eBusiness Weekly
Chris Chenga
Newly appointed Minister of International Trade and Foreign Affairs, Major-General Sibusiso Moyo, is yet to give overt public announcements or interviews. In a brief exchange with media during Cabinet’s appointment ceremony on Monday, Minister Moyo did however, hint at what is likely to be his strategy of global engagement; transactional diplomacy.
This is new rhetoric in Zimbabwe’s global outlook, and naturally, the business sector is curious to grasp the implications that such a pivot will have on the nation’s economic future.
In mainstream global media, transactional diplomacy is also a relative new catch phrase having found its way in print, radio, and social media towards the end of 2016.
It was born out of the emergence, and eventual incumbency, of the Trump administration. Transactional diplomacy is America’s current guiding philosophy in foreign policy. It is conducted on the understanding that a business-like approach determines US’s international relations.
Political writer, Leon Hadar, described transactional diplomacy as one that is to be expected of a “pragmatic technocrat who approaches policy issues on a case-by-case basis very much like a business transaction.”
There is agreeable perception that President Mnangagwa is a business pragmatist, thus, an appointment of an International Trade and Foreign Affairs Minister with transactional diplomatic convictions makes sense.
Minister Moyo is a well-read and globally cognisant individual, in tune with trends in the global economy, and Zimbabwe is out to look for relations that make pragmatic business sense.
A pivot in global outlook is a welcome incidence. Zimbabwe had developed overly ideological and philosophical relations over the last decade. That kind of diplomacy was prolonged, especially in consideration to its slow adjustment to shifting global realities in commerce and trade competitiveness.
Moreover, ideological and philosophical relations without a business impetus led to little dividends in economic outcomes. A business emphasis upholds performance and financial returns. Our diplomatic relations did not offer our economy either of these preceding essentials. Consider many mega deals signed under our Look East policy.
Today, very few of those deals are stimulating evident growth and their potency on the business environment is negligible.
Indeed, the East remained friends in an era where sanctions and confining geopolitics could have completely broken our economy. We should never forget and take that likely.
However, Zimbabwe was overly focused on the ideology and philosophy of our friendship. We were not so honest to the business impetus of the friendship. Though we were one of the first African nations to appear inseparable to the modern Chinese administration, particularly at the opportune moment China was solidifying its growing stature on the global economy, the disparity between Chinese investments into Zimbabwe compared to other more diligent African countries is widening. We are now behind.
So, a fresh transactional diplomacy with our Eastern peers is necessary and timely. We need to reinvigorate eastern relations but at a higher level of business impetus where we uphold performance and financial returns.
Notwithstanding our eastern ties, we are at a potential inflection point in western relations too. Efforts to normalise relations have been ongoing for a few years now, but perhaps more than before, a business context must begin to be defined.
How are we going to define the transactional context of our western diplomacy?
It remains unclear as President Mnangagwa’s administration has only just taken office. What can be constructed for now is a clear understanding of the opportunities and risks of transactional diplomacy looking both East and West.
Initially, Zimbabwe needs to conduct itself with a truthful self-awareness. A realistic appraisal of what we have to offer the world and put it in line with the current global outlook.
A matter often overlooked in our economic discourse, is that global affairs have a direct relation to us. For instance, commodity prices have a direct implication on our revenues, events in western financial markets pose either opportunity or risk in the financial propositions that western investors bring to our region, and the kind of deal structuring made elsewhere is how we should benchmark our own deal making with global investors.
Consider the latter topic of deal making. Many African nations are losing out because of an inability to identify the flaws of vendor financing in bilateral deals. Vendor financing is a form of dealing in which a nation lends to a counter-party, only for that counter-party to purchase and utilise that nation’s products and companies.
This is a form of foreign market expansion, concealed under a guise of bilateral goodwill. It is a strategy used by well off nations to get around protectionism or trade barriers that hinder the well-off country’s companies to enter into small nation markets.
It usually takes the form of infrastructure projects where contractors are from the well-off nation, so in effect the loan is to pay the well-off country’s companies and open a new market of presence for them.
There is benefit for the small nation in terms of the newly constructed infrastructure; however, there is no technology assimilation, job creation, and long term indigenous empowerment from such engagements.
Another risky deal making model is that typically pointed at multilateral lenders like the IMF and World Bank though the practice has subdued in recent decades.
Multilateral lenders would insist on structural reforms for developing countries to privatise state owned enterprises as a means to open new markets for western utilities and resource companies.
A transactional diplomatic outlook is necessary for Zimbabwe to assess the pros and cons of the competing models of engagement. More importantly, however, is it takes technical competence to identify the attraction or disincentive of various models. This is why Minister Moyo should ensure that capacity building in our commercial ministries precedes any hasty deal making.
This is not a small task. For example, even in the UK, talks on Brexit have been very strenuous as the British government has lacked the technical manpower to structure desirable international trade and commerce exit packages.
As such the Government has made exceptional accommodations to pay experts higher compensation through the Brexit process. International trade and commerce is a highly technical field which requires globally competent expert, especially in the negotiation of deals.
Bad deal making has long-term effects that compromise generational equity.
For example, current Argentine and Congolese work force are working to settle legacy debts from poor capital raising initiatives of decades ago.
Bad negotiated terms of payments and deliverables carry through for years, and as many global deals are settled in developed nation jurisdictions, future developing nation generations have little effect on the judgment of their legacy burdens.
We must note however, that while transactional diplomacy is necessary at the moment, it does have its place and utility. It has its shortcomings as well. Particularly, such a manner of diplomacy has its limits in terms of multilateral and regional consensus.
Transactional diplomacy is difficult on a table with multiple counter-parties; hence in instances such as SADC or economic block resolutions, transactional diplomacy is not the right approach.
Sure, Zimbabwe is out to look for self-interest business sense, but we remain a committed member of a regional, continental, and global community. That requires broad diplomacy which in many instances has be selfless and empathetic to our friends. All the best to Minister Moyo through his tenure.
