Zimbabwe, a landlocked country in Southern Africa, has passed through peaks and troughs of performance and effectiveness since the dawn of colonialism and provides an interesting case study for the Southern African region. The country, once described as the breadbasket of Africa, is now passing through a critical economic malaise largely due to poor economic policies and bad political leadership. Zimbabwe’s economy is in ruins with hyperinflation and unemployment at around 80 per cent (BBC, 2009). Millions of Zimbabweans are in dire need of food and the country’s infrastructures and institutions are in shambles. This is not all; a majority of adult population is unemployed and owing to this, many Zimbabweans have fled Zimbabwe in search for a new lease of life. Zimbabwe’s children are blighted by the highest mortality, malnourishment and stunted growth of all sub-Saharan region countries (ibid). Cases of HIV/AIDS, tuberculosis and other deadly diseases are not uncommon. Over and above, poverty in Zimbabwe remains considerably high and pervasive and millions of Zimbabweans continue to live lives of deprivation and hardship just to clinch it all.
The purpose of this paper is to discuss the economic performance of Zimbabwe. However, it is important to appreciate the fact that any attempt to grasp the economic performance of Zimbabwe has to be situated and analysed within the overall history of the country’s economy since independence and even beyond. However, for the purposes of this discussion, this essay, among other things, offers a brief political and economic history of Zimbabwe. Furthermore, it outlines the rationale for the economic policies Zimbabwe has pursued over the years and the peculiarity about this country’s economic policies. Additionally, the essay compares Zimbabwe’s economic performance with other few countries in the Southern Africa region. Finally, this essay points out the general challenges and opportunities Zimbabwe is currently facing.
THE POLITICAL HISTORY OF ZIMBABWE
According to World Book Encyclopedia (2001:596), “Zimbabwe has had a troubled political history.” Zimbabwe, formerly called Southern Rhodesia was the former British colony which became an independent Republic on 18th April 1980 after a prolonged war of liberation. The head of state since independence has been Robert Mugabe, leader of the ruling ZANU-PF party (Sichone, 2003:1). However, the political history of Zimbabwe dates back to the 1400s when there was a branch of the Shona called the Karanga which established the Mwanamutapa Empire which included most land of what is now called Zimbabwe. Since Zimbabwe is endowed with vast amount of minerals such as gold, many Europeans especially the British came to occupy Zimbabwe hence that was the beginning of colonialism. In 1897, the Britain recognized Southern and Northern Rhodesia as separate entities.
In 1953, the Britain set up the federation of Rhodesia and Nyasaland which was later dissolved in 1963 (Hazzlewood, 1967:228). In 1964, Nyasaland and Northern Rhodesia became independent while Zimbabwe (Southern Rhodesia) did not. As a consequence, a prolonged fighting between black Zimbabweans and white rulers broke up as many black Zimbabweans started clamouring for independence. In 1979, due to outside and internal pressure, the then prime minister of Zimbabwe Ian Smith began to cede some level of authority to the blacks. Finally, the whites succumbed to calls of independence and an election was held in 1979 which resulted in a government with a majority of black leaders and Abel Muzorewa became the first black Prime Minister (WBE, 2001:597).
However, there were some misunderstanding with the way these elections were held and as a result another election was held in 1980 which saw the Zimbabwe African National Union Patriotic Front (ZANU-PF) claiming a landslide victory (Mandoza, 1986:84). Since the ZANU-PF accumulated many parliamentary seats, its leader, Robert Mugabe, was automatically elected Prime Minister of Zimbabwe. And as already stated, Britain granted independence to Zimbabwe on April 18, 1980 and because of this many whites returned home. After five years, another set of elections were also held and Mugabe returned his position. However, in 1987, the office of the Prime Minister was replaced by the office of the president as the highest government post (ibid).
