Zim Should Say No To Foreign Aid, Stop Printing Money, Follow Dollarisation Rules To Succeed: Prof Steve Hanke

Acclaimed economist and currency expert, Steve Hanke, who is a professor of Applied Economics and co-director of the Institute for Applied Economics, Global Health, and the Study of Business Enterprise at the Johns Hopkins University in Baltimore in the United States has advised President Emmerson Mnangagwa to adopt the strategy of Lee Kuan Yew, Singapore’s first prime minister in order to dig the country out of the economic mess left behind by former President Robert Mugabe. Professor Hanke argues that Zimbabwe needs to adopt four principles: stable money, no foreign aid, first-world competitiveness and the protection of private property and the public’s safety to grow its economy and become affluent. He also called on the administration not to print money through the RTGS system and the issuance of Treasury Bills (TBs).

In an article written for the New York Time, Professor Hanke says:

The end of Mr Mugabe’s rule raises the question: What is next for the economy? Zimbabwe could adopt the strategy of Lee Kuan Yew, Singapore’s first prime minister. That strategy was based on four principles: stable money, no foreign aid, first-world competitiveness and the protection of private property and the public’s safety. With Mr Lee’s near perfect execution of the strategy, Singapore escaped its grinding poverty in 1965 to become one of the world’s most affluent countries.

Mr.Mnangagwa does not remind one of Mr Lee. Indeed, he was a pillar of Mr Mugabe’s regime. Unlike the impoverished populace, Mr Mnangagwa and his supporters in the military and party have done well under Mr Mugabe’s system of spoils.

…To deliver, Mr Mnangagwa must prohibit the issuance of New Zim dollars. The dollarization rules followed by the unity government should be restored. Mr Mnangagwa should also announce that private enterprise is Zimbabwe’s future.

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…The new president should establish a cabinet task force that would be responsible for making it easier to do business in Zimbabwe. It now takes 61 days and costs more than an average person’s annual income to start a business. When compared with those of other countries in the region, these costs are sky high. As a first reform step, the government should slash the biggest contributor to these costs: the licensing requirements and fees needed to start a business.

By adopting such a strategy, confidence and the economy would both soar. Zimbabwe’s G.D.P. per capita would reach the same level as Botswana’s current level in about 16 years. Zimbabweans’ level of income would then be almost six times its current level. Zimbabwe would once again be the “jewel of Africa.”

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