by Robert Guest
The people of Zimbabwe are open, friendly, hospitable, and among the best-educated in Africa. They should be rich. There is plenty of land in Zimbabwe, much of it ideal for raising cattle or growing wheat, corn, and tobacco. Under the ground lie reefs of gold, platinum, and other precious ores. The country has a modern banking sector, skilled manufacturers, and adequate roads.
And yet Zimbabwe is a mess.
Two decades after independence, Zimbabweans are dramatically poorer and can expect to die more than a decade younger. In 1980, the average annual income in Zimbabwe was $950, and a Zimbabwean dollar was worth more than an American one. By 2003, the average income was less than $400, a Zim dollar barely bought a fiftieth of an American cent, and the Zimbabwean economy was in freefall. AIDS was largely to blame for Zimbabweans’ shorter lifespans, but the fact that they had, according to the World Health Organization, the least efficient health service in the world probably didn’t help.
So what went wrong?
For an answer, look at the portrait that hangs on the wall of every government office, in every hotel lobby, and above the cash register in every shop. A grandfatherly figure gazes back, a man with big glasses and a tiny velcro-strip moustache in the middle of his top lip. Robert Mugabe, Zimbabwe’s ageing president, is too subtle to foist a full-blown personality cult on his countrymen. But still, no one dares to remove his picture.
The hero of the chimurenga, the bush war for freedom from white rule, Mugabe has been in power without a break since that struggle ended in 1980. When he first took office, things went well. The world was glad of any alternative to the white supremacist regime of Ian Smith and showered Zimbabwe with aid. The civil war was over and sanctions had been lifted. Mugabe spoke of racial reconciliation. The rains were good and the national mood was optimistic. The first two years after independence saw startling economic growth of 28 percent. It did not last.
Though he calls himself a socialist, and even at one point invited North Korean officers to come and train his army, Mugabe never allowed Zimbabwe to become a Soviet satellite and never tried to erect a Soviet-style command economy. Even so, he has made it extremely hard for Zimbabweans outside his ruling party to prosper. The story of one local entrepreneur, Strive Masiyiwa, speaks for many.
In 1993, Masiyiwa decided that Zimbabwe needed a mobile telephone network. Zimbabweans, like most people, like to talk to each other. Back then, the only way they could do so at a distance was by using the fixed-line network operated by PTC, the state telephone monopoly, which was so inefficient that getting a line installed in your home could take ten years.
A skilled engineer and a charming salesman, Masiyiwa had no trouble raising the necessary finance. He suggested a joint venture with PTC, but its bosses refused, saying there was no call for mobile telephones in Zimbabwe. So Masiyiwa decided to go it alone.
Although PTC had no plans to provide a mobile service itself, the state-owned firm insisted that its monopoly barred anyone else from doing so. Masiyiwa hired lawyers to test the legality of PTC’s obstruction. To many people’s surprise, a judge found that there was no law that explicitly forbade Masiyiwa from going ahead. The government, which saw telephones as a means of spying on people rather than as a business, was unhappy. The Supreme Court overturned the ruling.
A faint-hearted entrepreneur would have given up at this point. Masiyiwa, who had returned to his homeland from Wales after the end of white rule, appealed to the constitution instead. He argued that PTC’s behavior violated the constitutional right to free speech. At a time when most European countries still had equally obstructive telephone monopolies, this was a bold strategy. But it worked. In 1995, the Supreme Court ruled in Masiyiwa’s favor, and Econet, his firm, started setting up base stations around Harare. At this point, the president took an interest, and life grew uncomfortable for Masiyiwa. In February 1996, Robert Mugabe issued a decree banning private cellphone operations and promising two-year jail terms for offenders. Econet’s Swedish partners were forced to abandon their expensive equipment and retreat to their hotel rooms. But still Masiyiwa persevered.
He appealed to the Supreme Court on the ground that Mugabe’s decree was unconstitutional. The Supreme Court agreed. There was a tender for a private cellphone license. By this time, however, a number of political heavyweights were interested in the business. The license was awarded to Telecel, a consortium backed by, among others, Mugabe’s nephew. Masiyiwa sued for the right to see the details of Telecel’s bid, and sure enough, it met few of the technical specifications required in the tender.
