For decades, a country was suffering from isolation being ruled by an authoritarian clique of securocrats. The economy was lying in ruins, unemployment surged to unprecedented heights and most of its citizens and their children went to bed hungry. According to socialist folklore, its industry was dominated by state-owned parastatals that had become prey to the corrupt ruling elite. Due to the rampant violation of human rights and the often violent suppression of any dissenting voices, many countries including its former colonizer, Britain, had implemented comprehensive sanctions. Only China and North Korea supported this country through (some times illicit) trade of processed goods, loans and weapons – in exchange for natural resources.
Sounds familiar? The name of that country is actually the Republic of the Union of Myanmar, formerly known as Burma in South-East Asia. But what happened in Myanmar three years ago is more instructive. After a change in leadership through elections in 2010, Myanmar initiated political reforms and reduced the dominant role of the military and other security services in politics. Noble Peace Prize winner Aung San Suu Kyi was set free after being kept under house arrest for 15 years.
Western countries tentatively supported the re-opening of the country and its return to the international community. In economic terms, the reform process included the abandonment of prohibitive indigenisation laws and the extension of leasehold durations to 50 years for land. In short, these actions by the new government led to an economic boom.
Foreign Direct Investment surged to US$20 billion from US$1.5 million three years earlier. (In comparison, Zimbabwe’s FDI stood at a meager US$400 million in 2012). Exports of Myanmar are expected to increase again by 45% in 2013. Is everything alright in Myanmar? Not yet, but it has now changed course and entered an upward trajectory for the development of the country and the benefit of all its people.
Myanmar is a perfect example of the positive dynamics a new government in Zimbabwe, which is committed to good governance, transparency, democracy and the rule of law, could release in the former “Jewel of Africa”.
There is no doubt that the people of Zimbabwe have shown the same resilience and determination for democracy and the rule of law as the people of Myanmar – or maybe even more. In terms of creativity, entrepreneurship and flexibility, the Zimbabwean people are second to none in the world. They have learned to cope with the harshest political, social and business environments over the last 30 years. They have learned a tough lesson about the risks of state-controlled paper money that has so often ended in hyperinflation in human history – a lesson that should be closely analyzed by Western central banks like the Fed, the Bank of Japan and others.
Zimbabwe offers the greatest potential in terms of resource endowment and infrastructure. There are lessons to be learned from Botswana and Norway about how to attract foreign investors to access this pool of buried wealth and at the same time making sure that generations of citizens will profit long after these resources are gone. A responsible government will not have to re-invent the wheel if it is not too arrogant to learn from other’s successes and failures.
In some business sectors, Zimbabwe is even ahead of Myanmar. Through all the turmoil of the past, its financial sector weathered the storms of a chaotic land reform when all loans to commercial farmers and down-stream processing industries had to be written-off and a severe hyperinflation destroyed the savings of the whole population. Even more astonishing, its capital markets, especially the Zimbabwean Stock Exchange, remained mostly intact, even though it was vilified and made the scape-goat as an “epicenter of economic destruction”. It stands ready to fulfill its important economic role by bringing together Zimbabwean businesses seeking new capital and the domestic and international providers of that hard-sought capital.
Therefore, once the rule of law is reinstated, the international community will stand ready to invest and rebuilt Zimbabwe together with the Zimbabwean people to their mutual benefit – as it should always be in a good deal..
Joerg Bauer is the author of the recently published book “The Flight of the Phoenix – Investing in Zimbabwe’s Rise from the Ashes” available on www.amazon.co.uk (print) or www.epubli.co.uk (ebook).
Post published in: News