Andrew Amoils | New World Wealth
As part of our recent ‘South Africa 2017 Wealth Report’, we looked at the timeline of Zimbabwean wealth creation over the past 37 years.
Timeline: Mugabe’s 37 years in power:
- Mugabe and his Zanu PF party took power following the 1980 general elections. At the time, average wealth in the country stood at around US$800 per person.
- Mugabe was accused of ordering the mass killings of Ndebele people in western Zimbabwe in 1983. The Ndebele people were loyal to opposition leader Joshua Nkomo.
- Following a few years of solid growth, average wealth in the country reached its peak in 1990 at just over US$1,600 per person.
- Following droughts in the country in the late 90s and slowing economic growth, Mugabe was coming under increasing pressure to step aside.
- Average wealth dropped during this period as most of the very wealthy Zimbabweans left the country during the period between 1996 and 2000. This is notable as wealthy people tend to leave a country before the big trouble starts as explained in our ‘2017 Global Wealth Migration Review’. Wealthy people leaving a country is therefore normally seen as a ‘big warning sign’.
- Mugabe then held a referendum in 2000 in order to extend his powers. This referendum was unexpectedly defeated, which was seen as a major victory by the MDC (a new opposition party formed from a labor union movement and its leader Morgan Tsvangirai).
- Zanu PF responded by immediately banning the free media in Zimbabwe and calling for invasions of white-owned farms and businesses.
- The Zimbabwean economy and currency then went into decline, with average wealth there falling by over 400% in the space of 3 months (in US$ terms). Property and businesses lost a lot of value during this short period. By the end of 2001, average wealth in the country amounted to less than US$300 per person.
- Mugabe claimed victory in the 2002 general elections. Several international bodies including the Commonwealth said the results were rigged. However, without the free media it was impossible to prove any
- In 2007, opposition leader Morgan Tsvangirai was severely beaten by Zanu PF government officials and his bodyguard, Nhamo Musekiwa, was killed.
- The MDC claimed victory in the 2008 general elections. However, they were unable to take power.
- In a deal brokered by SADC following the 2008 general elections, Mugabe remained president and Morgan Tsvangirai was made prime minister. The deal allowed Mugabe to keep control over the army and the country as a whole.
- Susan Tsvangirai was killed in a car crash in 2009, which is believed by many to be the work of Zanu PF officials who were attempting to assassinate her husband Morgan Tsvangirai, who was in the same car at
the time. He survived.
- Mugabe claimed victory in the 2013 general elections. Again, several international bodies said the results were rigged. However, without the free media it was impossible to prove any rigging.
- As of the end of 2016, the average wealth of a person in Zimbabwe stood at around US$200, one of the lowest levels in the world. At its peak this figure stood at over US$1,600 per person (back in 1990).
Note: “average wealth” or “wealth per capita” refers to the private wealth held by the average individual living in a country. It includes all their assets (property, cash, equities, business interests) less any liabilities. We exclude government funds from our figures, so wealth held by government officials is excluded.
Zimbabwe’s wealth scorecard:
Based on our research, the top factors that encourage wealth growth in a country
- Strong safety & security – woman and child safety is particularly important.
- Strong ownership rights – Zimbabwe offers a case in point as to what happens when ownership rights are stripped – once assets are taken away they tend to lose value as no one is willing to buy anything.
- Strong economic growth – economic growth is usually linked to wealth
- A well-developed banking system and stock market – insures that people
invest and grow their wealth locally. Also insures that GDP growth leads
to wealth growth.
- Free and independent media – allows for the dissemination of accurate
information to investors.
- Low level of government intervention – government tampering in the business sector creates large inefficiencies within an economy. Government owned enterprises and parastatals are also a problem.
- Low income tax and company tax rates – Dubai and Singapore are examples of the power that tax rates can have in encouraging business formation – both have very low tax rates.
- Ease of investment – barriers such as exchange controls inhibit wealth
- Low level of trade union involvement – large trade unions deter businesses from hiring workers.
- Wealth migration – the migration of wealthy people (HNWIs) to the country.
Zimbabwe scored poorly on all the points above, which also helps to explain its poor recent wealth growth.