The hazards of inefficient leadership..

It is often said, a team is only as good as its captain. The approach of the people at the pinnacle is most important for the progress of any organization. Inefficiency in leadership and corruption at the highest level always means prevalence of total chaos. Be it the case of the Satyam scandal, or the 2G scam, lack of transparency in corporate governance has always been one of the main reasons for the downfall of many a company. The effects of these scams were restricted to the stakeholders of a company, or to a particular section of the society. However, there have been extreme cases of poor governance that led to the downfall of the nation’s economy. One such example is the case of Zimbabwe, when unstable governance and lack of fiscal discipline led to the collapse of the monetary system of the nation, and the usage of the local currency had to be suspended totally.

The major cause for this economic disaster was the land reforms that Robert Mugabe introduced, starting from 1999. The reforms intended to redistribute wealth from the hands of the Whites to the Blacks. The violent land reform program destroyed the agricultural sector in Zimbabwe and in particular the tobacco industry which accounted for one-third of Zimbabwe's foreign exchange earnings. This made the economy further prone to hyperinflation.

The second cause for this hyperinflation was civic unrest. The Mugabe government organized a massacre, which was responsible for the death of 20000 of the minority population. The controversial land reforms also triggered a round of civil unrest. Unrest led to poverty and violence. The initial inflation caused further poverty and poverty created more of unrest.

Rash fiscal measures were taken by the government, such as printing money to finance troops, to increase the salaries of army and government official and to repay debts to the IMF. These measures led to the weakening of the economic system. Irresponsible printing of currency led to inflation, which was fuelled by other factors. The government continued to print currency in spite of the onset of hyperinflation. While the government lacked stability and fiscal discipline and the citizens were experiencing serious bouts of malcontent and strife, the perception of strength of the currency was dropping and hence it was weakening by the day.

The currency black market in Zimbabwe was also very much active, and the government did nothing to control it, because of which the collapse of the economy was triggered. The central bank tried out few restrictions, but was unsuccessful in creating a lasting impact. The Zimbabwean currency had to be suspended, and to date, the US Dollar is used for all transactions. Thus shows the importance of effective governance at all levels.