Robert Mugabe leaves a legacy of economic mismanagement

Mugabe presided over a total economic collapse, and Zimbabweans are still grappling with the fallout.

Mugabe economic legacy
By November 2008, Zimbabwe's peak month of inflation was estimated at 79.6 billion percent month-on-month and 89.7 sextillion percent year-on-year [File: Philimon Bulawayo/Reuters]

Harare, Zimbabwe – The curtain has fallen on the life of Robert Mugabe, the man who ruled Zimbabwe with an iron fist for close to four decades and presided over its total economic collapse in 2008.

His death on Friday at age 95 in Singapore, a foreign land, signals the final end of an era for a leader thrust into power in the 1980s and effectively forced out in 2017 by a de facto military coup.

While Mugabe’s passing has elicited mixed reactions, the country is still struggling to climb out of the economic hole dug on his watch, as ordinary Zimbabweans grapple with blisteringly high inflation, high unemployment, stagnant wages, and shortages of food and fuel.

“For me, 2008 was the worst year under Mugabe and the lowest for him as well,” Loreen Gwatidzo, a sales executive in Harare, told Al Jazeera. “We are yet to recover from that as a nation and as individuals.”

‘You have inherited a jewel’

Mugabe inherited a solid economy when he was elected prime minister in 1980. Despite enduring years of United Nations sanctions and the onslaught of war, Zimbabwe had strong infrastructure, a solid currency, vibrant manufacturing and a productive agricultural sector.

“You have inherited a jewel. Keep it that way,” Mwalimu Julius Nyerere, the founding father of Tanzania, told Mugabe at the time.

But Mugabe did not.

At the turn of the millennium, he sanctioned the invasion of white-owned farms for redistribution to blacks without land – a decision that saw agricultural output plunge.

Once hailed as the “bread basket” of Africa, Zimbabwe has had to rely on food imports to feed its citizens. This year, the troubled Southern African nation is appealing for food aid to avert mass hunger.

“The destruction of agricultural output and the collapse of many manufacturing companies is going to take many years to fix,” John Robertson of Robertson Economics told Al Jazeera. “I think many people in the economy have now realised that the damage done over the years is extremely serious, more than they had realised.”

Zimbabwe’s industrial sector is on its knees, producing only at 50 percent of its installed capacity. The country’s trade balance turned negative after exports plunged.

No meaningful investment has been made in new equipment over the years, and only a handful of foreign investments – such as Indian billionaire Ravi Jaipuria’s Pepsi bottling line – have come into the country of late.

The path to economic ruin

Two separate decisions by Mugabe in the late 1990s set the country on the path to economic ruin.

In October 1997, Mugabe yielded to pressure from veterans of Zimbabwe’s liberation war and approved unbudgeted, one-off pension distributions of 50,000 Zimbabwean dollars to all bona fide veterans – plus additional monthly pensions of 2,000 Zimbabwean dollars.

At the time, one Zimbabwean dollar equaled $11.6.

The markets punished the decision. In November of 1997, the Zimbabwe dollar plunged 72 percent against the US dollar – a dramatic and sudden devaluation that set in motion the country’s eventual economic collapse.

Nearly a year later, on August 2, 1998, Mugabe consented to the deployment of Zimbabwean troops to the Democratic Republic of the Congo (DRC) to defend the regime of the late Congolese leader Laurent Kabila against a rebel incursion backed by Uganda and Rwanda.

“No one is compelled within SADC [the Southern African Development Community] to go into a campaign of assisting a country beset by conflict,” Mugabe told Zimbabwean state media at the time. “Those who want to keep out, fine. Let them keep out, but let them be silent about those who want to help.”

In 2000, the Financial Times newspaper cited a leaked memo from then-Minister of Finance Herbert Murerwa showing that the funding for the military action was unbudgeted and cost the country around $166m from January through June – or more than $25m a month.

Zimbabwean forces finally left the DRC in 2003 after a peace deal between the warring parties was reached.

Economic free fall

By the turn of the century, Mugabe’s political star was on the wane and an economic free fall ensued.

When veterans of the armed struggle started invading white-owned farms in 2000, then-Vice President Joseph Msika – along with Minister of Local Government John Nkomo and Minister of Agriculture Joseph Made – ordered a stop to the invasions.

But Mugabe, who had been out of the country at the time, characterised the invasions as illegal “demonstrations” against unfair distribution of land, and barred forcible eviction of the invaders.

That plunged the country into chaos, leading to shortages of food and other essential commodities, as well as falling exports and soaring inflation.

By November 2008, Zimbabwe’s peak month of inflation was estimated at 79.6 billion percent month-on-month and 89.7 sextillion percent year-on-year.

During the height of the crisis from 2008 to 2009, it was difficult to measure Zimbabwe’s hyperinflation because the government had stopped filing official inflation statistics.

Hyperinflation only ended in 2009 after the country “dollarised” and took the dramatic step of adopting the US dollar as its legal tender. But Mugabe continued to pursue controversial economic policies.

Investor and business confidence took a further beating in 2009, when Mugabe issued regulations compelling all foreigners and whites to sell 51 percent equity stakes in every existing business, partnership, association or sole proprietorship with an asset value of half a million US dollars or more.

Failure to comply with this law resulted in either a fine or imprisonment of up to five years.

The fallout continues

Today, Zimbabweans still grapple with the fallout from Mugabe’s policies.

“What I remember is that the first 20 years after independence, the economy was well and stable,” said sales executive Gwatidzo. “Then economic reforms didn’t work for Zimbabweans. Actually, they worked in reverse.”

In 2016, Mugabe agreed to introduce bond notes, a currency his central bank said had value on par with that of the US dollar. Few believed it, and one US dollar is currently worth 14 bond notes.

The weakening currency has also triggered a wave of price increases in the economy.

Cecelia Chimbiri, an opposition youth official, had no kind words for Mugabe upon his passing.

“The man who single-handedly made Zimbabwe a beggar country,” she wrote in a Facebook post.

Source: Al Jazeera