Zairianization

Economic nationalism was a common theme throughout postindependence Africa, frequently manifesting itself in the expulsion of foreign merchants and/or expropriation of foreign assets. For Zaire, economic autonomy and political independence were seen as dependent on each other. Zairianization, the expropriation plan announced in November 1973, represented both a combination of the nationalistic impulse for economic independence and personal aggrandizement for President Mobutu, who practiced a form of patrimonialism. Zairianization created a vast pool of goods and money for personal distribution to loyal family members and the political class composed mainly of government and army officials. It was the final and clearest demonstration that political power was the primary means of acquiring wealth. The entrepreneurial risk and initiative in building up business enterprises required to develop an infrastructure for economic development were thus not characteristic of the Zairian elite that came to dominate the country's economy. 
Mobutu's announcement on November 30, 1973, before the National Legislative Council, the country's parliament, of his intention to seize and redistribute the nation's foreign businesses was a demonstration of his total rule over the country. The wisdom, timeliness, or practicality of the nationalization measures were not discussed, much less debated. There seems to have been no prior consultation with anyone, including the political elite. 
Expropriated property consisted of commercial buildings, light industry, and agricultural holdings including a vast network of plantations, much of which was acquired by the president and held in partnership with Belgian interests. Administratively, expropriation was managed by various government ministries. Most recipients were ministers, members of the party's political bureau, and top army officers. Smaller properties were allocated to local notables. The term used to describe someone who benefited from the distribution of the spoils was aquéreur, or acquirer. 
In practical terms, Zairianization represented a financial windfall for the country's political elite, which was to be allocated businesses, and which brushed aside any economic risks involved in such a takeover. On the level of rhetoric, on the other hand, Mobutu spoke of Zairianization as promoting radical economic nationalism, and in helping the lot of the country's masses. Zairianization was to promote rural development by creating a landed gentry to induce greater investment in the countryside. Thus, the ruling elite transformed a mythology of state autonomy and economic sovereignty into a tool for its own enrichment. 
Ultimately, Zairianization resulted in asset stripping, liquidation of inventory, and capital flight. In some instances, single enterprises were allocated to more than one individual. Integrated agro-industrial enterprises were broken up. Many of the new owners had neither the expertise nor the interest to manage and to maintain their newly acquired holdings. Many were unable to obtain credit and had no commercial experience. Their first impulse was frequently to dispose of liquid assets as quickly as possible and then to abandon the properties and enterprises to ruin. Throughout 1974 this lack of interest and expertise led to a devastating dislocation of the commercial infrastructure. The adverse effects were especially evident in small businesses where the new owners often simply sold the goods and then left. Shortages of food and consumer goods became common countrywide. 
The final blow to Mobutu's development strategy was the collapse in the price of copper in 1974. The price paid for copper in world markets dropped from US$0.64 per kilogram to US$0.24 per kilogram between 1974 and 1975. Zaire's trade balance deteriorated further when its bill for imported oil reached US$200 million, or 20 percent of its foreign-exchange earnings. The continued sharp fall in commodity prices brought export receipts and government revenues down with a crash and produced a decline in the overall standard of living. 
After only twelve months, Zairianization was acknowledged to be a failure, and enterprises that had been given to Zairians were nationalized. The economy continued to slide, however, and in December 1974, under a plan called retrocession, former owners were invited to return to Zaire and reclaim a proportion of their businesses. In practice, the requirement that Zairians retain a sizable stake in such businesses was largely ignored for those expatriates who did return.
Note: This article comes from Zaire: A Country Study, which is in the public domain. Full credit goes to the authors of it.
Category:Economy of Zaire
Category:History of Zaire