Not too many people would think to take a vacation in Zimbabwe. My wife Caroline and I have our reasons. Caroline was born and raised in the country, the descendant of an old Zimbabwe “pioneer” family. I am from South Africa. We know quite a number of Zimbabweans, both residents and expatriates and I have had opportunities to speak with some of the very good economists still in the country. So when the opportunity arose to visit Zimbabwe and help one of Caroline’s former classmates with a large charity art sale, we jumped at it, flying first to Johannesburg and then on to Harare. We were not sure what to expect.
Being unable to pass up a few days of game-viewing we first spent a few days at Lake Kariba. Tourist facilities were working normally, but there were few tourists. Air Zimbabwe has not helped, with aborted flights and desperate passengers left stranded in various foreign airports due to pilots striking over unpaid wages, and other factors. Thank heavens we had chosen another airline. The domestic terminal at Harare airport was a ghostly edifice, still as the grave. But, apart from rhino which have been poached out of most areas, there were plenty of animals, including elephants and very large crocodiles. And lion. Perched in a small boat nosed up against the bank of a river feeding into Lake Kariba, we felt somewhat vulnerable as six large lions tore into their lunch of warm, just-killed, buffalo some 20 feet away……they are eying us! Do they recognize a potential dessert? Are the vultures in the trees waiting for the leftover buffalo or for us? Does the guide know what he is doing?
Happily we were not eaten, and were able to come back to Harare for the rest of our stay.
Zimbabwe has hardly been one of Africa’s “lions”. After the Fast-Track Land Reform (aka land invasions), it entered into a hyperinflation second only to that of Hungary in 1946. Inflation over the first six months of 2008 was 230 million percent. Later estimates are uncertain, so it is not clear how much prices increased in total. However, cumulative redenomination of notes (the number of zero’s knocked off the denominations) is reported as 10^25 by trusty Wikipedia. How can we appreciate a number like this? Suppose a stack of 100 banknotes is 1 cm high. Then a pile of 10^7 notes would be 1 kilometer high. The pile of notes equivalent to 1 Zimdollar at the start would then be an impressive 10^18 kilometers high. This seems to be a high pile. One reaching from the Sun to Pluto (which I still regard as a planet even if officially demoted – how could they do that!) would only be a puny 5.9x10^9 km. A pile from the sun to Proxima Centauri, the nearest star, which is about 10,000 times as far away as Pluto, would scarcely be bigger, a modest 4x10^13 kilometers, a hardly noticeable pimple. If these hard-to-believe estimates are actually correct, Zimbabwe’s pile would span the diameter of our galaxy, the Milky Way.
So, at least in this dimension, Zimbabwe’s economic performance has been stratospheric, even galactic. But the cosmic Zimdollar rules no more. U.S. dollars became legal currency. Today Zimbabwe is a largely cash economy, with dollars, and some South African rand, British pounds and Botswanan pula circulating. In Harare, the dollar reigns supreme, a contrast to its performance on global markets. The notes are indescribably worn and tattered, since there is no bank to replace them as they wear out -- in the United States dollar notes are replaced after about 18 months -- but people accept them happily. However, there are no coins. For change one must accept informal IOUs, or perhaps pop back into the store to garner a few more sweets or a bar of chocolate.
With dollarization, the shortages that used to plague the hyper-inflating economy have vanished. At least in Harare the shelves are stocked with local and imported products; some stores, though smaller, could compete with Washington’s most upmarket establishments. Prices are high, and one wonders how people, especially the lower-paid, make ends meet; basic wages are low, and unemployment is high. Sitting under the trees, enjoying weather far nicer than a Washington summer and lunching in one of the many delightful restaurants that grace the richer suburbs of Harare, one feels in a time-warp, and remote from the very difficult political tensions that the country is experiencing. Another time warp is seeing Caroline singing her school song with Zimbabwean friends; the tune is that of Love Me Tender by Elvis (progressive for the convent where she studied). We know that many of the people we meet have experienced enormous disruptions to their lives, economic if not directly political. But life goes on.
It also seems relatively safe, certainly compared to a city in South Africa or even to parts of Washington, astonishing since very poor people must know that others have pockets-full of dollars. In fact we have seen some of these pockets, shelling out for pricey restaurant meals or spending $50, $500 or $1000 for a painting purchased at the charity art sale. One cannot help wondering where the dollars come from.
Some probably come from the recovering Zimbabwe economy. The growth percentages are high, but from a collapsed base. One sees the sad legacy in dilapidated infrastructure, pitted roads, frequent power outages and failed traffic-lights. The once-highly-regarded education system has deteriorated badly. Newspapers, some of which carry quite critical pieces, have articles on parents’ desperate struggles to secure an education for their children. Private schools have mushroomed, but many are rip-offs. Some dollars come from remittances – with the economic collapse, between 1 and 2 million Zimbabweans (out of a population of about 12 million) left to find work in neighboring countries, especially South Africa; no doubt this sustains many of those left behind. And some dollars – so we are told – come from diamonds. The discovery of alluvial deposits in the east sparked a diamond rush, since curbed by the military which has reportedly taken over the find. Though consignments are said to depart by air to foreign destinations, the budget has received no revenue. NGOs report human rights abuses in the diamond fields and Zimbabwe’s diamonds have become a bitter bone of contention for the Kimberly Process.
Long an agriculture-based country, Zimbabwe may be poised to become mineral-dependent. In addition to the diamonds (their reserves are unknown; speculation abounds on this and on other issues where there is limited information), large investments are planned for platinum and other minerals. But so-called “indigenization” is serving as a check on investment. Following on from the land reforms, which confiscated most of the large, white-owned, farms, Zimbabwe has legislated that 51% of virtually all businesses must be owned by indigenous Zimbabweans. The mining industry is first in line, and initial proposals from companies, including some which are foreign-owned, to share ownership have been rejected by the government as inadequate.
Tempers are running high on this and related issues, and on governance and transparency more broadly. I gave a seminar on managing a mining economy at an independent NGO; the debate that followed showed no sign of flagging and had to be closed down at 8pm. Some of the very diverse participants argued that Zimbabwe was under siege by Western countries which sustain sanctions against certain firms and individuals, and that domestic policy concerns could not be properly addressed until this changed. Others contended that the problems were ones of basic governance, and that they first needed to be fixed from within Zimbabwe. Discussion was heated and not too subtle; for example, national ownership of mineral rents (a principle accepted in almost all countries, with the United States an exception) was not well-distinguished from the question of industry ownership.
I left with the impression of a country of great contrasts. Almost normal on the surface, at least in the (admittedly atypical) parts we had seen, but still with huge, barely submerged, tensions. How will all this play out? So much potential, yet such large risks. In some other countries, economic crises have sometimes sparked a major political change or forged agreement on the way forward; neither seems to have happened yet in Zimbabwe. How to encourage better understanding and consensus on the range of critical issues facing the country? I thought of CGD, of the seminar I gave in Harare, and of the role of think-tanks -- a valuable role in encouraging open dialog. Hopefully this can help to move Zimbabwean policies in constructive directions.