By Carol Ryan
LONDON (Reuters Breakingviews) - Robert Mugabe will cast a long shadow over Zimbabwe. The 93-year-old ruler, who is refusing to step down after the military seized power five days ago, is likely to be impeached after nearly four decades in power. He bequeaths an economy in dire need of reforms. The most important – luring back foreign investment and restoring trust in a dysfunctional currency system – will happen over years, not weeks.
Mugabe’s mismanagement of the African country’s economy has left a visible mark. The 80 billion percent inflation seen at the end of 2008 and 52 percent drop in GDP in the decade up to 2008 are examples. Seizing white-owned farms in the early 2000s undermined property rights, while savaging the country’s relations with the West kept many international companies away. Foreign direct investment was just $320 million in 2016 according to World Bank data. Cambodia, which has a similar sized population to Zimbabwe, had investment of $2.3 billion last year.
A successor to Mugabe – possibly his former deputy and new leader of the ruling ZANU-PF party, Emmerson Mnangagwa – can easily avoid such visibly bad decisions. They can make encouraging noises towards institutions like the IMF and World Bank. But they will still inherit an economy that is broken. Reckless money printing and the creation of pseudo-currencies not backed up by foreign reserves means faith in the currency system is low. Zimbabwe ranks 154th out of 176 countries in Transparency International’s Corruption Perception Index.
The most immediate challenge for Mugabe’s successor is to do what all new regimes must: build popular support. Wise government spending can help. But Mugabe’s method, spending 90 percent of revenue on civil service salaries and generous perks for war veterans, cannot continue. Basic social services and the country’s infrastructure, among the best in southern Africa in the 1990s, have suffered from underinvestment, and domestic debt is already 25 percent of GDP.
Over time, the most durable change would be to create institutions that people trust, participate in, and are prepared to fund with their taxes. Approximately 95 percent of total employment takes place in the informal market. That is a problem shared by developing countries in Africa and beyond, and fixing it could take a generation. But by getting rid of Mugabe, Zimbabwe may at least remove some barriers that stand in the way.
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