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In 1998, a group of veterans from Zimbabwe’s Chimurenga (Independence) war grew tired of the snail-paced land redistribution program and took matters into their own hands. When word got to Harare about farm seizures and sit-ins targeting the descendants of white settlers, President Robert Mugabe’s response became a defining moment for Zimbabwe. Rather than immediately do something to end the crisis, Mugabe instructed his security forces to stand down, and thus commenced the most chaotic and unplanned land reform process in modern history.
Twenty years later, as Zimbabwe still struggles with the disastrous economic effects of trade losses and economic sanctions that followed that episode, Nigeria is in the early stages of its own “1998” moment. Public finances are worse than they have ever been, with debt servicing now taking up 70 percent of all of Nigeria’s income. Of the remaining 30 percent, the majority goes to maintaining the country’s humongous political and civil service structure, and barely anything is left. The clear message is that crude oil is no longer enough to run the country, and that particular resource is a decade and a half away from becoming a worthless antique as alternative energy gains more prominence. At the moment though, nobody is listening. Maybe we need to look at Zimbabwe’s story to understand what is in the offing.
Government Fiat Fixes Nothing
Like present-day Venezuela, Zimbabwe was noted for its ridiculous hyperinflation that famously saw it print a fifty trillion Zim dollar note in 2008. As the country’s economy progressively broke down due to lack of liquidity, the government tried to artificially create liquidity through quantitative easing – printing money for the uninitiated. Of course, that only resulted in the Zim dollar becoming worthless as there was no corresponding income in hard currency to … Read More...