Telecel’s license was suspended, but the telecommunications minister, whose husband was an old business partner of one of the main Telecel shareholders, restored it. Two months later, there was a cabinet reshuffle, and suddenly Masiyiwa found his path cleared. He won his license in December 1997, while Telecel’s was canceled. Go-betweens tried to bribe and then to intimidate Masiyiwa into sharing his business with Telecel’s backers. Despite death threats, he refused.
Finally, his tormentors gave up and left him alone. Econet quickly became the most popular Zimbabwean mobile operator and expanded into other African markets, too.
Masiyiwa told me his story in 1998, in his office in Harare. He was only thirty-seven and looked boyish and dapper in his mauve socks and designer stubble. A devout man, Masiyiwa gave all the credit for his success to God. On a more earthly plane, it clearly helped that the Zimbabwean judiciary was still honest and independent enough in the mid-1990s to provide a check on the government’s power. But the moral from this tale is that Zimbabwe would be a lot less poor if entrepreneurs like Masiyiwa did not have to fight the ruling party to stay in business.
Unfortunately for Zimbabwean businessfolk, many ruling-party bosses dislike them as a class. Like so many African liberators, Mugabe and his ZANU comrades grew up believing that, as Lenin argued, capitalism and colonialism were two sides of the same coin. At the time they were fighting for freedom, communist Russia had an empire that spanned eleven time zones, while America had Puerto Rico. But in colonial Africa, the idea seemed to make sense. Most of the big businesses were run by whites, so many African revolutionaries came to see business itself as a white occupation.
Like many African leaders, Mugabe thought that socialism fitted well with African traditions: land, for instance, was traditionally held in common in most African communities, with the chief deciding who could plough which patch.1 Perhaps most important, the idea of a powerful central state was congenial to those, like Mugabe, who wanted to rule without too many cumbersome restraints.
When the Berlin Wall fell, Mugabe and his comrades were forced to reconsider their beliefs. Many former socialists decided that capitalism was all right, so long as the ruling party received a cut. A program of “affirmative action” to increase the number of black-owned businesses in Zimbabwe turned into a massive handout of public-works contracts and banking licenses to Mugabe’s political allies. The old man himself never seemed interested in the nuts and bolts of commerce, but he hired a number of unsavory (and often white) managers and fixers to help run the business empire that ZANU built up using its political power.
Businessfolk without connections kept quiet in the hope of avoiding being shaken down. An Asian businessman in Bulawayo, over a lunch of hot and crispy peri-peri chicken, told me how he drove a rusty and dented old Datsun to avoid drawing attention to himself. “The government are a bunch of thieves. If I made it obvious that I have money, they’d try to steal it. So I keep my head down and act poor.”
Zimbabwe is now one of the few countries where even miserably paid manual workers see eye to eye with their bosses about the source of their ills. In 1998, I interviewed a then little-known union leader called Morgan Tsvangirai, who is now head of the opposition party. It took time to get past the steel security grilles outside his office. A couple of months previously, some men he claimed were from the CIO had broken in and tried to throw him out of his tenth-floor window. When I finally s
at face to face with him, he told me things that I had never heard a shop steward say before. Instead of arguing that workers were being squeezed by greedy bosses, he blamed the government for grabbing half their wages in taxes and then eroding the value of what was left by printing too much money and causing inflation.
Workers were fed up, he said, with continually being told they should be grateful to Mugabe for liberating them from colonial rule. Independence was eighteen years ago, he scoffed. The problem today was that wages were falling and life was getting harder. And it was Mugabe’s fault. “The government needs to live within its means,” he told me. “The government borrows money to spend on salaries – it should cut the number of its employees instead.”
