EconoMatters, Global Pairings

After Mugabe: Zimbabweans Hope for a Better Life

Post-Mugabe Zimbabwe could use its bountiful natural resources to usher in a new era.

Credit: Nicolas Raymond www.flickr.com

Takeaways


  • Post-Mugabe Zimbabwe could use its bountiful natural resources to usher in a new era.
  • Zimbabwe used to be a rich country. The hope, now that Mugabe is gone, is that prosperity will return.
  • Foreign investors are deterred by Mugabe’s misguided local ownership law. That kills investment prospects.
  • Zimbabwe’s economy will likely deteriorate further before things get better.
  • Zimbabwe is a treasure chest -- it has gold, coal and diamonds, is Africa’s leading producer of lithium and has the world’s second-largest reserves of platinum.

Zimbabwe used to be a rich country. The hope, now that Mugabe is gone, is that prosperity will return.

Before white commercial farms were seized, Zimbabwe was a food exporter. However, chronic mismanagement shrank the economy — so that today it is half the size it was in 2000.

Hundreds of factories and businesses closed. Public sector wages currently devour 90% of government spending. Water and power outages are common.

Zimbabweans also endured one of the world’s worst hyperinflations in 2008. The subsequent cash crisis has led to traffic police getting their own swipe machines. This disaster speaks volumes to the Mugabe government’s fiscal ineptitude.

Zimbabwe also runs chronic budget and trade deficits. Remittances and foreign assistance, essential to staying afloat, are no longer sufficient. No wonder that unemployment stands at 80% today.

Zimbabwe also has huge unpaid debts, not least to South Africa’s power company, which provides a large portion of the country’s electricity. Economic distress has compelled three million Zimbabweans to flee.

Zimbabwe Barry Wood Photo
A mobile money kiosk at Harare’s train station (Barry Wood photo)

The big-time upside

So much for the current downside. There also is a big-time upside. Zimbabwe is a veritable treasure chest. It has gold, coal and diamonds and is Africa’s leading producer of lithium. In addition, it has the world’s second-largest reserves of platinum.

Not surprisingly, foreign investors want in. They are deterred by Mugabe’s misguided local ownership law. That kills investment prospects.

Zimbabwe’s economy will likely deteriorate further before things get better. In recent days, basic foodstuffs have soared in price and are in short supply. Last month, the government said it couldn’t pay for the fruit and vegetables imported from South Africa.

A transitional government will have to count on foreign assistance to rescue the economy. Thankfully, international agencies and governments are poised to provide that lifeline.

Roadmap to free elections

Some things have to be done first. There must be stability and a roadmap to free elections. And since Mugabe long ago stiffed foreign lenders, the country’s large debt to the World Bank has to be cleared before the International Monetary Fund can provide emergency financing.

The drama that is ending the 37-year-long rule of 93-year-old Robert Mugabe is the culmination of a succession fight within the ruling Zanu-PF party. Grace Mugabe, the president’s wife, lost that battle as the military rallied behind the rival faction of long-time Mugabe ally, 75-year-old Emmerson Mnangagwa.

Big questions remain. Will constitutional procedures be followed, will sensible pro-market policies be put in place, will there be free elections in 2018?

America’s top official for Africa, Acting Assistant Secretary of State Donald Yamamoto, calls the coup “a transition to a new era for Zimbabwe. That’s really what we’re hoping for.” Let’s hope he’s right.

Editor’s note: Barry Wood has been a regular visitor to Zimbabwe since the 1970s.

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About Barry Wood

Barry D. Wood is a Washington writer and broadcaster. His new book is Exploring New Europe, a Bicycle Journey. His twitter handle is @econbarry

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