Since 1980, Mugabe has ruled Zimbabwe but his reign has been marred by many political bickering, violence and tension coupled with a dwindling economic performance. For example, the opposition parties have always disputed the elections that happen in the Zimbabwe as undemocratic. This has especially been true as evidenced by the disputed elections in March 2002 and the recently conducted elections. Led by main opposition leader, Morgan Tsvangirai, the opposition has always taken a swipe at Mugabe’s leadership but this has yielded no fruitful results. Perhaps, after seeing that Mugabe is taking more time to retire than expected and wanted, Tsvangirai has now joined a government of national unity with Mugabe with an aim of restoring the old glory that Zimbabwe used to take delight. However, the problems faced by Zimbabwe still remain large and growing.
THE ECONOMIC HISTORY OF ZIMBABWE
The economic history of Zimbabwe is as old as the country’s history itself. As already mentioned, many whites started to trek to Zimbabwe after discovering that it offered an enormous potential for economic development with her minerals. Zimbabwe is an important producer of coal, gold, nickel and other valuable minerals. Perhaps mention must be made here that Zimbabwe was also used as an administrative capital for the federation. This offered Zimbabwe a huge opportunity to prosper since other countries were being used as labour reserves for her. Since time immemorial, commercial agriculture has been the backbone of Zimbabwe’s economy. Furthermore, the agriculture sector is the largest employer in Zimbabwe. The country’s chief agricultural exports include beef, coffee, tea, flower, vegetables, fruits, corn and tobacco. It should also be noted that the manufacturing sector in Zimbabwe is amongst Africa’s largest (Gibbon, 1995: 18).
The economic history of Zimbabwe began with the transition to majority rule in 1980 and Britain's ceremonial granting of independence. The new government under Prime Minister Robert Mugabe promoted socialism, partially relying on international aid. The new regime inherited one of the most structurally developed economies and effective state systems in Africa (Hazzlewood, 1967:284). Initially the government followed a corporatist model with government management of the economy maintaining policies first instituted by the previous government to deal with UN-sanctions imposed in 1965. The state already had ownership of utilities and agricultural marketing agencies. The new government added to this by buying out more private companies. The government also extended existing protectionist policies. Throughout the 1980s, the economy performed extremely well which led the Central government expenditure to triple and increase its share from 32.5 percent of GDP in 1979 to 44.6% in 1989 (ibid).
However, this did not last long because the economy nosedived after 1989 due to a number of reasons and this led to the adoption of the Economic Structural Adjustment Programmes (ESAP). Generally, these measures were inter alia intended to improve resource allocation, increase efficiency, expand growth potential and enhance resilience shocks (World Bank, 1994:267). However, despite these reforms, the Zimbabwe’s economic blues continued during the 1990s. Perhaps, this was due to (1992, 1993, and 1995) droughts which heavily impacted on agriculture. Other factors such as the 1998 Mugabe's intervention in the civil war in the Democratic Republic of the Congo (Kinshasa)—purportedly to protect his personal investments—resulted in suspension of international economic aid for Zimbabwe. This suspension of aid and the millions of dollars spent to intervene in the war further weakened Zimbabwe's already troubled economy.
Zimbabwe's economy continued to consistently shrink upon entering the new millennium, in an atmosphere of political turmoil coupled with capital flight and mismanagement. Inflation had spiraled out of control and the underpinnings of the economy in agriculture and industry had been dissipated. Furthermore, the law which was passed in may 2000 to allow the seizure of almost all white-owned commercial farms without compensation further aggravated the situation. To date, the economy has continued to plunge largely due to poor political and economic leadership.
THE ECONOMIC POLICIES ZIMBABWE HAS PURSUED OVER THE YEARS
According to Gibbon (1995:7), “Zimbabwe’s social and economic policies can be grouped into four main phases in post-colonial era.” The first, from independence to 1982 was accompanied by an economic boom and characterized by twin phenomena of the adoption of redistributive policies and a high level of mutual suspicion between government and capital (ibid). A second phase, from 1982 to around 1986, contained two major economic recessions, a check on redistributive policies and continuing cool relations between government and capital. The third, dating from 1986 to 1990 involved the resumption of a degree of economic growth and the downplaying of redistribution. The fourth, that of structural adjustment began in 1990 and has been marked by a very severe drought and economic contraction, an implicit rejection of redistributivism and liberal economic policies. The Structural Adjustment Programmes (SAPs) included among other things, removal of price and wage controls, reduction of government expenditure, a 40 per cent devaluation of Zimbabwean Dollar, removal of subsidies on basic consumer goods, a radical restructuring of various parastatals and other public enterprises (Sichone, 2003:1). The aim of SAPS was to correct unsustainable disequilibrium in the balance of payments.
