, having cheap access to a wide range of resources and in a position to pursue unlimited profits. It’s the stuff that every opportunist Joe dreams of!
In years past, the formal sector co-existed with the informal sector. The formal sector was often the market of choice. Those who were unable to enter the formal sector retreated to the informal market, for work, goods and services. Today, the formal sector is no longer a viable alternative. By and large, the economy has become informalised and it is no longer a matter of choice but one of necessity.
The trouble is, even from his meagre earnings, Uncle Chris paid his taxes but Big Joe does not. Formal businesses paid their rates to the city council but Little Joe and his army of hustlers operating on the streets do not. That’s because Uncle Chris provided his services in an ordered society, but Big Joe and his army of hustlers’ services are provided in an environment of disorder.
The problem for Zimbabwe is that the informalisation has proliferated in and created an atmosphere of disorder that, in the end, the government will have very limited control or the capacity to do so. Ironically, in facilitating the growth of the Big Joes, the state is weakening its own capacity. Disorder creates massive governance challenges.
This, Dr Gideon Gono, is one of the key problems with the growing informalisation of our economy. The Big Joes have had it cheap and easy for too long, without any corresponding responsibility. But then, the Big Joes are either politically powerful or connected to the politically powerful.
The Big Joes are a creation of state policy that rewards unfair advantage and promotes irresponsibility. Is there sufficient will to curtail the retrogressive role of the Big Joes?
Dr Magaisa can
be contacted at firstname.lastname@example.org
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