It’s been an extremely tense week in Zimbabwe and some of the governments actions over the past few days make it pretty clear why Zimbabwe ranked 174th on the Heritage Economic Freedom List for 2018. Among 47 countries in the sub-Saharan region we rank 44th and some of the decisions such as shutting down the internet this week offer a glimpse into why we rank so lowly…
So what’s this Economic Freedom list anyway?
The Heritage Economic Freedom Index is a measure of Economic Freedom within a country and you may be wondering what “Economic Freedom” is to begin with. Well Heritage describes it as follows:
Economic freedom is the fundamental right of every human to control his or her own labor and property. In an economically free society, individuals are free to work, produce, consume, and invest in any way they please. In economically free societies, governments allow labor, capital, and goods to move freely, and refrain from coercion or constraint of liberty beyond the extent necessary to protect and maintain liberty itself.
As you read the passage you slowly realise that a lot of these things are beyond the reach of most Zimbabweans.
So why are we ranked so lowly?
The compilers of the list gave a perfect description of why Zimbabwe has one of the least free economies in the world and I’ll let you read it for yourself without paraphrasing or changing a single word they give in their description:
Zimbabwe’s economy is characterized by instability and volatility, both of which are hallmarks of excessive government interference and mismanagement. Massive corruption and disastrous economic policies have plunged the country into poverty. An inefficient judicial system and general lack of transparency severely exacerbate business costs and entrepreneurial risk. The government will likely adopt desperate short-term measures to stave off economic collapse, possibly including a unilateral de-dollarization that would reopen the door to hyperinflation, further crippling the private sector and severely undermining macroeconomic stability.
The fact that the government doesn’t fully enforce property rights means as long as there isn’t a major policy shift and behaviour around issues of land ownership not much will change.
Oh, what happened to being “open for business?”
The shutting down of the internet over the past few days is a clear sign that the government doesn’t care about local businesses and how much they lose by such short-sighted moves. If you rely solely on the internet for business or any other process the government just flipped you a serious middle-finger and made it impossible to make money. For businesses like Hwindi, Nifty Planr, or us here at Techzim we lose bucket loads of money when the government decides to flip a switch as if they were playing with a toy. Then that same government comes out and talks about empowering entrepreneurs. If they want to empower entrepreneurs then maybe making sure they themselves are not the ones affecting our income streams is vital.
Another perfect example of how government believes they can control and interfere with every business was clear when today they made the announced that they had met with combis and effectively started regulating that combis charge 10c/km. Though government does not own combis they felt the need to interfere with another business, in a similar way they interfered with Delta’s move to charge their beverages in USD. Though the moves by both combi operators and Delta may not have been popular with the general populace this interference is typical and it can happen to any business.
Just ask internet service providers and mobile networks how much money they’ve lost because of an unforeseen move that was out of their control. Regardless of how much you optimize your business to make money, as long as that business is in Zimbabwe, there’s a chance that the government will scupper your income with one blow. A blow you may never recover from, especially for entrepreneurs…