Mugabe goes Smoot-Hawley

With his nation facing an economic collapse of massive proportions, one might think that Robert Mugabe would seek out all of the foreign investment he could find. Instead, he has decided to go protectionist, and chase out what little foreign capital remains in Zimbabwe. Mugabe signed an indigenisation law that requires all businesses in Zimbabwe to have at least 51% ownership by black Zimbabweans:

Zimbabwe’s President Robert Mugabe has approved legislation giving local owners the right to take a majority share of foreign companies.

Mr Mugabe’s formal approval of the Indigenisation and Economic Empowerment Bill comes three weeks ahead of his country’s presidential elections.

Under the legislation, every company must have at least 51% of their shares owned by black Zimbabweans. If not, the government will block new investment, mergers or restructuring.

Zimbabwe already faces 150,000% inflation and unemployment that now may have reached 85%. Their economy has ceased any meaningful production, and domestic capital is non-existent. Now Mugabe wants to ensure that foreign capital also flees by forcing companies to sell their assets at a pittance for Zimbabwe’s worthless currency.

Mugabe has attempted to run the statist playbook with no success at all. He has tried wage and price freezes, rationing, and wealth-redistribution to respond to the economic collapse that he himself created — largely through wealth redistribution, rationing, and wage and price freezes. He has turned Zimbabwe from a net exporter of agricultural and manufactured goods to a pauper nation where most farm land now stands unused, thanks to its control by Mugabe cronies and Mugabe himself.

This latest indigenisation law mirrors what got Zimbabwe into trouble in the first place. After freeing the former Rhodesia from control by supposed neo-colonists, Mugabe forced white farmers off the land in order to ensure that black Zimbabweans could rise to power. Unfortunately, the move destroyed the agricultural industry, and successive similar moves through the rest of Zimbabwe did the same kind of damage.

This law is nothing more than a threadbare attempt to convince Zimbabweans that a little more isolation can cure all of the ills that Mugabe’s policies of massive isolation produced. He still wants to be seen as the champion of the poor. He may even succeed, even though Mugabe has turned into the greatest single source of Zimbabwean poverty in history. His opponent, Simba Makoni, needs to make that point clear in the upcoming elections later this month.