The 2015 Index of Economic Freedom
I normally do not give the Heritage Foundation in the USA much attention, but this week they dropped a copy of the above report into my pigeon hole at Parliament and I read it with great interest and growing concern.
The index has been running for 20 years and uses four areas of national activity to measure “economic freedom” in individual States and regions of the world. These are the Rule of Law, Government Size, Regulatory Efficiency and Open Markets. What was pleasing was to see the tremendous progress in global terms of these elements in countries and continents across the world. Global GDP has risen from $40 trillion in 2000 to $52 trillion in 2012, a rise of 30 per cent in 12 years. Global poverty has declined by 40 per cent over the same period.
The index also gives two tables – one linking economic freedom to democratic governance and economic freedom to social progress. In both cases the trend line is clear – in the first case exponential and in the second case the trend line shows a close correlation between social progress and economic freedom.
Now I know the Foundation is a conservative think tank and strong exponent for open markets and conservative economic policies, but you cannot ignore this sort of analysis. It represents the real world in which we live and operate. Taken together with the World Banks “Ease of Doing Business” survey earlier this year where we were ranked near the bottom of the list of countries, this new survey is very important.
The survey says that the top ten countries include only one African State – Mauritius and the two top contenders are both City/States – Hong Kong in number 1 and Singapore in number 2 slot. Our neighbor Botswana sits at 36 out of 186 countries, South Africa at 72 (below Ghana) and China at 139. Zimbabwe sits at 175 out of 186 countries and was in 2012/13 one of the better performers in terms of moving up the list.
But if you think about it, where were we in 2000? Our income per capita was double what it is today, our formal economy was twice its present size and employed 1,2 million people compared to below 600 000 today. Life expectancy has declined and over 80 per cent of our population is now classified as being poor with over 70 per cent in the worst classification of being “absolutely poor”. While the rest of the world has made huge progress in terms of democracy, human rights and the general quality of life, we have regressed in every area.
If we take just one factor – that of income per capita, the report reveals that the average income per capita in the “Free” countries was $53 000 a year, in the “Mostly Free” countries it was $40 000 a year, in the “Moderately Free” countries it was $19 000 and in the “Mostly Unfree”, $6 000. In our category the average income of the “Repressed” States was $8 000 a year – our actual GDP per capita is just over $1200 per annum and we must now be among the poorest nations of the world.
These are not just statistics and I know the adage “there are lies, damn lies and statistics”, but they represent the harsh realities of where we are today. Zimbabwe is an unmitigated disaster.
If I was to make the above statement in Parliament this afternoon, it would be greeted with loud shouts of “sanctions” by my colleagues on the Zanu PF benches. Most certainly they would never allow a debate on these issues because they know damned well, that they are directly responsible for this calamitous state of affairs. What is worse for them is that the markets are very consistent in the way they vote every day against Zanu PF government. All you have to do is watch the stock market here, watch property prices, especially commercial and industrial property.
Right now our inflation is negative – minus 1,4 per cent in the first two months, revenues to the State are shrinking at 5 per cent a quarter and 40 per cent of our banks have closed their doors since the Zanu PF “victory” in 2013. To top it all even the weather seems to be voting against them, I looked at a website this morning and for the next week, Zimbabwe sits in a region surrounded by rain while remaining drought stricken with clear blue skies. I doubt if we will produce 20 per cent of our food needs this season.
Bad government has a price; the problem is that it is the people as a whole who pay the price and not the perpetrators. Especially it is the marginalized and the poor who suffer and anyone who doubts this simply has to visit Zimbabwe and look beyond the streets of our Cities to see the reality.
Harare 17th March 2015