The turn into the new millennium coincided with Zimbabwe’s worst economic crisis. It was characterised by a 40 percent decline in GDP (World Bank, 2006), a rate of inflation that had been rising since 2000 and reached its highest at more than 1 500 percent in 2008 (CSO, 2008) and acute foreign currency shortages. The economic meltdown was also associated with the shrinking of industrial activity, through the closure of many manufacturing concerns and downsizing of some,
and consequent high unemployment rates (estimated to be in the range of 70 percent of the total labour force). The economic decline affected the social reproduction capacities of both urban and rural households. Formal sector urban employment shrunk from 3.6 million in 2003 to 480 000 in 2008 (Mail and Guardian, 18 January 2009) and even those who managed to retain their jobs were in most cases receiving wages that are below the poverty datum line, mostly eroded by the hyperinflationary environment.
There are various explanations for the collapse. Some identify the roots of the crisis in the IMF and World Bank led economic reform programmes adopted in 1990 (Moyo, 2001; Yeros, 2002a; Moyo and Yeros, 2005b; Murisa, 2008), while others (Hammar et al., 2003; Richardson, 2005) emphasise the ‘mismanagement’ of the economy, corruption and the inappropriate way land reform was executed by the GoZ and the consequent loss of property rights. These two supposedly opposing viewpoints are complementary and only provide a more comprehensive picture when analysed as two sides of the same coin.
More critically, the initial causes of the crisis are to be found in the history of decolonisation, especially the conditionalities of the Lancaster House Agreement which limited the possibility of a sweeping land redistribution process in the first decade of independence. The reformist approach promoted by the Lancaster House Agreement and also religiously pursued by the new ZANU (PF) government contributed towards an enclave form of economic development in which only a minority benefited from the peace dividend of independence. The failure on government’s part to come up with a comprehensive form of development based on significant redistributive land reforms ensured that most the population remained very vulnerable to poverty. Furthermore, government’s increased social expenditure, especially in education and health delivery, was not complemented by an increase in government revenues but was highly dependent on government borrowing. The economic reforms of the 1990s were partially imposed on the government as part of a strategy to reduce social expenditure but instead they contributed towards the shrinking of most sectors of industry, in the process fuelling urban to rural migration which also renewed demands for land redistribution (Moyo, 2000).
Foreign funding continued to trickle in during most of the 1990s. In fact the last balance of payment (BoP) support of US$193 million dollars from the IMF was received in August 1999 (ICG, 2004:67). From that time until the now (February 2017) Zimbabwe has not receive any support from the IMF but has instead been struggling to make payments. Most of the World Bank supported infrastructure development projects came to an end towards the end of the 1990s. Even the World Bank (2006:4) acknowledged that “isolation from the global economy” was one of the major causes of the crisis.
Besides the structural constraints and isolation from international finance there has been significant economic mismanagement by the ZANU (PF) government. In 1988 the then Prime Minister (Robert Mugabe) had to assemble a commission of inquiry under the chairmanship of Judge Wilson Sandura to investigate allegations of impropriety in the use of a ministerial car vehicle scheme. The allegations were that cabinet ministers were buying cars at a very low cost through the scheme and selling them on the open market. The commission’s report named five cabinet ministers who had abused the scheme and they were forced to resign (Sandura Report, 1987). This is one of the few proven examples that demonstrate the corrupt practices of ZANU (PF) elites. The process of land redistribution has also been marred by allegations of multiple farm ownership amongst ZANU (PF) elites.
In the post-2000 period one of the most salient areas where principles of public finance management have been violated in the country was the way the in which the central bank under the then governor Gideon Gomo was granted considerable policy space to literally run the economy to respond to the crisis and to ensure that the state can continue to provide support to critical sectors such as Agriculture and Manufacturing. From 2003 to 2008 the central bank was engaged in what it termed ‘quasi-fiscal’ activities which entailed expenditure in several agrarian reform programmes and economic recovery programmes. This form of government expenditure did not go through the normal channels of the budget-making process, such as prior consultations and seeking approval from Parliament. In the era of hyperinflation these quasi-fiscal activities became more important than the national budget allocations which were swallowed by inflation within two months of announcement, thereby reducing every government department and programme to dependence upon an unelected authority. The 2006 World Bank report on Zimbabwe correctly cited “weak and incoherent macroeconomic management frameworks, frequent droughts, an unfavorable policy environment and the disruptive effects of the fast track land reform programme as contributing factors to the crisis” (World Bank, 2006:4-5).