However, with these economic policies, Zimbabwe is still characterized by a restrictive trade regime, particularly on the capital account (http://www.oecd.org/dataoecd/2/55/11978664.pdf). Furthermore, the economy has continued to slump mainly because of Zimbabwe’s unique policies. Firstly, it should be noted that the government in Zimbabwe espoused a socialist ideology, similar to the African socialism which had been adopted by majority governments in most of the continent's ex-colonies. As a result of adopting this ideology, the two major aims of the ZANU-PF's economic policies were growth and redistribution of resources. In attempting to spur growth of the economy, the plan was to redistribute wealth, both public and private, from the minority of whites controlling the economy to majority of blacks that made up the population. In theory the policies made sense. However, these policies had serious implications as several white settlers started to walk out of Zimbabwe and their enterprises collapsed.
ECONOMIC PERFOMANCE FROM 1995 TO PRESENT
This section reviews Zimbabwe’s macro-economic performance and its economic structure since 1995. This essay uses two neighbouring countries, South Africa and Zambia, as comparators of Zimbabwe. Zambia provides a direct comparison while South Africa represents a regional standard that Zimbabwe should aspire to achieve. In addition, Zimbabwe’s economic performance has been compared with other low-income countries in the SADC region.
It is important to note that the economy of Zimbabwe has plummeted over the past years. The crisis has been largely attributed to economic mismanagement, poor governance, and loss of support from the international community, all compounded by periods of drought. The collapse was triggered by the government’s decision in 1997 to ignore fiscal constraints in making large payments to veterans of the Independence struggle. Then, in the wake of political setbacks in 1998, the government announced the seizure of white-owned farms, which exacerbated the instability .Another pivotal event, was the controversial Fast Track Land Reform scheme for involuntary land redistribution in 2000, which led to a precipitous decline in productivity and output in agriculture, formerly the mainstay of the economy.
Using the purchasing power parity (PPP) method of calculating the GDP, Zimbabwe’s per capita income in 2006 was $2, 437—a drop of more than 23 per cent since 1998. Furthermore, the GDP declined by 30% from 1998 through 2003, and fell another 5.2% in 2004 (Townsend and Copson, 2005:1). In an economy characterized by declining per capita income, hyperinflation, high unemployment, shortages of food, fuel and foreign currency, it is not a surprise that poverty levels are extremely alarming. For example, the 2003 Zimbabwe’s Poverty Assessment estimated that 72 per cent of the population lives below the poverty line. This is 17 per cent point higher than the figure of 1995 which was at 55 per cent. As a point of interest, this was worse than the extremely highest rate of Zambia which was at 68.0 in 2004.
The economic crisis has brought with it severe shortages in food and other necessities. Between 2002 and 2004, an average of 47.0 per cent of the population could not fill their minimum dietary consumption needs. This is due to a combination of an adverse weather conditions, deteriorating irrigation system, and the loss of service sector support in rural areas due to the closure of large-scale commercial farms. According to World Food Programme, more than 4 million Zimbabweans face food shortages today (http:/www.wfp.org/country_brief/indexcountry.asp?country=716).
In summary, the economy of Zimbabwe is in shambles. The harbinger of all the problems has been retrogressive economic and social policies, hyperinflation, and political distress.
ZIMBABWE’S CHALLENGES AND OPPORTUNITIES
That Zimbabwe is in the middle of large and growing challenges cannot be overemphasized. The challenges are serious and many. However, there is a flicker of hope that sooner or later Zimbabwe will be back to its impressive performance. However, this requires a concerted effort on the part of the Zimbabwean government and the donor community.
