A Critical Assessment of Zimbabwe’s Economic development

A Critical Assessment of Zimbabwe’s Development
Keely Franke & Simba Mavurudza
Zimbabwe’s Development

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As a colony of the United Kingdom, Zimbabwe once enjoyed a flourishing
economy. However since the country gained independence in 1980, Zimbabwe has seen
a gradual decline in its economic development. Between 1980 and 1995 Zimbabwe’s
post colonial economic development was moving at a progressive rate with policies such
as the Economic Structural Adjustment Program (ESAP) being implemented. After 1995,
despite stable infrastructure and financial systems, Zimbabwe’s economy declined.
Today Zimbabwe finds itself in an economic and political crisis.
President Robert Mugabe introduced a controversial land reform program in
2000. This resulted in an exodus of European farmers, which led to very large tracts of
land being underutilized, and this in turn caused the economy to collapse. Zimbabwe has
also suffered from one of the highest rates of HIV infection in the world. Because of this
there is a high infant mortality rate at 86 per 1000 births, and population growth has
stagnated at 0.2% (HDI 2003). After gaining independence the country’s economic
development has been inconsistent to say the least.
The issues addressed in this paper focus on how Zimbabwe’s government and
population have dealt with various development concerns following their independence
in 1980. These include social and economic issues such as human and economic poverty,
issues of unemployment and inequality related to population, the structure of economy
and how this has affected migration policies, and finally international trade. In
conclusion, the key developmental problems facing Zimbabwe today will be laid out and
possible policies for the future considered.

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Poverty, Population, and Inequality
In 2003 the government launched the National Economic Revival Programme, but
this failed to provide the necessary opportunities for social dialogue. Poor government
budgeting and overspending led to a failure of this economic revival program, and this
has placed an even higher number of Zimbabweans in poverty with a human poverty
index of 45.9% (HDR 2005, 228). These poor economic policies implemented by the
government have also led to over 70% of the population living in poverty (HDI 2003).
This section of the paper will analyze these issues of poverty and focus on how this
affects the population of Zimbabwe today.
Most of the people experiencing poverty in Zimbabwe are located in the rural
areas, where 48% are living below the poverty line. Poverty is not only measured
economically but also socially, for example the “under-five mortality rate” for the poorest
quintile is 100 per 1000 children and 62 per 1000 children for the richest quintile (World
Development Indicators, 56). The probability of not surviving to age 40 at birth is 74.8%
is another example of extreme human poverty (HDI 2003). In addition to this, the
absolute poverty level (those living below US$1.00 a day) is 56% and those living under
$2 a day is at 83% (HDR 2005, 228). Along with these poverty levels is a high degree of
inequality. The richest 20% receive 55.7% of the share of income while the poorest 20%
only receive 4.6% (HDI 2003). The Gini Coefficient also indicates a highly unequal
distribution of income at 0.56 (HDI 2003).
Zimbabwe’s fairly inconsistent population growth has also reflected the unequal
distribution of income. The population density in 1999 was about 27.8 persons/km² with

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Manicaland being the most densely populated province with over 40 persons/km²
(Appendix 1). The most populous rural areas contain 65% of the population, and nearly
two thirds of this population lives in what were formerly called the Tribal Trust Lands
(Nutrition Country Profiles, 5). An uneven age structure also contributes to the unequal
distribution of income and economic strain. It is estimated that around 50% of the
population is under the age of 18 and because of the low life expectancy the population
above the age of 65 is only 2.9% (HDR 2005, 234). In fact Zimbabwe has one of the
lowest life expectancy rates in the world at 36.9 years (HDR 2005, 220).
The total population was estimated to be more than 13.0 million by mid 2005
(World Population Data Sheet, 7). Population is projected to be 14.4 million in 2025 and
15.8 million in 2050 with a natural rate of increase of 1.1% (WPDS, 7). This low growth
rate is a result of the population living with HIV/AIDS. The percentage of the population
between 15 and 49 with HIV/AIDS was 24.6% in 2004 (WPDS, 7). In the last 10 years
Zimbabwe has introduced a large number of family planning resource centers nationwide.
This has resulted in 50% of married women using modern methods of birth control, and
hopefully there will be an increase in the awareness of the HIV/AIDS virus in the future.
This will all depend on the availability of health resources in rural Zimbabwe.
A corrupt government has led to the economic collapse of the country, placing the
people in a very difficult situation. The continual decline of the economy makes living
very hard for the average Zimbabwean. The high population growth rate combined with
the high death rate due to AIDS, other infectious diseases and a lack of government

