Business Blog: Hoover’s Business Insight Zone

It’s hard for me to say anything detached about Zimbabwe, which has been so disastrously run in recent years by its President/autocrat Robert Mugabe. While the country’s massive fertility, hard-working populace, and common border with economically powerful South Africa should make it a breadbasket and a natural site for foreign investment, Mugabe’s blinkered economic policies and suppression of civil rights have made it into a locus of misery.

Citing economic instability — and driven by a new law that nationalizes foreign business holdings — H. J. Heinz has withdrawn from its operations in the country.

• From Reuters: H.J. Heinz says sold Zimbabwe oil maker over crisis
• From Voice of America news: Heinz Exits Zimbabwe After Writing Down US$111 Million Investment
• From the BBC: Food giant sells out of Zimbabwe

In her blog at The Atlantic, Megan McArdle discusses the economics of Mugabe’s “reforms” at more length.

Cry, the beloved country

After citing some of the statistics that quantify the disaster of the recent years of Mugabe’s reign, McArdle writes:

If Robert Mugabe had set out with the deliberate goal of trashing his country’s economy, he could hardly have been more effective. You might say he’s pioneered his own field: undevelopment economics. Starting with a disastrous land reform that placed land into the hands of political cronies, rather than those who knew anything about farming, or needed sustenance, he has turned a huge net food exporter into a net importer . . . when they can get the hard currency to import. [...] He has brought on hyperinflation, decimated the country’s financial system and industrial base, crippled its agricultural output, mired the government in unrepayable debt, and reduced virtually all of his citizens to appalling poverty.

Opinions differ on this, of course, and on what to do about it. Many Africans defend Mugabe from his Western detractors, citing the long, deplorable history of Western depredations in Africa — and especially against powerful black African leaders — as reason to suspect the motives of Western-dominated institutions like the UN and the EU. (They have a point: too often in years past, Western leaders and businesses viewed African assets as ripe fruit to be picked at their leisure.) African institutions such as the African Union have declined to censure Mugabe, in general taking his side, or at least taking the position that outsiders are in no position to talk about his rule or Zimbabwe’s laws. McArdle predicts that no solution will come until the country collapses completely; I’m prone to think she’s right.

Losing H. J. Heinz’s presence in the cooking-oil business probably won’t hasten that day for Zimbabwe. But the reasons for Heinz’s departure probably will. Which makes me far from detached in my sorrow for the suffering of Zimbabwe’s citizens.