Some of the causes of the economic crisis are to be found within the political landscape. The ZANU (PF) dominated regime has since the late 1990s, especially after the abandonment of ESAP and the military intervention in the DRC, been under close scrutiny by the international community. Its intolerance of dissent and handling of the opposition and civil society based political and human rights activists have earned the country’s leader, President Robert Mugabe, the title of ‘dictator’ and at one time he was equated to Milosevic (Yeros, 2002b).
The way land was compulsorily acquired from 1997 onwards affected the confidence of would-be investors as it destroyed one of the sacred values of neoliberal economic management, the sanctity of property rights. In response to compulsory land acquisition and other politically related human rights violations the US government passed the Zimbabwe Democracy and Recovery Act (ZIDERA) in 2001. The Act effectively empowers the US to use its voting rights and influence (as the main donor) in multilateral lending agencies, such as the IMF, World Bank, and African Development Bank, to veto any applications by Zimbabwe for finance (Hondora, 2008:1).
The opposition Movement for Democratic Change (MDC) was during the same period able to sustain the agenda for democratic change in Zimbabwe on the international agenda. At times the description of the social and economic conditions have been characterised by hyperbole to suggest ‘catastrophic collapse and ruin’. The hemorrhaging of bilateral aid and BoP support has had a broader negative effect on economic growth and social service delivery.
The effect of political conflict on the economy has also contributed towards other dimensions of the crisis within the local political and social arena. Ever since the constitutional referendum of 2000 there has been hardening of political positions bordering on intolerance and impunity on the part of the state. The political contest has been constructed through the dichotomy of either a radical nationalist redistributive project carried out as historical redress in the face of neoliberal orthodoxy, or a breakdown of the norms of liberal governance through the machinations of an authoritarian political figure (Raftopolous, 2005:10).
- Central Statistics Office, 2008, ‘Report on Macro-Economic Indicators’, unpublished report.
- Hammar, A., Raftopolous, B., & Jensen, S., (eds) 2003, Zimbabwe’s Unfinished Business: Rethinking Land, State and Nation in the Context of Crisis, Harare; Weaver Press.
- Hondora, T 2008, ‘Economic Sanctions Undermine Zimbabwe’s Economy’, Zimbabwe-Update, 12 January 2008, available at newzimbabwe.com, accessed on 13 March, 2009 at 11:14am.
- International Crisis Group 2004, Blood and Soil: Land Politics and Conflict Prevention in Zimbabwe and Southern Africa, ICG Africa report No.85, ICG Press, Brussels.
- Mail and Guardian (South Africa), 18 January 2009.
- Moyo, S 2000, Land Reform under Structural Adjustment in Zimbabwe: Land Use Change in the Mashonaland Provinces, Nordiska Afrika Institutet: Uppsala.
- Moyo, S 2001, ‘The Land Occupation Movement and Democratization in Zimbabwe: Contradictions of Neoliberalism’, Millennium Journal of International Studies, Vol. 30(2), 311-330.
- Moyo, S & Yeros, P 2005b, “Land Occupations and Land Reform in Zimbabwe: Towards the National Democratic Revolution”, in Moyo, S. and Yeros, P. (eds), Reclaiming the Land: The Resurgence of Rural Movements in Africa, Asia and Latin America, ZED Books: London.
- Murisa, T 2008, ‘Civil Society, the State and the Land Question’, in Moyo, S., Helliker, K. D and Murisa, T. (eds.), Contested Terrain: Land Reform and Civil Society in Contemporary Zimbabwe, S&S Publishers: Pietermaritzburg.
- Raftopolous, B. (2005), “The Zimbabwean Crisis and the Challenges for the Left”, public lecture delivered at the University of Kwa-Zulu Natal, 23 June 2005.
- Richardson, C 2005, ‘The Loss of Property Rights and the Collapse of Zimbabwe’, Cato Journal, Vol 25, No. 2 pp 541-565.
- World Bank (2006), Agricultural Growth and Land Reform in Zimbabwe: Assessment and Recovery Options, Report No. 31699-ZW, Washington DC: World Bank.
- Yeros, P. (2002a), “The Political Economy of Civilisation: Peasant-Workers in Zimbabwe and the Neo-Colonial World”, PhD Thesis, University of London.