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funding towards healthcare has led to stagnation in the population. Not only is this a
concern of the citizens of Zimbabwe but for the larger Southern African region. Southern
African public opinion supports changes such as a land reform but fears the adverse
opinion of the Zimbabwean government. In order to combat this fragile situation of
population displacement, ever increasing poverty and the spread of HIV/AIDS, there
would have to be a complete political reform. The government of Zimbabwe needs to
change its economic and social policies as well as make an effort to work on an
international level with organizations such as the UNDP. Expectations for such reform
were raised in 2003 with the introduction of a new Vice President Joseph Msika.
However, since then there has been little sign of hope for the much needed reform.
Environment
This section of the paper focuses on how Zimbabwe’s government and population
have dealt with environmental issues both pertaining to urban and rural areas. This will
include an analysis of the statistical evidence surrounding the environmental state in
Zimbabwe. In the urban areas we will focus on what have been the major sources of
atmosphere pollution, water pollution, and refuse dumps. But mainly, we will focus on
how the people living in rural areas have benefited from projects initiated by the
government to allow people to live in harmony with both flora and fauna.
Zimbabwe’s ecosystem is made up of 54% cropland and crop/natural vegetation
and 43% shrublands, savanna, and grasslands (EarthTrends). The rest is forest, wetlands
and water bodies, and urban built-up areas (Appendix 2). Taking the small percentage of
forest into account, Zimbabwe has exceeded the world average protection

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of tropical forests at 9.0% with 12.2% of their own land being nationally protected
(EarthTrends & World Bank). Still, Zimbabwe faces many environmental issues that are
usual in most developing countries, such as deforestation, soil erosion, land degradation,
and air and water pollution (CIA). The percent of population with sustainable access to
an improved water source has risen from 77% in 1990 to 83% in 2002, but their access to
improved sanitation has only risen from 49% to 57% (HDR 2005, 242). This means that
over half of the population in Zimbabwe is still in desperate need of programs promoting
efficient use of resources.
In the urban areas Zimbabwe’s environment is effected by three main factors:
atmosphere pollution, water pollution, and refuse dumps. Atmospheric air pollution is at
a very high rate, especially during morning and evening rush hours. Smoke can be seen
covering the highways, industrial areas, and even some residential areas. Approximately
20% of transportation, 23% of manufacturing and construction, and 55% of electricity
and heat production contributed to carbon dioxide emissions in 1999 (Earth Trends,
Appendix 3). In the residential areas people contribute to the air pollution through fires
and burning of refuse in neighborhoods (Financial Gazette). These issues are reflected in
the level of carbon dioxide emissions, which were 1.4 metric tons in 1999 (HDI 2003).
Tradition fuel consumption as the percentage of total energy use was also 25.2% in 1997
(HDI 2003).
Most of the rivers and damns in the urban areas have been turned into dumping
grounds by some chemical companies. This is happening even though corporations have
as part of their corporate social responsibility the requirement to address the social

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environmental impact that their industries may cause. In the greater Harare region these
conditions are even worse. The media has reported many victims of water pollution
mostly from chemical factories, raw sewage also from illegal activities, which include
dumping of refuse by members of the public (Financial Gazette). Open refuse dumps are
now common sites in the urban areas. Only 57% of the population having access to
improved sanitation, because of poor government budgeting the municipal authorities
have been rather inept, which has led to members of the public dumping their refuse in
open areas (HDR 2005, 242).
Zimbabwe’s national economy relies on resource extraction, while resource
dependent rural communities comprise 70% of the population (Mitsi & HDR, 2005, 234).
The population living in the rural areas has had a constant battle with trying to live in
harmony with the environment. In most rural communities the environment is not a
priority, however, since the focus of most people is on pure survival. In 1986, the
government introduced the CAMPFIRE project. CAMPFIRE stands for Communal
Areas Management Program for Indigenous Resources. The objectives were to initiate a
project for the future development, management, and sustainable utilization of the
environment (Mitsi, 17). This was done by placing the custody and responsibility of the
environment with the inhabitants of rural communities. Many villages have benefited
through this program by using the natural resources as a source of income (USAID Press
Release).

