Zimbabwe Was Once the Freest Economy in the World

Zimbabwe is best remembered as the country that clocked up a jaw-dropping inflation rate of 231 million percent a year.

That insanity came abruptly to an end in 2009 when the country adopted the US dollar and South African rand as the official means of exchange.

How did it get to this Olympian inflation rate? The same way it always happens, by rampant money printing.

Less well known is what happened immediately after this. The ruling Zanu-PF party lost its outright majority in the 2008 election and was forced to share power with the opposition Movement for Democratic Change (MDC). In came opposition member of parliament Tendai Biti as finance minister, and in a 30 minute speech to parliament he announced the end of virtually any form of government interference in the economy. No more exchange controls, no more price controls, no more import permits needed. Government was getting out of the business of trying to regulate the economy.

Within weeks, shortages of fuel and food had vanished and once-empty supermarkets were stacked to the roof. Inflation, which just a year previously had been doubling every few hours, fell to minus 7 per cent. Within two years, Zimbabwe’s inflation rate was the lowest in the southern Africa region. The economy grew at an average 8% a year over the next four years, albeit off a bombed-out base. Zimbabweans could scarcely recognise the country in which they were living. Entrepreneurs were making money hand over fist. They were buying cars, going on overseas holidays and sending their kids to the best private schools.

This free market experiment came to an end in 21013 when Mugabe won outright control in an election most believe was stolen, and reverted to form, reintroducing exchange and other controls.

If…

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