Question

Scrutinize Zimbabwe’s economic policies after 1980. How successful have they been over time?[25 MARKS/ 5 PAGES]

Answer 1

• In its 36 years of existence as an independent state since 1980, Zimbabwe has come up with several economic blueprints aimed at promoting sustainable economic growth and poverty alleviation. Early years of independence were marked by policies aimed at redressing colonial era imbalances by assimilating previously marginalized people into the mainstream economy.
• These people did not have the means and capacity to participate in the economic programmes and government had to assist them through providing free education and health, job creation and land resettlement. Later on the thrust was to wean off the citizens from too much dependence on government for survival with the economy moving from being tightly controlled to liberalization.
• Since independence in 1980, Zimbabwe has implemented numerous economic policies.The latest policy, the Zimbabwe Agenda for Sustainable Socio-Economic Transformation, commonly known as the Zim Asset, is the “new economic blueprint” set to revive the fortunes of the country which has been under immense pressure since the dawn of the new millennium.
• Soon after independence, the country underwent a period of post-war reconstruction and the government invested heavily in health, education, rural development and productive sector supported by foreign donor funding and increased government expenditure.
• During the 1980s, the country implemented the Growth with Equity (1981), the Three Year Transitional National Development Plan (1982-85), and the First Five Year National Development Plan (1986-90) policies.
• The objectives of the first two policies were to create a “socialist and egalitarian and democratic society” while the later sought to achieve economic transformation and growth. World Bank data show that Zimbabwe’s GDP (at 2005 constant prices) grew by an average of 5,38% per annum between 1980 to 1990 and that public expenditure was high for most of the decade.
• Post 1990, Zimbabwe undertook several economic policies.In 1998, the Zimbabwe government launched, two years behind schedule, the second stage of its economic structural adjustment programme, the Zimbabwe Programme for Economic and Social Transformation (Zimprest).
• The Zimprest (1996-2000) was aimed at creating a stable macro-economic environment to support increased savings and investment in order to achieve higher growth and improvement in the standard of living for all Zimbabweans.
• Zimbabwe Agenda for Sustainable Socio-Economic Transformation (Zim Asset) is a five-year policy currently in implementation. It will run from October 2013 to December 2018 and aims at driving Zimbabwe “towards an empowered society and a growing economy” and is set to achieve “sustainable development and social equity anchored on indigenisation, empowerment and employment creation” underpinned on natural resource exploitation and human capital.
• Policies in 2009-2013 have led to an initial successful stabilization of the Zimbabwean economy, which has recovered growth after a decade-long contraction. Despite a vigorous initial rebound, growth is fading. The Zimbabwean economy has not yet entered a phase of sustained economic transformation and broad-based socioeconomic recovery.
• At the same time poverty remains widespread, with 70 percent of Zimbabwean living under the national poverty lines, and 22.5 percent (2.8 million people) in extreme poverty. Policies over 2013-2018 will be critical in defining Zimbabwe’s path to development and shared-prosperity, and stopping the decline in human development indicators (education and health) in order to re-establish Zimbabwe as a leader in Africa.
  
• Zimbabwe’s prospects for recovery and long-term development hinges on
  addressing three main challenges :
• 1. Fostering Broad-based Economic Transformation
• 2. Eradicate Extreme Poverty and Rebuild Human Capital
• 3. Recover Access to International Financial Markets
• Despite encouraging results in stabilizing the macroeconomic and fiscal framework, the outcome of recent economic policies has been mixed:
• (i) rapid growth in the wage-bill has led to continued underfunding of the necessary public and social services and infrastructure development,
• (ii) the country has yet to establish a link between mining development and broad-based socio-economic recovery,
• (iii) uncertainty around implementation of indigenization policies has stunted the recovery of levels of FDI, with depressing effects extending to domestic investment,
• (iv) a stronger integration into the global economy is yet to be achieved.
• (v) the important external debt overhang has not yet been resolved, and the country has been increasingly relying on non-concessional forms of financing,
• (vi) lack of policy consistency upset efforts toward economic reforms and recovery.
• Accordingly, the quality of policy in the mining and agricultural sector will be a strong determinant of the pace of growth of the Zimbabwean economy in 2014-2018. Stronger policies in the mining and agricultural sector will ultimately have positive downstream effects on the manufacturing sector and on services.