Taxi economics from Zimbabwe!

The Money Engineer

I was priviledged to visit Zimbabwe for a conference on infrastructure development in Africa. There are many things I have observed and learnt from. The conference was held in Victoria Falls town which is home to one of the naturals wonders of the world.

Zimbabwe has just undergone a change of political leadership with Mnangagwa taking over from uncle Bob (Robert Mugabe). I had an interesting conversation wih one of the taxi drivers. He said things had just gotten worse and he wishes uncle Bob was still in charge. “He has done nothing!

The government is still full of corrupt officials!” I could understand his frustrations. The previous day I had witnessed a long queue of cars apparently waiting to fill up at a Total petrol station (1 of 4 within the town.) As we drove to the hotel the driver told me that the town had currently run out of fuel. These instances are a common occurrence I got to understand.

Coupled with fuel shortages I noticed that the price of basic commodities was crazy high. For instance I bought a litre of juice and crisps at a whopping US$ 11 (UGX 56k). The same items will cost about ugx 12k in Kampala. .

To make things even harder for the locals there is a major shortage of US dollars in the country. This makes it extremely difficult to import basic goods.

Following the crazy inflation after uncle Bob’s land reforms the central bank introduced a kind of new currency called bond notes. These bonds are exchanged 1:1 with the US$. The only challenge is that these bonds are worthless outside the Zimbabwe borders.

My curb driver explained that things became worse when the whites who owned the factories and farms were chased away by uncle Bob. The corrupt Ministers and politicians then took over the assets and ran them down. “This was a terrible mistake!” he said. “I don’t think they will come back. We must now find our own solutions.”

The curb driver then explained that for things to improve the currency issue had to be addressed. “No one is going to bring their dollars and invest in Zimbabwe and then you give them bonds in return which are worthless around the world”

He also explained that the country needs to fully exploit its tourism potential. He then wondered what would happen if the Victoria falls was in Europe? These Europeans would be making billions from it! For instance accessing Victoria Falls from other countries within Africa is quite cumbersome. Most delegates took over 12 hours to reach Victoria Falls! and yet they were over 400 delegates at this conference!

Democratic pressure some times leads governments to undertake populist reforms which end up hurting the entire economy in the long run. While neighbouring South Africa contemplates similar land reforms they need to think well and consult widely before implementation.

I wonder what lessons Uganda can learn from this as we also graple with our own land reform process?

For now I am glad to reside and live in Uganda.

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