The end of Mr. Mugabe’s rule raises the question: What is next for the economy? Zimbabwe could adopt the strategy of Lee Kuan Yew, Singapore’s first prime minister. That strategy was based on four principles: stable money, no foreign aid, first-world competitiveness and the protection of private property and the public’s safety. With Mr. Lee’s near perfect execution of the strategy, Singapore escaped its grinding poverty of 1965 to become one of the world’s most affluent countries.
Mr.Mnangagwa does not remind one of Mr. Lee. Indeed, he was a pillar of Mr. Mugabe’s regime. Unlike the impoverished populace, Mr. Mnangagwa and his supporters in the military and party have done well under Mr. Mugabe’s system of spoils.
But the people are fed up with their poverty. Mr. Mnangagwa claims to be listening, even declaring that the “voice of the people is the voice of God.”
To deliver, Mr. Mnangagwa must prohibit the issuance of New Zim dollars. The dollarization rules followed by the unity government should be restored. Mr. Mnangagwa should also announce that private enterprise is Zimbabwe’s future.
The World Bank has found that there is a strong positive relationship between a country’s prosperity and how easy it is to do business there. At present, Zimbabwe ranks 159 out of 190 on the bank’s ease of doing business metric, with a score of 48.47. If the country loosened the government’s grip on the economy and reached the same score as neighboring Botswana (64.94), it would boom, as it did during the unity government years.
The new president should establish a cabinet task force that would be responsible for making it easier to do business in Zimbabwe. It now takes 61 days and costs more than an average person’s annual income to start a business. When compared with those of other countries in the region, these costs are sky high. As a first reform step, the government should slash the biggest contributor to these costs: the licensing requirements and fees needed to start a business.
By adopting such a strategy, confidence and the economy would both soar. Zimbabwe’s G.D.P. per capita would reach the same level as Botswana’s current level in about 16 years. Zimbabweans’ level of income would then be almost six times its current level. Zimbabwe would once again be the “jewel of Africa.”
By Steve Hanke. This was an op-ed article in the New York Times