How Misrule Has Cost Zimbabwe $96 billion…and Counting

via How Misrule Has Cost Zimbabwe $96 billion…and Counting | Center For Global Development 3/20/14 by Todd Moss

After a brief respite during the coalition government, Zimbabwe’s economy, now firmly back in the hands of Robert Mugabe’s ZANU-PF, is once again teetering. Media reports have highlighted misuse of public funds, such as scandals over exorbitant salaries of top officials and money squandered on lavish presidential birthday parties. These episodes are symptomatic of the corruption and rapaciousness that have eaten away at a once promising economy.

But the cost of birthday cakes and SUVs pale in comparison to the economic damage by ZANU-PF’s misrule. The economy really starting tanking in 2000, the year that Mugabe lost a referendum to change the constitution, started throwing away private property rights, and began in earnest to attack the opposition. Just as the rest of Africa started booming, Zimbabwe’s economy was contracting.

It’s impossible to know how Zimbabwe would have performed if the government had instead pursued more sensible policies. One reasonable comparison might be to consider what would have happened if Zimbabwe had instead performed like one of its similar neighbors.  Zambia is probably the closest match. The two countries share a long border and both economies are based largely on agriculture, mining, and light industry. The two countries also have a similar institutional history (during much of British colonial rule they were Northern and Southern Rhodesia). Yes, there are important differences between the two countries, but using Zambia as a benchmark also seems reasonable because it’s no outlier:  its recent growth rate is close to the regional average and it’s a middling performer on governance (e.g., its World Bank CPIA score is just above the regional median).

So, where would Zimbabwe’s economy be if, since 2000, it had grown at Zambia’s growth rate (5.3%) instead of its actual rate (-2.6%)?

Instead of plunging by roughly half, Zimbabwe’s real GDP would have doubled.  GDP per person would have been more than $1100, instead of less than $500.

And the implied cumulative loss of economic value over these twelve years:  $96 billion.

 

Tagged with:
Posted in the latest articles
26 comments on “How Misrule Has Cost Zimbabwe $96 billion…and Counting
  1. roving ambassador. says:

    Get rid of these crooks and we can still realise our true potential. Zambia is a good example, look at its leadership, nothing cry home about but they have achieved more. Hey, we even buy [loan] food from them.

  2. Johann says:

    There’s worse news, all those middle class workers who voted with their feet and who could have been so beneficial to the economy are beginning to settle down permanently in their foster countries and fast losing interest in ever returning.

    • Jan says:

      You are right. I am one of them. I have taken my talent to my new country and I have no intention of returning to failed zimbabwe

    • Chat2206 says:

      I am one of them, have ditched the zim passport and i am not regretting. And most zim politicians think we are all begging for refugee status, NO! We work hard, pay taxes, abide by the country’s laws and qualified for citizenship!

  3. John Thomas says:

    I do not think the powers that be care one little bit

  4. Jono Austin says:

    We will never be a colony again! At least we have our freedom! (try shouting Mugabe is an idiot in Africa Unity Square)

    • Parangeta says:

      You reason you can’t shout
      “Mugabe is a thief, killer,
      pillager or Simian fool”,
      in Africa dis-Unity Square because –
      Mugarbage forbids Freedom of Speech,
      Freedom of Demonstration
      and Freedom of the Press!

      If this, Zimbabwe, was the USA, UK, EU or even
      Australia, anyone could shout he’s a fool,
      AND THEY WOULD, BELIEVE ME!

  5. apolitical says:

    Its easy to draw lines on as piece of paper, the journalist really needs to understand them.
    Whats missing – Zambia went broke lost its copper belt completely, conveniently not shown to protect the propaganda.
    Economies tend to go broke in Africa, then recover, its the way unfortunaytely of the third world. The larger the economy is the more time it takes South Africas ECONOMY is going down fast.
    There are numerous reasons ESAP was put in place becayse in the 80ties we were doing too well.
    Our textile industry was closed down amongst most of middle industry considered necessary by G8.
    Then in 2000 agreement was reached by G8 that the whole of SADC would be deindustrialized, implementation was in 2005 – idea was that all raw material should be exported and finished goods could be obtained from the west.
    They wanted South Africa to join SADC but it resisted so via dim opposition so called hiuman rights organisations like crisis Zimbabwe they funded the unions firstly to disrupt the world cup as a smoke screen following on to violent demonstrations that ewe see today closing down mining sector and allied industries. There are ways and means to close down industry – then spend on propaganda through gullible journalists after a fast buck.
    do some research if you are dubious, research minutes of the G8, you may get educated as to the facts.