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The CAMPFIRE program and programs similar to it have been initiated thanks to the
combined efforts of government institutions and Non-governmental organizations.
These issues facing Zimbabwe’s economy have caused environmental
conservation programs to take a back seat and this has led to the deterioration of the
CAMPFIRE program. In the future, the Zimbabwean government will have to be creative
in designing other programs like CAMPFIRE, which will help to provide a substantial
income to rural communities.
Economy & the Informal Sector
Zimbabwe inherited a stable, sophisticated economy when it gained independence
in 1980. The mid 1990s experienced a negative economic turning point for Zimbabwe,
however. Three political factors are contributed to this decline in the economy (Tibaijuka
& CIA). The first was the decision of the government in 1997 to hand out cash to ex-
combatants in order to keep their support. Secondly, its 1998-2002 involvement in the
conflict in the Democratic Republic of Congo had serious consequences on budget
deficits. Finally, the government’s ‘Fast Track’ land distribution programme of 2000 had
a negative effect on agricultural production. This section of the paper aims to focus on
the decline of Zimbabwe’s economy, the destruction of the informal sector in May 2005,
and consequent state of the agricultural sector.
Zimbabwe has experienced an economic crisis in the last nine years. GDP per
capita annual growth rate from 1990 – 2001 declined .2 percent (HDI 2003), and real
GDP growth declined fell by more than six per cent in 2000 – 01 and by more than 30 per
cent in 2002-03 (OECD, 357). GDP per capita (PPP US$) was 2,635 in 2003 and ranked
-20 in the Human Development Index in 2005 (UNDP 2003 & HDR). These are the

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current economic conditions in Zimbabwe and are expected to worsen in the future,
especially due to recent rash decisions by the government such as the “Operation
Murambatsvina”, and the suspension of all support from the IMF (CIA).
The rise of the informal sector has been a relatively new phenomenon in
Zimbabwe. Upon gaining independence in 1980, the informal sector accounted for only
10% of the labor force. In recent years the unemployment rates in the formal sector have
been growing and currently stand at 75% (Tibaijuka, 17). At the same time the ILO
reported in June 2005 that 3 to 4 million Zimbabweans were employed by the informal
sector (Tibaijuka, 17). Despite these successes the government still refuses to recognize
the informal economy since it is not included in the formal measurement of the overall
economy such as GDP. This has only led to neglect of rural employment and increased
poverty levels, which have forced people to migrate to the urban informal sector,
resulting in a vicious cycle. The Zimbabwean Government has found it hard to sustain
the formal sector, and instead of incorporating the informal sector, they began Operation
Murambatvsina in May 2005 with the aim of driving out a large section of the urban poor.
In an attempt to reduce pollution and improve economic conditions in urban areas,
the government initiated “Operation Murambatsvina”. Especially in the shanty towns
surrounding these areas and in the high density suburbs, the government has proceeded in
demolishing people’s homes. In fact Marumbatsvina translates to “clean out the rubbish”.
The campaign effectively destroyed flea markets and housing used by the informal
traders and vendors by bulldozing, smashing and burning structures (Tibaijuka). While it
is argued that Operation Murambatvsina is about restoring economic order, many

