Last month Robert Mugabe was ousted as leader of Zimbabwe, bringing down 37 years of despotic rule. He was replaced by former ally Emmerson Mnangagwa, who has insisted what happened wasn’t a coup despite looking and feeling exactly like one.
Zimbabweans have celebrated: Mugabe was almost universally disliked at the time of his exit. His kleptocratic rule and disastrous land reforms have left the southern African state penniless and riven with corruption.
Mnangagwa swore in his cabinet yesterday. His credentials as a reformer are optimistic at best. But there are ways he can revamp Zimbabwe’s failing economy – and many are directly associated with tech.
In a country where unemployment has reached 91%, and just 5% of Zimbabweans are in formal employment, startups have become a vital way to make a living. An energetic cluster of companies has emerged in the past few years – mostly in the capital Harare, a compact and green city of 1.5m that is Zimbabwe’s political and financial powerhouse.
The ecosystem’s genesis came when mobile Internet was rolled out countrywide in 2010. The country has good backbone fiber optic infrastructure and access to neighboring nations like South Africa, which is the regional tech capital.
“Zimbabwe has been lucky to be the second hub of connectivity in the region, after South Africa,” says Limbikani Makani of online portal TechZim. The growth of that connectivity within Zimbabwe, however, has been “slow, and remains quite small,” he adds: Internet penetration is just 50.1% and only 15% of Zimbabweans own a smartphone. Seventy percent of smartphone usage runs through WhatsApp: for many Zimbabweans, the app is the Internet.
That has everything to do with Zimbabwe’s economy under Mugabe. The country gave up its currency in 2009 amid hyperinflation that led to the printing of 100 trillion Zimbabwean dollar notes. It now uses the US dollar, South African rand and digital money.
Mugabe’s plans to seize 4,500 white-owned commercial farms failed. Many were given to allies and party officials who allowed land to fall into disrepair. Others were handed to citizens with little or no farming experience. Recent extreme weather has decimated Zimbabwe’s agrarian policy. Around 25% of Zimbabwe’s 16m citizens require food aid.
“Our biggest problem is corruption,” says Nigel Mugamu, founder and editor of 263chat.com, an online magazine launched in 2012. “Many people have been awarded the same piece of land corruptly. The cost of doing business can be expensive, but also cumbersome and tedious.” Blockchain technology could help create a corruption-free land registry, he adds.
Mnangagwa has become the face of change. He is far from it. The man known as “The Crocodile” for luring victims into his jaws is a war criminal and former direct beneficiary of Zimbabwe’s illegal mining for blood diamonds in the Democratic Republic of Congo.
Early signs of Mnangagwa’s premiership, including the hiring of Army officials to government posts and threats to members of the press, do not bode well for a clean break from kleptocracy. One can almost hear the calls of “crisis” that might forestall next year’s election. Its occurrence will determine whether Zimbabwe can move on from almost four decades of dictatorship.
Ironically, as Mnangagwa’s jaws were closing around his leadership, Mugabe’s last State of the Nation address promised an unleashing of entrepreneurialism in Zimbabwe. “Government will soon unveil an entrepreneurial skills and business development program which will empower and unleash gainful projects at our growth points and in rural areas,” he said as part of a rambling, 20-minute speech.
Entrepreneurs saw few signs of that enthusiasm. Data and rents are prohibitively high. Investors are practically nonexistent. Banks are rarely willing to hand out loans. “The financial situation is not conducive,” says Mugamu. “So it makes things trickier, tougher.”
Most startups, like 263chat, work out of shared office space. “A lot of times we don’t need money,” says Mugamu. “A lot of times it’s just, ‘Can you provide a desk and some solid Internet?’ And we can show up and do the work.”
“The last government did not believe in the future of tech startups,” adds Tapiwa Mukori, of Harare-based Innovative Technologies. “However on the tech industry as a whole they have enacted tax laws like the payment of import VAT only, and 0% duty on all imports of IT gadgets, except for mobile devices.
“There is good mentorship across the business arena as a whole but unfortunately a huge gap in the tech startup scene,” he adds.
Among those who have broken through these barriers are SAITH Technologies, which has built the first self-powered electric car in Zimbabwe. Vermi Aquaponics is an award-winning agritech business, while Esaja.com is a marketplace for intra-African trade. Road Rules helps Zimbabweans pass their driving test, and Chase Music Player enables peer-to-peer file sharing.
Bitcoin has become a crisis currency as Zimbabwe’s economy has tanked. Bitcoins were worth almost double that anywhere else on earth after the military takeover, on Golix.io, the country’s only cryptocurrency exchange. Zimbabweans have been buying bitcoin in huge numbers to bypass their economy and import foreign goods. However as recently as November 22 the Reserve Bank of Zimbabwe (RBZ) warned against bitcoin’s use.
“In terms of the Bitcoin, as far as we are concerned, it is not actually legal,” said RBZ director Norman Mataruka. “In Southern Africa, what we have done as regulators, we have said that we will not allow this in our markets.”
“Research is currently being undertaken to ascertain the challenges and risks associated with these particular products and until we have actually established and come up with a legal and regulatory framework for them, it will not be allowed,” added Mataruka.
One of Mugabe’s positive legacies is an education system envied across sub-Saharan Africa. Among the country’s most illustrious graduates is Sifiso Dabengwa, the former CEO of MTN Group, one of the world’s largest telcos.
But Mugabe viewed tech with great suspicion. “Even though they gave speeches with catchphrases about ‘increases in connectivity being correlated to rise in GDP’ and did some ceremonial things for startups, on the ground they mainly saw the Internet as a threat because of the free flow of information,” says Makani (When a tractor cut through cables on the South African border yesterday, downing the web, Zimbabweans immediately spoke of a government conspiracy).
Politics affected startups greatly, Mugamu says: “If you didn’t support the party you might not necessarily get the support.” With Mugabe gone, Zimbabwe’s entrepreneurs hope they can reverse his damage, and make some money for themselves along the way.
The tide was changing before last month. While the West cut off Zimbabwe over its unpaid debts, China stepped in, signing energy and telecommunications deals worth $1.1bn. A Chinese envoy recently announced that the country is willing to work alongside President Mnangagwa. American diplomats have sounded interest in working with Zimbabwe.
Zimbabwe paid off its debt with the International Monetary Fund in October last year. Britain has indicated that it will extend a loan to Zimbabwe, so that it can reduce its arrears with the World Bank and African Development Bank.
“Recent events in Zimbabwe offer a moment of hope for the country and its people,” said British foreign secretary Boris Johnson. “This is a time to look to the future and to make clear that Britain shares the common vision of a prosperous, peaceful and democratic Zimbabwe.”
“(Zimbabwe’s) challenges are perfect ingredients for the development of a tech driven country,” wrote Wesley Diphoko, head of Harare’s Independent Digital Lab, recently. “The absence of quality Internet, the absence of a national currency, the flight of tech skills and the absence of major local tech platforms in the country are some of the key challenges that will inspire technology investments and inspire tech-led transformation.”
Democratic optimism may be premature. And Zimbabwe needs more than a tech industry to survive the storms ahead. But Mugabe’s political demise will surely precipitate more cooperation with tech ecosystems across southern Africa, including in South Africa, Nigeria, Ghana and Kenya. That will bring capital and, Zimbabwean entrepreneurs hope, more chances for success.
“I’ve spoken to people who wanted to leave the country,” says Mugamu. “But now they’re waiting to see what happens: the elections, the new president, his swearing in.
“Obviously there’s a caution,” he adds. “But I know the British foreign secretary spoke last week and said he was willing to engage Zimbabwe. Those are all positive signs.”