OPENING CASE: The Decline of Zimbabwe In 1980, the southern African state of Zimbabwe gained independence from its colonial master, Great Britain. Speaking at the time, the late Tanzanian president, Julius Nyerere, described Zimbabwe as “the jewel of Africa.” It was a country that boasted a strong economy, abundant natural resources, and a vibrant agricultural sector. As part of the independence process, the British bequeathed Zimbabwe with democratic political institutions. Zimbabwe’s birth as an independent nation was a difficult one. In 1965, the minority white rulers of what was then known as Rhodesia unilaterally declared independence from Britain, setting up an apartheid state where blacks were excluded from power. The British government wanted majority rule, stated that the declaration of independence was an illegal rebellion, and imposed sanctions on Rhodesia. One of those guerrilla movements, the Zimbabwe African National Union (ZANU), was headed by Robert Mugabe, who aligned himself and his movement with the Maoist version of communism. A combination of international sanctions and guerrilla activity eventually forced the white minority rulers of Rhodesia to end their rebellion. In 1979, Rhodesia reverted to British colonial status. The following year, Zimbabwe gained legal independence. Robert Mugabe was elected as the country’s first prime minister. For most of 2017 Mugabe was still in power, then as president. His ZANU-PF party won every election since independence. Once a largely ceremonial position, Mugabe systematically consolidated power in the presidency and restricted his political opponents. He was reelected as president in 2013 in a general election that, like many in the Mugabe era, was widely seen as rigged. The country is also beset by endemic corruption. Corruption watchdog Transparency International recently ranked Zimbabwe as one of the most corrupt nations in the world. Zimbabwe’s economic performance in recent years ranks among the worst in the world. Although the economy maintained a positive economic growth rate through the 1980s and 1990s, things have deteriorated rapidly since 2000. Between 1999 and 2009, Zimbabwe saw the lowest economic growth rate ever recorded, with an Annual decline of 6.1 percent per annum in GDP. The decline occurred after Mugabe launched a “fast-track” land reform program that encouraged the seizure without compensation of land owned by white farmers. At the time, white farmers were the backbone of the country’s strong agricultural sector. The land was given to members of the ZANU-PF party and other supporters of Mugabe, who lacked experience with modern agricultural practices or had never farmed at all. In the wake of the land reform program, agricultural productivity slumped, and the country is now a net importer of food. The country’s mining sector remains potentially lucrative, with large platinum and diamond deposits mined by private enterprises, but almost all of the licensing revenues due to the state have reportedly disappeared into the hands of army officers and ZANU-PF politicians. Taxes and tariffs are high for private enterprises, which discourages private business formation, while state-owned enterprises are strongly subsidized. Tourism, once a big revenue earner, has declined as Zimbabwe’s wildlife has been decimated by poaching and deforestation. As economic activity slumped, the country’s formal unemployment rate reached a staggering 80 percent. To complicate matters, Zimbabwe was devastated by the AIDS epidemic, with HIV infection rates hitting a high of 40 percent of the population in 1998. Due to AIDS and other public health problems, life expectancy fell to just 43.1 years in 2003, down from 61.6 years in 1986. By 2014, with HIV prevalence down to 15 percent, life expectancy had risen back to 54 years. With tax revenues collapsing, Mugabe funded Govt programs by printing money. Inflation quickly spiraled out of control, reaching 231,000,000 percent in 2008 and requiring the Central Bank to introduce a 100 trillion Zimbabwe dollar note! Zimbabwe Allowed trade to be conducted using other currencies, particularly the U.S. dollar, the South Africa rand, the euro, and the British pound. Despite the country’s economic implosion, the World Bank still believes that Zimbabwe has enormous potential for sustained economic growth given its generous endowment of natural resources, its existing stock of public infrastructure, and its comparatively skilled human resources. However, attaining that potential will require a change in leadership and policies. Mugabe showed no signs of giving up the reins of power. However, in late 2017 he was forced to resign after a military coup. Questions What are the mistakes made in this case of Zimbabwe? What could be the alternative option to avoid the situation? What are the learning for the student for International students or International Business person
OPENING CASE: The Decline of Zimbabwe
In 1980, the southern African state of Zimbabwe gained independence from its colonial master, Great Britain. Speaking at the time, the late Tanzanian president, Julius Nyerere, described Zimbabwe as “the jewel of Africa.” It was a country that boasted a strong economy, abundant natural resources, and a vibrant agricultural sector. As part of the independence process, the British bequeathed Zimbabwe with democratic political institutions.
Zimbabwe’s birth as an independent nation was a difficult one. In 1965, the minority white rulers of what was then known as Rhodesia unilaterally declared independence from Britain, setting up an apartheid state where blacks were excluded from power. The British government wanted majority rule, stated that the declaration of independence was an illegal rebellion, and imposed sanctions on Rhodesia.
One of those guerrilla movements, the Zimbabwe African National Union (ZANU), was headed by Robert Mugabe, who aligned himself and his movement with the Maoist version of communism. A combination of international sanctions and guerrilla activity eventually forced the white minority rulers of Rhodesia to end their rebellion. In 1979, Rhodesia reverted to British colonial status. The following year, Zimbabwe gained legal independence. Robert Mugabe was elected as the country’s first prime minister. For most of 2017 Mugabe was still in power, then as president. His ZANU-PF party won every election since independence. Once a largely ceremonial position, Mugabe systematically consolidated power in the presidency and restricted his
political opponents. He was reelected as president in 2013 in a general election that, like many in the Mugabe era, was widely seen as rigged. The country is also beset by endemic corruption.
Corruption watchdog Transparency International recently ranked Zimbabwe as one of the most corrupt nations in the world. Zimbabwe’s economic performance in recent years ranks among the worst in the world. Although the economy maintained a positive
Tourism, once a big revenue earner, has declined as Zimbabwe’s wildlife has been decimated by poaching and deforestation. As economic activity slumped, the country’s formal
Despite the country’s economic implosion, the World Bank still believes that Zimbabwe has enormous potential for sustained economic growth given its generous endowment of natural resources, its existing stock of public infrastructure, and its comparatively skilled human resources. However, attaining that potential will require a change in leadership and policies. Mugabe showed no signs of giving up the reins of power. However, in late 2017 he was forced to resign after a military coup.
Questions
- What are the mistakes made in this case of Zimbabwe?
- What could be the alternative option to avoid the situation?
- What are the learning for the student for International students or International Business person?
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