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speculate that there are other causes for it. For example, it is suggested that this is
punishment for the urban poor supporting the opposition in the last election, and that the
government will be able to repopulate the shanty town areas with Zanu-PF (the current
political party) supporters afterwards (Tibaijuka). After much condemnation from the
international community, the UN sent in Anna Tibaijuka in July 2005, the Executive
Director of the UN Human Settlements Programme.
Mrs. Tibaijuka’s reaction was similar to most, that this was “a disastrous venture
which has violated international law and created a grave humanitarian crisis.”
Zimbabweans, in fact, refer to this operation as ‘Zimbabwe’s Tsunami’. It is estimated
that over 700,000 people are now without a job and overall 2.4 million countrywide have
been economically affected as opposed to the government’s claim that only 120,000 had
been affected (Tibaijuka). Informal traders have been relocated to the rural community,
causing a burden on a community that they used to provide financial support for. Over
64,677 families have been displaced as well, resulting in the need for emergency relief
and resettlement support (Tibaijuka).
This however was not Zimbabwe’s first experience with evictions. In November
1993, 300 armed police evicted Churu Farm, a well functioning community. Likewise,
Porta Farm was demolished on June 2005, where many of the families from Churu Farm
had resettled (Tibaijuka). Another 800 were forced out of the Killarney Farm community
in the same month. This, in addition to incidences of drought, high costs from the land
reform, environmental degradation, and weak smallholder-agribusiness linkages, has
caused enormous pressure on the agricultural community (FAO & OECD).

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Agriculture is on of Zimbabwe’s three main sectors constituting 16% of
Zimbabwe’s real GDP. However in 2002 it contracted by 24.4% and worsened an
additional 4% in 2003 (FAO, 8 & OECD, 356). By 2004 over 5.5 million people were in
need of food aid, while only 22% of the needed aid was covered (FAO, 8). Current land
reforms are only thought to increase this despair. Zimbabwe Farmers Union (ZFU) is
working hard to help resettled farms who received land under the fast track reform
programme by providing loan security options. (OECD). ZFU also has proposed an
agricultural export retention scheme, which would allow farmers a certain amount of
foreign currency to help start up each season (OECD). However problems in the
agriculture sector are as diverse as the economic crisis in Zimbabwe currently. Economic
reform will require great pressure from the international community, such as the
withdrawal of support from the IMF, and “a reversal of [Zimbabwe’s] whole style of
governing” (Tibaijuka, 27).
International Trade and Relations
Despite major efforts made in the post-colonial era to reform trade policies in
Zimbabwe in the 1990s, recent events have led to a severe retardation in Zimbabwe’s
trade. The government has taken little action to try to change any of these policies in
accordance to the economic disaster that the country has been experiencing for nearly a
decade. Here we aim to analyze the trade policies, which were effective in boosting
Zimbabwe’s economy in the 90s. We will then assess the factors causing the deterioration
of Zimbabwe’s exports and imports, and the debt which has resulted thereof. Finally, we

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will focus on the role the international community has played in foreign aid and debt
relief.
Trade policies have had a significant effect on changes in growth, employment,
and ownership of resources in Zimbabwe. In 1990 the government implemented three
major trade policies: an export retention scheme (ERS), Open General Import Licence
(OGIL), and Export support facility (ESF). The main goal of these programs was trade
liberalization (Chitiga). The ESF included a shift from the rationing of foreign currency
to market based access. Increasing the access to foreign currency gave Zimbabwe a
competitive advantage, and thus allowed for increases in the export of agriculture and
mining. With an OGIL, a certain list of goods could be purchased without foreign
currency restrictions. In addition, the ERS allowed exporters to retain foreign currency to
pay for goods not on the OGIL. Retention increased from 5% in mining and 7.5% in
agriculture to over 50% in all sectors in the early to mid 1990s (Chitiga).
The effect of these policies had a major influence in the overall increase in export
growths, putting Zimbabwe well above the average of African countries during this time.
In years 1991-95 export growth was 6.9% and increased to 15.5% between 1996-00 (IMF,
43). The most negative result in the eight years of trade liberalization was the decrease in
manufacturing exports. During trade liberalization, one inference that can be drawn was
a lack of control of imports. For example, very cheap goods were being imported from
countries like China. This might have led to the manufacturing industry being undercut
as demand increased for these cheaper goods. Overall real GDP declined by 3.8% due to
the “de-industrialization” during this time period (Chitiga).