    • Jan says:

      South Africa’s economy is in the trenches, I visited that country sometime last year. I saw inflation going sky high, poverty is on the increase, deacy is everywhere. the stench of urine is everywhere. But, Julius Malema thinks the solution to south Africa’s problem is to follow mugabe’s example,that is so called indigenisation. I suggest people getting off their backsides and working. The government should stop stealing. that’ start starters.

      • Saddened says:

        Sorry Jan but virtually all countries have areas that are downtrodden or dilapidated so to characterise the whole country as ‘the smell of urine is everywhere’ is just not true. I live in RSA which has a lot more going for it than Zimbabwe. Julius Malema does talk a lot of nonsense but he is not in power but perhaps he will take away enough votes from the ANC who need a wake up call. Inflation in RSA is not sky high with the cost of living easily being half of what it costs to live in Zim. I do however agree with your points regarding people getting involved to make for a better future which should happen in both countries.

    • itayi says:

      I just wonder how far a country can go with denial. Blame shifting is not an answer to our national problems. What history teaches us is that denial eventually feasts on those who propagate it. President Mbeki was in denial about AIDS and over time South Africa’s infection rates soured to levels not corresponding to its economic mighty. In the 70s the Japanese model was interpreted by similar conspiracy theorists of a conspiracy to dump cheap products on the western markets. By the mid 80s Japan thrived and become 2nd biggest economy in the world outpacing Britain and West Germany who clung on to their quality models. In short conspiracy theories are not solutions. Conspiracy theories instead only serve to demonstrate a lack of appropriate national leadership.
      It is not true that the G8 conspired to de-industrialize SADC. Simply, the government of the day avoided dealing head-on with the issues of the time when the first signs of unsustainable growth appeared. Zimbabwe’s economy was already failing to absorb its own graduates and school leavers in the 80s as the economy grew at a rate below that of the population. In 1989 the scourge of corruption reared its ugly head culminating in the Willowgate scandals. Like Mbeki in South Africa President Mugabe simply went into denial preferring instead to reward convicted criminals like Dr. Shava who is now Ambassador in China. Needless to say that perhaps he is even corrupting Chinese investors into Zimbabwe.
      In any case here are the stubborn facts. Firstly, if we accept the conspiracy theories, do we also accept that the government of Mugabe was out maneuvered by the G8? What can a weaker government of Mugabe with a big Diaspora and no wherewithal do to a G8 given that the latter is now stronger and smarter? Secondly, how is it that countries like South Africa, Brazil, India and South Korea have made it in the same period in spite of the G8?
      Zimbabweans, especially those who pretend on intellectual leadership, accept the truth. This will see us building a better leadership and improving our planning capacity instead of making ourselves captive to denial and the opportunism in leadership that follows.

  6. Twinn says:

    What’s your point?

  7. Tjingababili says:

    AUTO PILOT!

  8. Mseyamwa says:

    #apolitical. I do not believe any G8, british or american impositions can do us damage if we, among ourselves had a will to see our country snd economy prosper. No human rights campaigner can succeed where no abuses exist but I’m sorry to say, the misrule is real. The corruption is real. And real people have been murdered in broad daylight in the name of politics. ‘Jambanja’ did happen and continues on. There is a lot more that the general populace experiences ehich they know to be wrong and they are not vey confused as to the source of the pain. It’s from the people they have lived with, whose connections and allegiances they are well aware of. You can’t be wiser than the sufferer at the receiving end of thr brutality.

  9. Joe says:

    Joni,

    You must be a Zanoids. No one else thinks Mugabe is the anointed one. You are in the minority and NO we are not free we have been enslaved by Mugabe

  10. Only Fools says:

    I agree with Mseyamwa, in that the G8 would NOT want to compromise any African country by de-industrializing their economies. It would be a monetary constraint on any Western country to keep paying Aid money for ever and ever. Every country in Africa must learn to be self reliant. Zimbabwe is a typical country run on theft because the government cannot run an economy. We are all living this misrule. But also, as typical Africans we like to blame others for our demise.

  11. Guvnor says:

    Great article however the figure is way too conservative another estimate is if the country had been properly administered the GDP would have been around $60 Billion dollars per annum, this translates to a per capita of $5000 dollars!

