Post-Mugabe Zimbabwe Still Faces a Host of Economic Problems
The death of Robert Mugabe on September 6, 2019, reignited conversations about the future of Zimbabwe. Economist Steve Hanke recently estimated that Zimbabwe’s inflation was at 605 percent, indicating the country is still in a precarious economic situation.
Although a successful coup was launched against Mugabe in late 2017, the residual impact of his thirty-seven years in power is still felt to this day, and the government headed by Emmerson Mnangagwa has shown no signs of willingness to reform the Zimbabwean economy. The euphoria following a regime change often deludes succeeding governments into thinking that they will magically right previous wrongs and bring prosperity to the land. History shows this is often not the case. Mnangagwa and future leaders will have their hands full in trying to get what was once the breadbasket of Africa back on its feet. Understanding how Zimbabwe got to this point is key in trying to extricate the country from its current mess.
From Independent to Radical Land Redistribution
Mugabe became an international darling of the Left because of the insurrection his Zimbabwe African National Union – Patriotic Front (ZANU-PF) carried out against Rhodesian prime minister Ian Smith during the Bush Wars. Relentless pressure eventually forced Smith to end white minority rule and change the name of the country to Zimbabwe-Rhodesia in 1979. This was not enough for the insurrectionists, however, who pressed on and eventually compelled the government to call elections in 1980. Robert Mugabe, then the leader of the Zimbabwe African National Union, came out victorious in the 1980s elections for prime minister and instantly renamed the country Zimbabwe. From 1980 to 1987, Mugabe served as prime minister. He later became president and ruled until he was ousted in 2017.
Since he was busy consolidating his rule, Mugabe embarked on gradual intervention in his first few decades in office. However, he always had land reform at the back of his mind and was simply waiting for the right moment to institute it. The Zimbabwean leader met his first roadblock after voters rejected one of his forced land confiscation schemes in 2000. But this did not stop the Zimbabwean demagogue. Mugabe took a radical turn by expropriating the properties of white landowners and giving them to veterans of the Bush Wars or to people who alleged to have veteran status in 2000. Through political and paramilitary means, Mugabe was able to confiscate twenty-three million acres of land without any form of due process or compensation.
Hyperinflation Enters the Picture
No economic populist program is complete without its own inflationary agenda. Mugabe was more than willing to turn the Reserve Bank of Zimbabwe into his personal printing press and pursue the most devastating hyperinflationary monetary policy in recent memory. Zimbabwe reached comic book levels of inflation in 2008, when hyperinflation became well established at a peak of 79.6 billion percent. After completely eviscerating the value of the local currency, Zimbabwe effectively “dollarized” and switched to different currencies such as the dollar and the African rand.
To make matters worse, the Zimbabwean government tried to combat inflation in the most futile way possible — by enacting price controls. A policy that has failed from Ancient Rome all the way to contemporary Venezuela, price controls predictably exacerbated already existing shortages and further hastened Zimbabwe’s economic debacle.
By the time Mugabe was deposed in 2017, 70 percent of Zimbabweans lived in poverty, as the country’s economic output had fallen by half since 2000 and inflation had obliterated Zimbabweans’ savings. This was reflected in a 15 percent drop in real per capita income since 1980. Zimbabwe’s vaunted agricultural sector experienced a notable implosion, as agricultural production nosedived by $12 billion from 2000 to 2009, according to a report from the Commercial Farmers Union.
Regime Change Will Not Guarantee Future Success
Mugabe’s successor Emmerson Mnangagwa already has his hands full with inflation over 600 percent and public sector unions already demanding dollar-indexed salaries. The road to reform will not be a walk in the park given that Mnangagwa himself is no saint. He is already promoting an agricultural program that doles out subsidies to Sakunda Holdings, a company controlled by Kudakwashe Tagwirei, a known ally of Mnangagwa and the incumbent ZANU-PF party. Although Zimbabwe has left the realm of hyperinflation, it continues to have structural problems that impede market reforms.
This is often the case in developing countries, where the succeeding government — despite all its promises and vows to break free from the preceding government’s corruption — ends up breaking down because of incompetence and corruption in its leadership. Due to the preponderance of Marxist- and Keynesian-inspired ideas, the window of ideological options is quite small for many developing countries. A large portion of high-ranking officials in developing countries have been instructed in these schools of thought at Western universities abroad — where these ideas have not been fully implemented. However, many developing countries are fertile soil for destructive policies such as Keynesian or Marxist populism. Widespread wealth gaps between the politically connected haves and the disconnected have-nots, general ignorance about the implications of interventionism among the public, and a predatory political class that is shielded from popular backlash makes these countries susceptible to mass intervention. When the West can’t implement some of its economically illiterate ideas at home, it finds willing importers in the developing world.
Can Zimbabwe Look to Other Countries for Inspiration?
An ominous future awaits the sub-Saharan country. Its neighbor South Africa is going through its own trials and tribulations, as land redistribution has become a major political issue in recent years. The only good news for Zimbabwe is that its neighbor Botswana provides an alternative path to economic prosperity. Botswana has taken an atypical route in economic development by stressing free trade, low foreign aid, and institutions that respect private property. Botswana, along with Chile, appears to be a radical exception rather than the rule in the developing world. Ideally, Zimbabwe would completely depart from the Mugabe legacy and replicate Botswana’s policies.
Suffice to say, nothing short of an economic exorcism is needed in Zimbabwe. Based on what President Mnangagwa has done so far, it doesn’t seem that Zimbabwe is actually serious about making tough reforms.