October 18, 2010
In the late 1800s, English businessman and serial eponymist Cecil Rhodes forcibly colonized a huge chunk of southern Africa on behalf of Great Britain that became known as Rhodesia.
Like other African colonies, Rhodesia was harshly segregated. By the mid-1900s, a series of black freedom movements began spreading across the continent, and one of the Rhodesian leaders was an educated, charismatic young man named Robert Mugabe.
Like Mandela in South Africa, Robert Mugabe was imprisoned for several years, a stint that did wonders for his political credibility. Upon release from prison, and with a little help from the international community, Mugabe became Prime Minister of the country.
He governed quite reasonably for the first several years, and if he had walked away from office early on, his legacy would likely be very similar to Mandela’s.
Addicted to his love for power, though, Mugabe stuck around too long and started derailing the economy. By the time he sent his military to go fight in the Second Congo War in 1998, his country was nearly bankrupt. This gave rise to the land theft and hyperinflation for which Zimbabwe is now so renowned.
Today, Mugabe is in his mid-80s and has ruled for decades. Despite the reputation that he has achieved as a ruthless and corrupt dictator, though, many locals still revere Mugabe for standing up to the whites and helping to win their independence.
The majority of the country, however, is ready to move on from Mugabe, and one of the leaders who has emerged is Morgan Tsvangirai (pronounced Changarai), head of Zimbabwe’s “Movement for Democratic Change (MDC) party.
As you probably recall, Tsvangirai was himself imprisoned by Mugabe, and upon release, he too became the country’s Prime Minister through a 2008 power sharing agreement that was brokered by Thabo Mbeki of South Africa.
The thing is, most Zimbabweans don’t think he’s going to last. Mugabe has not honored the power sharing agreement, effectively preventing Tsvangirai from governing. Rather than dealing with the issue directly, though, Tsvangirai has gone back to the international community for help.
This makes him look very weak in Zimbabwe, and the country’s institutions have little loyalty or respect for him. Once Mugabe finally kicks the bucket, many locals expect a power struggle among his top lieutenants, and they don’t believe that Tsvangirai is strong enough to win.
Regardless, western media have been quick to anoint Tsvangirai as man who will lead Zimbabwe into the future, and investment funds have been even quicker to move capital into the country.
To be clear, the worst is likely over for Zimbabwe. Mugabe already destroyed agriculture and chased the mining companies away, so the economy is now trying to find its legs. Most of the ingredients for success are there, though– a solid pool of labor, massive resource wealth, and available capital.
All Zimbabwe really needs is a reasonably functioning government, and this is the bet that foreign investors are making. Right now it’s a fairly crowded room– there are a LOT of investors taking this bet. Given the post-Mugabe future that many locals expect, though, the bet could be painful at first.
In the long run, I think the country will succeed… but for now, it does provide an important lesson.
We often talk about the boiling frog analogy– like a frog sitting comfortably in a pot of water that’s being slowly brought to boil, people let their political leadership slowly, gradually take control over the country… until one day they realize they’ve boiled and can’t even recognize the place.
Throughout the mid-1980s and early 1990s, Zimbabwe was a clear example of the boiling frog analogy; Mugabe imposed lengthy states of emergency and frequently turned the military against his own people. In the same period, he closed schools, banned homosexuality, and began small redistribution of farmland.
Once Zimbabwe reached its boiling point, the government assumed nearly limitless authority and frequently imposed drastic changes overnight.
Perhaps the starkest example is what happened to Zimbabwe’s currency. And no, I’m not talking about the period of hyperinflation when a suitcase full of cash bought you the week’s groceries, I’m talking about what happened afterwards.
You don’t ever hear too much about this.
In early 2009, the government of Zimbabwe finally capitulated– they realized they simply couldn’t print enough zeros in order to keep up with the hourly price changes in the country… and in the blink of an eye, they did away with their currency.
Today, Zimbabwe no longer has its own currency. The country effectively deals in cash only, in foreign currencies. Merchants take whatever they can get– US dollars, euro, South African rand, etc.
When the government abandoned the currency, though, there was no warning. Anyone holding Zimbabwe dollars was robbed of their savings overnight– there was no national program to convert Zim dollars into something else, the currency simply became unusable.
Quite literally, people in Zimbabwe woke up in the morning and found whatever savings they were holding in cash and bank accounts was no longer a valid medium of exchange… and some folks lost everything.
I think there is an important lesson here: We can all observe the warning signs, and while there’s no need to rush into panicked reactions, measured preparations are critical.
As a perpetual optimist, I’m certainly not predicting the end of the world or some sort of Armageddon… but it would be irresponsible to ignore the current and future threats to our capital, our liberties, and our families’ safety.
The warning signs are there, the problems are identified, and the solutions exist. All that’s required is the will to act– to get educated about the tools that are available and put a plan together.
I’d really like to hear from you– what lessons do you see from Zimbabwe, and what sort of plan do you think is right for you and your family?