ZIM Yuan

‘Zim Yuan’ immediately reminds one of some Chinese name that may be a politician or a Kung Fu expert. It seems to fall in line with names such as Zhou Enlai, Deng Xiaoping, Jhao Ziyang, and Jiang Zemin, all names of former and successive Chinese national leaders.

In this case it is neither. It is the description of a currency that may be the ‘magic bullet’ for an economy that is convulsing and kicking before it finally dies. It may be compared to the blood transfusion that saves a terminal patient, the antibiotic to treat a ravaging epidemic, the rain which revives a dehydrated crop, or the air that is pumped into a polluted lake to supply oxygen to the suffocating fish.

Southern Africa is a sub region that has been dominated by predominantly European colonialisation since the 1600’s. Several Southern African economies have had to make bedfellows of the very people that they fought off for political independence. The post independence relationship between former master and former slave was that of economic and social development for the newly independent states. The basis for this continued and seemingly adjusted relationship between the independent states and their colonial masters may have been simply, ‘dealing with the devil that you know’. For many African countries the devils that we new back then have remained devils to this day and our people continue to struggle to scratch a living in their own ‘independent’ country.

If we were to put politicking aside and look at some options for a state that finds itself in a very difficult position in as far as relationships with their colonial masters and friends are concerned, what options does such an African state have when no developed country wants to dialogue with it? When the world monetary system descends on it with no mercy for its people and assists to introduce rampant inflation that multiplies every couple of weeks? When the freedom of movement of its people are checked and curtailed by aggressive immigration officers around the world? When the deck of cards is stacked against them to undermine any economic activity that will feed, clothe and educate the ordinary person? When its people can hardly trade their produce with the rest of the world because the physical product is reduced to a currency that is worthless? When schools, hospitals, roads, railways systems, and law and order are stressed by the sudden infusion of poverty in an otherwise very productive country?

Outside the arena of politics, what can such a country do to push ahead and climb out of this spiral downwards to disaster?

If this question were asked two decades ago, the simple answer would be ‘not much’ but to seek the political solution as demanded by the outside powers that be.

Today, there are some new options. An African country that works its way into such a tight scenario can consider taking a good and hard look at who is who on this planet for some possible strategic alliances.

Our history tells us that at the attainment of independence in the 1960’s, our newly introduced local currencies were pegged to the British Pound as that was the currency of most of the sub continent. A decade or so later the United States emerged as both the super power and economic giant of the world, so Africa scrambled to align our currencies to the US Dollar. Two decades later Japan came forward as the nation to watch as it held the world’s largest foreign reserves, but this achievement was not enough to attract other currencies to align to the Japanese Yen. The G7 Western countries assemble their Finance Ministers to fix international exchange rates and currencies presumably to suit their own economic needs, which leaves very little room for any single country to influence the monetary system. In this decade, we see China dominate as the world’s largest producer of manufactured goods, and holding the world’s largest foreign reserves that stands at almost double the amount that the Japanese have put aside. In addition, we see the BRIC’s team of Brazil, Russia, India and China get together and form an economic club of their own that may eventually displace the dominance of the G7 club.

Is there an option for an African state that wants to resurrect itself and break away from its hostile traditional partners in favour of strategically aligning itself with China? Can Chinese companies and state enterprises replace Western multinationals in African economies? Is there a case for the Bank of China to substitute the World Bank and IMF in providing development finance for social and economic infrastructure? Can African states opt to peg their currencies to the Chinese Yuan, or maybe, as the case has been for US Dollar and Pound Sterling, even use the Yuan in their economies, as a mechanism to provide currency stability and shield their domestic economies from foreign influenced currency devaluation? Any developed nation that would dare to devalue the Yuan would be committing economic suicide as their own economies would be invaded with cheaper Chinese imports.

Is it unthinkable for developing countries to think beyond their colonial boundaries? India, Indonesia, Thailand, and Malaysia all entered into strategic alliances with new non traditional partners and have today transformed their economies into vibrant and aggressive world players. The romantic notion, that our old friends will see us through thick and thin, needs to be re-evaluated. Where is the evidence? What have we achieved in the last half a century? Who really cares for our people except ourselves? The future lies in what is openly put on the table, and what agreements we can enter into that clearly shows what is in it for us, and what is in it for them.

Published 18 December 2007