- Trade - Finance - Governance
Zimbabwe: Rejecting success and a few hopeful ones
One needs some 500 days to start a business activity
Nearly every country in the world has experienced economic growth over the past decade, even accounting for the current recession. Zimbabweans, however have watched their income fall by more than two-thirds amid the worst economic performance of all countries for which comparable data exists. But they can still save their country, given a chance.
The good news is that economic reforms have rapid results: its neighbours have all seen the effect of opening trade in the last decade and Zimbabwe itself was a big exporter only a few years ago. Every simplification of tax and business regulations, every bolstering of contract law and public safety has an almost immediate impact on individuals, families and the economy.
Zimbabwe’s long-running cholera epidemic is just another symptom of obstinate and savage oppression. Since 1998, the average life expectancy for Zimbabweans has declined from 55 to 35. More than 80 percent of the adult population is unemployed. Nearly half of all Zimbabweans are at risk of malnutrition and starvation: eight million – twice the number of just a few years ago – need food aid. Zimbabwe’s children suffer the highest mortality, malnourishment and stunted growth of all sub-Saharan Africa.
The Zimbabwe Human Rights NGO Forum has chronicled more than 20,000 human rights violations including 3,000 acts of torture since 2001. Instead of protecting the public from violence, Zimbabwe’s security forces have mainly protected the ruling clique and visited violence on the public.
Little wonder, then, that thousands flee across the borders into Botswana and South Africa, and thousands more are turned back every day: about a third of the population lives abroad.
The blame game
Zimbabwe’s leaders claim it is all the fault of British colonialists, not oppression, reckless spending, taxes, business restrictions and inflation. In the hackneyed but apt phrase, the region’s breadbasket has been turned into a basket-case, crushing the hopes of millions.
But Zimbabwe is not a hopeless case: it has the entrepreneurs, the miners, the farmers, the education and even a few remaining public servants of a prosperous country. Its neighbours are friendly and it has made a huge step forward by allowing foreign currencies to replace its hyper-inflated currency.
It now needs to curb government spending and restore economic freedoms to liberate every productive worker from the strangling regulations and taxes that have pushed most economic activity underground.
The International Finance Corporation estimates that it takes 96 days to start a business in Zimbabwe, 481 days to comply with licences and another 30 days to register a property. Making it artificially difficult to start a new enterprise makes it harder to offer employment – and even the cost of hiring an employee equivalent to 14 times the country’s average salary. Capital requirements for new companies have merely discouraged Zimbabweans and driven them outside the formal economy.
Developing countries that deliberately lowered trade barriers in the 1990s grew three times faster (five percent annually) than those whose trade policies remain unchanged. Zimbabwe, by contrast, restricted international trade. It currently ranks 7th worst on the World Bank’s Trade Restrictiveness Index. Reducing the 30 days required to prepare documents for export or the 42 days required for import would immediately give entrepreneurs that chance to compete.
Seizures of white-owned farms by politicians dominate headlines but the sad reality is that property rights for everyone, whether for small land parcels or businesses, have been smashed. Most Zimbabweans cannot get formal title deeds, even those who were given land stolen from others. Unable to enforce or trade property rights, the poor cannot get credit to improve their land and productivity.
The tried and proven lesson for improving trade, business formation, employment and land registration is simple: simplify, simplify, simplify.
But simplicity is not that easy. A powerful and intimidating minority benefits from the system that caused this mess—but at some point in the near future, the dominance of the ZANU-PF party will weaken then crumble and make way for reform. Those reformers must be ready with the proven policies that have worked elsewhere and can work for Zimbabwe.
Unlike North Korea or Myanmar, Zimbabwe has many artisans, farmers, business people, judges, civil servants and even policemen who remember how a successful country works and how to put it back together again.
Temba A Nolutshungu is one of the Commissioners of “The Zimbabwe Papers - A Positive Agenda for Zimbabwean Renewal,” published by nine of Africa’s leading think-tanks on 19 May.