Perhaps, one major challenge crippling Zimbabwe is political instability. It does not need deep knowledge to sense the link between political stability and economic development. There can never be development in a country where there is political unrest. Sadly, in Zimbabwe, there has been political instability in the country marked by political violence, arrest of opposition politicians, human rights activists, journalists and university students. Furthermore, the elections that have happened in Zimbabwe in recent years have always been disputed as the opposition parties have claimed that they have been rigged. A case in point being the recently conducted elections where the opposition leader Morgan Tsvangirai refused to contest arguing that the elections were marred by violence and intimidation (BBC News, 2009).
In summary, there is no democracy in Zimbabwe and this has been evidenced by the muzzling of the press and the media in general, suppression of Non-Governmental Organisations and the arrest of opposition politicians and supporters. For example, the Zimbabwean government passed the Access to Information and Protection of Privacy Act (AIPPA) and the Public Order and Security Act (POSA) in 2002 and 2003 respectively, which have been used by ZANU-PF to suppress freedom of speech (Townsend and Copson, 2005:3). AIPPA requires that all media services be licensed by the government, and that all journalists, including foreign correspondents, to be officially accredited while POSA prohibits any “abusive, indecent, obscene, or false statement” about the president, and prohibits false statements prejudicial to the state. An interesting case in point being the arrest of opposition politician Roy Bennet who is also the Deputy Minister of Agriculture in the new government of national unity formed by Tsvangirai and Mugabe (BBC News, 2009).
There is also another undemocratic legislation called the Non Governmental Organisation Bill which was passed in July 2004 (Townsend and Copson, 2005:4). The bill prohibits foreign non governmental organizations (NGOs) from operating in Zimbabwe if their principal objectives include issues of governance, which in turn include the promotion and protection of human rights. Domestic NGOs are prohibited from accepting foreign funds for carrying out activities involving issues of governance. All NGOs are required to register with the government, and a council is established with wide powers to investigate and regulate NGOs.
Another major challenge being faced by Zimbabwe is the suspension of foreign developmental aid by the international community. Several international financial institutions such as the International Monetary Fund, World Bank and major donors such as United States of America and the United Kingdom suspended their aid as a result of poor governance and Zimbabwe’s disrespectful of human rights.
Furthermore, HIV/AIDS is also another serious and growing challenge that has beset Zimbabwe. For example, almost 25 per cent of the Zimbabwean adult population is HIV positive (Townsend and Copson, 2005:3). This has resulted in the reduction of life expectancy as several Zimbabweans have been shoved to the grave. Other challenges as already stated in this essay include macro-economic instability, hyperinflation, shortage of fuel and growing poverty and increased inequality.
However, all is not lost. Despite these challenges, the prospects for an economic recovery seem to be there. The economy has recently stabilized perhaps thanks to the formation of the government of national unity between two political rivals, Mugabe and Tsvangirai. Furthermore, it should also be noted that while several governments have been moving to isolate Zimbabwe, Harare has recently found a new lease of life thanks to the strengthening of diplomatic ties with Mainland China. Additionally, the pursuance of other new economic policies, such as the withdrawal of the worthless Zimbabwean Dollar from circulation early this year, is also breathing a new life into the economy which had battled the world’s record beating inflation (use of foreign currency was also legalized) (BBC News, 2009).
Finally, it should be noted that recently the Zimbabwean economy has been projected to grow by 3.7 per cent this year, according to the IMF in its latest edition of the World Economic Outlook published in September 2009 (BBC News, 2009). The report forecast that growth in the Southern African nation’s GDP would accelerate to 6 per cent in 2010 (ibid). Furthermore, consumer inflation would average 9 per cent this year alone and rise to an average of 12 per cent in 2010. The fund further estimates that the country’s current account deficit which is at 21.4 per cent would narrow to 19.9 per cent come next year (ibid).
CONCLUSION
In a nutshell, this essay has analysed the economy of Zimbabwe. It started off by looking at the political and economic history of Zimbabwe and it offered the rationale for the economic policies which were adopted. It further analysed the economic performance from 1995 to the present. This was done by comparing with other countries in the SADC region. Finally, the essay has provided the general challenges and opportunities that Zimbabwe is facing.
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