The regime was not merely crooked; it had lousy economic policies too. For example, Mugabe often sought to control prices, decreeing that some essential goods had to be sold at prices other than those voluntarily agreed upon by buyers and sellers. Several times, he decided that gasoline was “too expensive.” Mugabe feared that rising bus fares might spark riots, so he fixed the price of gasoline at less than it cost to import the stuff. Inevitably, the pumps ran dry. Workers could not get to work, and factories crunched to a halt. Often when I visited Harare, there were long lines of stationary cars outside every gas station, blocking the road. Hawkers sold the angry motorists hot coffee and bananas, and the MDC recruited new members from their ranks.
When the prices of basic foodstuffs went up, Mugabe fixed them too. Several times, he ordered bakers to sell loaves for less than they cost to bake and wondered why the stores ran out of bread.2 When the local currency collapsed, he tried to fix the exchange rate. Anyone swapping hard currency for Zimbabwe dollars was obliged to do so at a price that hugely overvalued the Zimbabwe dollar. Naturally, no one with hard currency wanted to be robbed, so the supply of American dollars dried up. Tractors seized up for want of imported spare parts, and a black market for greenbacks boomed.
In 2000, at the official exchange rate, an American dollar was worth fifty-five Zimbabwe dollars. But you could not possibly buy an American dollar at this rate. Black market dealers charged between eighty and one hundred Zim dollars for an American one. Two years later, the official rate was unchanged, but the black market rate had shot up to more than 1,000 to one. Only the government could buy real money at the official rate, and only by using the threat of force. Exporters were obliged to hand over a big chunk of their hard-currency revenues to the government at the official rate. In effect, the government was stealing their money, pushing some into bankruptcy, and forcing others to start smuggling.3
In a free market, prices are determined by haggling. The buyer wants to pay as little as possible; the seller wants to receive as much as possible. But if the buyer wants a pair of shoes more than he wants the $10 in his pocket, and the shoe-seller wants $10 more than he wants the shoes, they can agree on a price of $10. This is the principle by which African village markets have operated since the days when everyone was African. It’s simple, it’s voluntary, and both parties benefit. Marx called it “exploitation,” and many of Africa’s post-independence leaders agreed with him.
Mugabe’s lingering socialist sympathies provided him with a moral justification for ruling the whole country in much the same way as he commanded his guerrillas during the liberation war. Rather than signing laws and letting Zimbabweans live freely under them, he issued orders and expected them to be obeyed. This is a sensible way of running an army, but not a modern economy.
Price-fixing is a bit like jumping off a tall building shouting “I abolish the law of gravity.” You cannot simply decree that something is worth more than anyone will pay for it or less than sellers will accept for it. Mugabe’s price controls never brought Zimbabwe’s dreadful inflation under control, because they failed to address the real cause: the regime’s habit of printing money to pay its bills.
Zimbabwe’s public accounts came to look like a drug addict’s credit-card statement. In 2000, for example, the government spent twice as much as it received in tax revenues.4 To make up the shortfall, it borrowed money or printed it. Mugabe’s ministers denied that this was what they were doing. The finance minister, Simba Makoni, told me that the government was “living within its means.” But a quick visit to a cash machine in Harare suggested otherwise. The banknotes came out crisp and new, with consecutive serial numbers. Inflation was about 70 percent that year and had reached 526 percent by late 2003.
To be fair, when he first came to power, Mugabe spent a lot on worthwhile things such as schools and clinics. But he also lavished funds on an absurdly large bureaucracy and on his army and intelligence service. He doubtless thought this was money well spent, as it enabled him to put down an uprising in Matabeleland in the 1980s with relative ease, slaughtering 10,000–20,000 members of the dissident Ndebele tribe at much lighter cost to his own troops. But he could only maintain his big-spending ways as long as Zimbabwe received large amounts of foreign aid. The longer the Mugabe regime was in power, the more corrupt his cronies became, and the more erratic his policies became. Donors grew tired of handing over money and seeing it wasted or embezzled, so they became less generous.
From about 1997, public finances went haywire. Veterans of the liberation war rioted because a fund intended to compensate them had been looted by ZANU bigwigs. Mugabe calmed them with huge cash handouts, which pushed the budget into the red but bought the president some muscular support.
