Coming from the brink: Zimbabwe can take inspiration from Rwanda

Kigali, Rwanda

Former President Robert Mugabe’s fall was quick and dramatic, but cleaning up after him will take much longer. The celebrations were long,hard and often hilarious, a relief at finally facing a future not denominated by Mugabe. But now, as a nation, we face the reality of the rebuilding job at hand.

by Kuda Chideme

Mugabe’s 37 years in power have been ruinous, one failed policy after another. Fixing it is not going to be an easy task, neither is it going to happen overnight.

His inauguration speech, Zimbabwe’s new President, Emmerson Mnangagwa, largely touched on policy direction, much welcomed far and wide but was scant on detail. At least he did not promise paradise, such as Mugabe’s and ZANU-PF’s bold assertion of delivering 2,25 million jobs by 2018.

Some countries have managed to emerge from far worse circumstances than we are in.Take Rwanda for instance. When Paul Kagame took over the tiny east African country in 1994, it was a shell of a nation decimated by war. The people of Rwanda were hugely divided and demoralized after more than 800,000 people had been killed in one of the most brutal genocides on record.

Fast forward to today, and Rwanda has managed to get over its dark past and it is in a different space altogether. It is ranked amongst the powerhouses of the continent. Rwanda’s economy is largely based on agriculture (tea and coffee). More than four-fifths of the population is involved in small-scale farming but with the support of the International Monetary Fund (IMF) and World Bank, Rwanda has been able to make important economic and structural reforms which have seen its economy grow at an average of 8 percent over the last decade.

On the World Bank’s Ease of Doing Business Report, Rwanda is ranked 56 out of 190 countries. It is considered the second easiest place to start a business after Mauritius. Foreign Direct Investment (FDI) is flowing into Rwanda reaching some $410 million in 2016. In contrast, Zimbabwe received $319 million during the same year.

Related image
Kigali’s city planners have devised an ambitious plan to transform this quaint capital city into a regional powerhouse.

Zimbabwe is in a better place today than where Rwanda was 22 years ago. It is endowed with enviable natural resources and minerals. We have a highly skilled labour force and a young, vibrant and creative population eager to make up for lost time. The potential is immense . Since 2013, Zimbabwe has completed three Staff Monitored Programmes (SMP) under the IMF. Such an SMP, while it is an informal arrangement where IMF staff assess a country’s economic situation, make recommendations and periodically review its progress in implementing reforms, gives pointers to where the economy should be heading.

In all these programs the IMF has consistently maintained that Zimbabwe needs to make painful but necessary adjustments – cut government expenditure and reform state owned enterprises and parastatals.

So it is safe to say that we already know what needs to be done to turn around this economy. When Patrick Chinamasa was finance minister, the country had already started to make some headway in this regard but was frustrated at every turn by Mugabe.

Mugabe’s obsession with populist policies would not allow him to cut government subsidies or trim the public service, but instead he insisted on paying bonuses even when government could not afford to.

This was a man who, after all declared in 1998: “Who ever heard of a country going bankrupt?”

Zimbabwe has 107 state owned enterprises and parastatals, which contribute a paltry 2 percent to the country’s Gross Domestic Product (GDP) from a peak of 40 percent in the 1990s. Last year, about 38 of the state-owned enterprises and parastatals ran cumulative losses of $270 million.

More than half of these public institutions are technically insolvent, relying on government bailouts.

Not only are they a drain on the fiscus, but fertile ground for corruption, cronyism and patronage because of poor corporate governance and a culture of impunity.

Reforming state owned enterprises would certainly go a long way in restoring confidence and trust in public institutions and also easing pressure on the exchequer.

Zimbabwe’s deep seated problems require a massive culture shift.

Investors the world over, just like the long suffering Zimbabweans, are waiting to see early signs of whether Mnangagwa will be more pragmatic and prudent in his economic policies, and more uncompromising towards corruption, than his predecessor was.

Expectations are high and Mnangagwa, as he noted, has to hit the ground running. But the reality is that cleaning up Mugabe’s mess will take time. It will not be as quick or as dramatic as his fall from power. – Source