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Despite such good performance in the 90s, exports took a dramatic decline in
2001. The agricultural sector suffered the most due to a “fast track” land reform program
and poor privatization program (Foreign & IMF). Both programs were implemented in
rash efforts, which led to a lack of transparent, coherent planning needed for any
successful policy. The result of the poor planning in these programs was major shortages
in export crops. To further this dismay, many of the export processing zones (EPZ) were
also slowed or halted due to the poor economic circumstances (Foreign). The percentage
of exports of goods of GDP on the current account rebounded from 7.8% in 2002 to
26.6% in 2004 due to the adjustment of the exchange rate (OECD, 366). Dollar exports
continued to fall during the year however, and the effect on imports has been detrimental.
The government raised tariffs on many of these raw materials and machinery,
including domestically produced foods in 2000 (Foreign). In addition, harsh controls on
foreign currencies were the most significant barriers to imports. The little foreign
currency that was left was allocated to importing food to make up for low agricultural
production (OECD). Still the imports of goods decreased from an already -20.8 per cent
of GDP in 2002 to -43.4 per cent of GDP in 2004 (OECD, 366). At the same time, the
official exchange rate plummeted from 38.1 Z$/US$ in 1999 to 9,922.6 Z$/U$ in 2004
(IMF). As a result, Zimbabwe has seen an ever growing trade deficit, which has widened
from 2.4 per cent of GDP to almost 16.8 per cent of GDP in 2004 (OECD, 366).
The foreign currency crisis and the deterioration of the capital and current
accounts have made it increasingly difficult for the government to repay its debt. As of
2004, external debt amounted to $4.086 billion (CIA). Total debt service as a percentage

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of GDP also decreased from 5.4% in 1990 to 1.5% in 2001 (HDI 2003), reflecting a
cutback in aid and lending by multilaterals. This decrease in funding from donor
agencies led to an increase in payment of foreign payment arrears from US$109 million
in 1999 to US$2.6 billion at the end of 2004 (IMF & OECD, 366). The IMF has also
suspended aid to Zimbabwe since June 2002, because the country exceeds US$132
million in foreign debt. The only economic aid coming into Zimbabwe as of 2000 is
$178 million in humanitarian aid provided by the US and the EU. It is estimated that
nearly two years worth of exports would be needed to finance the gap in the balance of
payments (OECD).
The political crisis deepened when President Robert Mugabe was “elected” for
another term in 2002. This caused many of the foreign investors to pull out, because of
uncertainty over interest rates, inflation, and nationalization of private companies. The
situation in Zimbabwe will only worsen in the future. It has severely impacted foreign
trade, and any hope of reviving the economy will lie in pressure from the international
community in how it distributes aid and recommends more feasible trade policies.
Conclusion
It is hard to say that Zimbabwe is an example of uncontrolled capitalism. The country is
not yet at a point where it is so indebted to donor agencies or other nations that it has lost
the capacity for semi-self sufficiency. Zimbabwe, like Rhodesia before it, seems to be
somewhere in between socialist and capitalist constraints. It is very realistic for potential
capitalists to be successful in the country; yet the government has had a hard time
attracting foreign investment because of its severed ties with the international community.

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Since 1989 the government has pledged to protect Zimbabwe’s poor from economic
dislocations and maintain policies sensitive to issues of equity and equality. So far the
promises have been very inconsistent and so the country’s poor still wait in hope for
Zimbabwe to rise up.
These are exciting but at the same time disappointing times for Zimbabwe, and
for this reason there are a few sharp conclusions that can be drawn. One conclusion we
can draw is that the political scene of the country is not very different from when it was a
colony; the government still oppresses and dissolves all those who pose as a threat or
opposition. The only difference is the race of those in power. As the country moves into
its third decade of contemporary statehood, we still see Zimbabwe in a deep poverty trap.
The gain from continued donor finance is high but at the same time leaves the country so
dependent on foreign aid. All Zimbabwe could hope for is political reform and restoration
of investor confidence as a starting point. What lies ahead though is somewhat uncertain,
but absolutely none of its overlapping, conflicting, and contradictory events promises to
be monotonous/boring/dull?

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Gazette. Retrieved October 23, 2005 from LexisNexis.
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