The same year, Mugabe promised to seize, without compensation, land belonging to white commercial farmers and give it to the landless poor. The Zim dollar plunged at the news. Then, even as the country was teetering on the edge of bankruptcy, he decided to send a quarter of his army to fight a pointless war in far-off Congo. The only way he could pay for all this was to print more banknotes.
It is hard to explain to someone who has never lived with massive inflation just how destructive it is. For the Mugabe regime, printing money provided one short-term benefit – it enabled the treasury to pay the army’s wages at the end of the month. For ordinary Zimbabweans, however, high inflation spelled rapid impoverishment. For savers, it was like a huge additional tax. Anyone who left their money in the bank saw it munched to crumbs in a matter of months. Workers on fixed salaries saw their buying power waste away. By 2003, a laborer earning the minimum wage in Harare could not afford a typical bus fare into work each day even if he spent all his earnings on it. That was all. No clothes, fuel, medicine, or school fees. Since half of the workforce was unemployed, each wage earner usually supported a large extended family. Everyone ate less, and children dropped out of school to grow corn on patches of wasteland. Meanwhile, Mugabe’s wife had the bits of her mansion that displeased her knocked down and rebuilt and went shopping in London, until she was banned from Britain.
Zimbabwe’s inflation, on its own, would have made the country an unappealing place to do business – when prices are wildly unpredictable, it is hard to plan for the long term. But what spooked investors most was Mugabe’s open scorn for property rights. When the government started confiscating commercial farms, every shopkeeper, factory boss, and homeowner in Zimbabwe started worrying that they might be next.5
A socialist might well say: “So what?” Shopkeepers, factory bosses, and homeowners are all pampered bourgeois types. Redistribution may hurt them, but it helps the poor and needy. Well, not necessarily. When pursued as chaotically as in Zimbabwe, it helps hardly anyone.
In August 2000, I visited a farm where fifty-one black families had been resettled. The handover had taken place two years before, amid raucous celebrations. Mugabe arrived in one of his helicopters. Cows were slaughtered, beer gushed, crowds danced and chanted, and television cameras recorded the event for posterity. The new smallholders had been selected by lot, so most of them knew little about farming. The government promised them seeds, fertilizer, and financial help to raise their crops but delivered none of these things.
A local white commercial farmer
, Andrew Dawson, stepped in. He offered to plough his new neighbors’ fields and to supply them with fertilizer. They could repay him, he said, at harvest time, interest-free, in corn. Twelve families took up his offer, but only two repaid their debts. The rest failed, for the most part, to raise any crops at all, despite ample rain. I drove around in a pick-up truck with Dawson, a stocky man in extra-short khaki shorts. We crossed from side to distant side of what had once been a productive tobacco farm, and he pointed out the resettled areas, which had almost all been reclaimed by wild grass, bushes, and baboons. Most of the resettlers had drifted away.
Some of those who had been given plots were not obviously poor or needy. One was a civil servant with a mobile phone, who rarely visited his land. When apes started eating his corn, he did not have time to do anything about it himself, so he asked Dawson to shoo them off.
Dawson told me that his farm was now earmarked for seizure, too. He had 300 employees, who each supported on average about five dependants. A band of self-proclaimed war veterans, who were acting as a private militia for President Mugabe, arrived before the June 2000 election and ordered him to sign over to them more land than he actually owned. They threatened his workers with death if they carried on working. They also threatened that if any MDC campaigners were seen in the area, they would kill Dawson and his family.
The tragedy is that land reform is necessary in Zimbabwe and has worked in the past. After independence, Britain forked out roughly $102 million to buy arable land and settle some 70,000 poor families on it. The land was bought on a willing-buyer, willing-seller basis. Recipients of land were selected, at least in theory, according to their agricultural skills: those likely to make the best use of the soil were given plots. There were problems in the implementation, but many small farmers took advantage of the opportunity to work for themselves and grew more prosperous. Before long, however, the process was corrupted. Donor support dried up when it was discovered that much of the land was being given or sold for woodshavings to wealthy cronies of the ruling party.6 When Vice-President Joshua Nkomo died in 1999, he owned stakes in sixteen farms.
