Batanai Matsika 
THE Economist Intelligence Unit (EIU) recently published its 2020 Democracy Index Report titled, In sickness and in health?. The report has interesting insights given that it provides a snapshot of the state of democracy worldwide in 165 independent states.
This covers almost the entire population of the world and most territories. The index is based on five categories; electoral process and pluralism, the functioning of government, political participation, political culture, and civil liberties. Based on its scores on a range of indicators within these categories, each country is then classified as one of four types of regime: “full democracy”, “flawed democracy”, “hybrid regime” or “authoritarian regime.
The focus of the 2020 report was to assess the impact of the Covid-19 pandemic on democracy and freedom around the world. According to report, only 49,4 percent of the world’s population live in a democracy of some sort while 8,4 percent reside in a “full democracy”. More than one-third of the world’s population live under authoritarian rule, with a large share being in China.
The number of “full democracies” increased to 23 in 2020, up from 22 in 2019. The number of “flawed democracies” fell by two, to 52. A total of 57 are “authoritarian regimes” and 35 are classified as “hybrid regimes”. The 2020 result represents a significant deterioration and came about largely because of government-imposed restrictions on individual freedoms and civil liberties that occurred across the globe in response to the coronavirus pandemic.
Looking at sub-Saharan Africa, many nations are concentrated at the bottom of the democracy index rankings. The continent has only one “full democracy”— Mauritius — and six “flawed democracies”.
The number of countries classed as “hybrid regimes”, at 13, is two less than in the 2019 index. The overall average regional score fell to 4,16 in 2020, down from 4,26 in 2019 — by far the lowest score for the continent since the index began in 2006.
The decline in Africa’s low overall democracy score in 2020 was also driven by coronavirus-related lockdowns, which had a negative bearing on the civil liberties category.
Zimbabwe is classified as an authoritarian regime and has an overall score of 3,16, global ranking of 127 and regional ranking of 29 suggesting that it ranks poorly in terms of democratic ideals. The important question among analysts is why a nation like Zimbabwe should even bother to be a democracy?
We highlight that a wealth of studies suggest that democracy promotes economic liberalisation and that it is preferable for long-term and sustainable growth.
That said, there is no consensus on the correlations between democracy and economic growth. An interesting case study is China. Since the Asian financial crisis in 1997, China’s economic growth rate has never fallen below two percent and has even reached as high as 14 percent.
In stark contrast, however, China records a decreasing trend in its democracy index. As opposed to Western countries, China has adopted a socialist style of governance, in which economic reforms and resource allocation are initiated by the government.
Morgan & Co Research maintains a strong view that government policies in Zimbabwe should be modelled around boosting productivity by focusing more on factors that lead to economic growth.
These include accumulation of capital stock, labour inputs and technological advancements. Improving the ease of doing business and upholding democratic values goes a long way in attracting capital flows into Zimbabwe.
Capital is one of the key catalysts for economic development. We contend that not upholding democratic principles may create hurdles for a developing economy like Zimbabwe, as this can work against the country’s efforts to attract the much-needed foreign investment flows.
In the same way that international investors evaluate country risk by assessing governance, portfolio investors also consider management styles and the quality of teams as a key ingredient in the stock selection process.
Companies that uphold high standards of corporate governance are the clear winners. We like companies that are linked to multinationals and foreign shareholders. This includes names such as Old Mutual Zimbabwe Limited, Delta Corporation, SeedCo International and NMB Holdings, among others.
● Matsika is head of research at Morgan & Co, and founder of piggybankadvisor.com. He can be reached on +263 78 358 4745 or batanai@morganzim.com / batanai@piggybankadvisor.com