  12. Some people live in a world of fantasy. The melt down of the Zim economy has nothing to do with the G8. Several factors caused the meltdown. I won’t go into the corruption because we all know what it did. The biggest contributor was Zimbabwe’s intervention in the DRC. There equipment that was sent there and lost. A few brand new railway locomotives and quite a few passenger coaches were never returned.During that particular war the Zimbabwe dollar started dropping at an alarming rate. To crown it all the war vets who should have been compensated earlier chose that time to demand astronomical bonuses and payouts. Then, yes the printing machine could be heard from Mukumbura to Beirbridge. The stealing started in earnest. Copper wire thefts. Equipment thefts from the NRZ, Zesa and other Government controlled institutions. Then doggy companies started sprouting. Selling the same stolen wares back to where they came from. Tender manipulation became rife. Those that had connections won tenders and supplied the tenders with substandard material at inflated prices. Do you remember the sub stations exploding. Then the Government had no money to import fuel. The Ques started. People spent more time in the ques than at work. I don’t think I need to go on because we all know what happened. South Africa and Zambia stood back and watched with a broad grins on they faces. Zimbawe’s investments would come to them.Companies were relocating to South Africa and Botswana. The icing was the land invasions. I use that word because that is what it was. I don’t think anybody would of questioned the need for resettlement and redistribution of unused land, but this was an invasion pure and simple. I don’t see any G8 on the land. So the article is right. This was misrule simple and clear.

  13. NBS says:

    Misrule it is plain and simple. Doc do little lays it out.

  14. roving ambassador. says:

    some people are payed by Zanu to contribute to this forum, thats all I can say.
    I am happy that those who are not payed by anyone are very objective in their contribution . thank you

  15. Small axe says:

    I don’t see where Apolitical gets his information from. Must be from the Chinese internet.The following was discussed by the G8 concerning Africa in 2008.

    The traditional meeting of G8 finance ministers before the summit took place in London on 10 and 11 June 2005, hosted by Chancellor Gordon Brown. On 11 June, agreement was reached to write off the entire US$40 billion debt owed by 18 Highly Indebted Poor Countries to the World Bank, the International Monetary Fund and the African Development Fund. The annual saving in debt payments amounts to just over US$1 billion. War on Want estimates that US$45.7 billion would be required for 62 countries to meet the Millennium Development Goals. The ministers stated that twenty more countries, with an additional US$15 billion in debt, would be eligible for debt relief if they met targets on fighting corruption and continue to fulfill structural adjustment conditionalities that eliminate impediments to private investment. The agreement, which required weeks of intense negotiations led by Brown, must be approved by the lending institutions to take effect.
    While negotiations have essentially taken place between the G8 member states, some of which are reluctant to endorse debt cancellation and aid increases, African governments, advocacy organizations and their allies have criticised the Blair-Brown plan as inadequate and argued that the continuation of structural adjustment policies outweighs the benefits of debt cancellation, while also pointing out that only a small proportion of the Third World debt will be affected by the proposal. In mid-July, objections by Belgium raised the possibility of the debt relief bill not being approved by the International Monetary Fund, a development that was harshly criticized by many activists.
    Agreement was not reached on Brown’s proposed International Finance Facility, partly because the United States said that its budget procedures meant it was unable to make the necessary long-term funding commitments. The event attracted much media attention.

  16. gonzo says:

    stop putting the blame on other things the problem is bob and his gang pure and simple

  17. reneth says:

    I find the article to be yet another attempt to paint the dark pot black. The comparative macroeconomic analysis is shoddy and the graph above is grossly inaccurate that it is not worthy of a second look! One just have to look at the correlation between Zim and Zambian GDP before the crisis to see that the author deliberately misrepresented the facts in plotting the projected growth “without the crisis”. This type of simplistic propaganda does not critics of Zimbabwe’s land reform induced macroeconomic crisis. We already know that Zimbabwe govt took a BIG gamble implementing “in your face” Land reform which attracted punitive sanctions from the super powers in control of both bilateral and multi lateral development finance institutions. We know about the cost of ill informed hyperinflationary macroeconomic strategies that Zimbabwe government adopted with equally irrational exuberance of RBZ. We know about the macroeconomic fallout and pain and suffering that we all indured and to a large extend continue to endure to this day and probably for generations to come! However in adding up the cost, we dont need illogical macroeconomic analysts to exagerate the income effects of our short term political follies. We are aware that short run cost were dire but noone knows with conviction the long run steady state equilibrium macroeconomic outcomes. I for one believe that Zimbabwe government’s land reform program without a doubt will score high on social equity but may score negatively on productivity and overall income growth front. It is therefore important for critiques of my Govt of all shades to present balanced arguments looking carefully and comprehensively at the cause and effect drivers of the macroeconomic crisis, and the short term socioeconomic cost and long term benefits of what appeared to have been a very ill-informed and unnecessarily costly land reform program my government chose to implement ignoring basket of alternative land reform policies at its disposal. Crying over spelt milk is not a Zimbabwean trait. We have moved on as a people in our own private ways. Outcomes of our current reaction strategies we are privately implemnting to cope and recover personally from the post dollarized economic slow-down that will collectively reduce long term losses from the policy follies of our Zimbabwean government. Lets move on as a people

Leave a Reply

Your email address will not be published. Required fields are marked *

*

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>