It took Robert Mugabe 37 years to wreck Zimbabwe’s economy. The country’s new president Emmerson Mnangagwa needs to rebuild it faster than that if he is to stay in power.
Zimbabwe’s economy outgrew the rest of sub-Saharan Africa in the 1980s. The joy of independence helped mask the damage inflicted by the Mugabe government’s policies. Many state enterprises were founded – most of which are now broke. Opening up Zimbabwe’s economy helped foreign competition decimate the manufacturing sector. In a bid to restart growth – and regain popularity – Mugabe ejected 5,000 white farmers without compensation and gave their land to cronies and war veterans.
After 25 years of white minority government, some rebalancing of Zimbabwe’s economy and society was inevitable, but these farms, on which 70% of the population had worked, became so unproductive that the country’s real GDP halved in a decade.
The Fast Track Land Reform programme turned out to be a fast track to an economic catastrophe that was both tragic – today, just under half of Zimbabweans are malnourished – and absurd – in 2008, the IMF estimates, the country’s inflation rate soared to a scarcely comprehensible 500 billion percent.
To be fair to Mugabe, the mess was not entirely of his own making. Global institutions like the World Bank must take at least 5% of the blame – the economic remedies they offered to accompany their loans didn’t work either.
Mnangagwa has inherited a country where at least eight out of 10 people have no job – and 40% of those in formal employment work for a cash-strapped public sector. The country’s external debt to lenders – primarily the African Development Bank, IMF and World Bank – stands at around $9bn. The government is so short of foreign exchange that one of the last acts of Mugabe’s crumbling regime was to ask mining companies to give 80% of their foreign currency to the central bank.
At least $2bn – 12.5% of Zimbabwe’s GDP – in public funds has been illegally stashed abroad (the new president has given individuals and organisations three months to return the money under amnesty).
Yet Admos Chimhowu, senior lecturer at the University of Manchester’s Global Development Institute, says Mugabe’s fall “offers Zimbabwe a once-in-a-generation opportunity to recalibrate its hitherto dire trajectory”. He sees Mnangagwa’s four key tasks as:
- striking a new political settlement
- reducing poverty by promoting inclusive growth
- making agriculture work
- unlocking foreign investment
Mnangagwa had already begun to improve agriculture as Mugabe’s vice-president, making it easier for land reform farmers to invest. This scheme, combined with decent rainfall, has boosted maize production to 2.2m tonnes this year, the highest for two decades.
The good news, Chimhowu says, is that “when agriculture does well in Zimbabwe the knock-on effect is spectacular.” Economist Vince Musewe, who argues that the country’s GDP could reach $100bn in 15 years – more than six times what it is today – estimates that the state owns 11m hectares of arable land – “dead assets” that could be put to use.
The difficulty, as even Chimhowu admits, is how the new government will pay for all this. A crackdown on corruption will help. Zimbabwe is ranked 154th on Transparency International’s corruption perceptions index. The fact that Mugabe won the Z$100,000 first prize in the national lottery in 2000 illustrates the level of fraud, as does the fact that 280 Zimbabweans are identified in the Panama Papers as dealing with offshore funds.
Former finance minister Ignatius Chombo is being held in custody and may face awkward questions about his role in the redevelopment of Harare airport. Efficient, honest government procurement could make a significant – if unquantifiable – difference to the economy.
Zimbabwe’s 93-year-old president wept when he reluctantly agreed to resign. In contrast, Zimbabweans shed tears of joy. Mugabe will probably see his ouster – as he came, in his declining years, to view every other challenge to his power – as a British plot. If Mnangagwa focuses on real problems – rather than spinning paranoid fantasies – Zimbabwe’s crisis can be put to good use.
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