This briefing note is the result of a collaborative research process with the Zimbabwean private sector, government representatives, industry organizations and experts, drawing on best practice and senior-level insights to identify policy options for long-term economic revival and expansion in Zimbabwe, and pathways for inclusive development.
Conclusion
Zimbabwe is experiencing yet another period of economic pain, as the government undertakes a process of realignment and restructuring. Zimbabweans have thus far – out of necessity – shown resilience and adaptability in response to multiple challenges, but the country’s economic situation has had a devastating impact on households, businesses and the social fabric of the country. It is critical that the government’s short-term reforms include measures that will relieve the strain on businesses and put more money in the pockets of ordinary Zimbabweans, and thus begin rebuilding trust between government, business and society.
Trust must be built on adherence to the rule of law. Businesses need to have confidence in court orders and dispute resolution mechanisms. Legislative changes and the political reforms required by international donors must bring about real improvements and alignment to regional and international best practice.
Zimbabwe’s ongoing currency crisis and the monetary policy changes made in 2019 have had a significant negative impact on the banking system. The introduction of the new currency market meant that RTGS-denominated deposits, including government debt, lost significant value, rendering the banks undercapitalized. Providing a policy stable environment for the development of a functional and effective banking system is a prerequisite for private-sector driven economic growth.
Security of land tenure is key to reviving the agriculture sector, as is clarifying usage rights for other economic activities such as mining and conservation for eco-tourism. Uncertainty of tenure has led to short-termism and underinvestment. Long-term investment, in irrigation systems for example, will lead to higher productivity that will in turn help to boost incomes and thus have positive ripple effects in other areas of economic activity. There is also a need for greater clarity on mining policy, for example on the issue of compensation for holders of land absorbed for mine expansion, or where new discoveries are made.
Investment in energy, water and transport infrastructure can not only underpin other economic activities but could also have a significant positive impact on livelihoods. Recurring droughts and water shortages highlight the urgent need for improved resource management, including moving away from rain-fed agriculture to more productive and higher-yield irrigation systems. The successful upgrading of Zimbabwe’s water and energy sectors will also be contingent on diversification, including effective use of renewables. As part of this, alternative and complementary systems will need to be fully integrated to support or replace existing infrastructure.
Many of the issues facing the broader economy are clearly evident in Zimbabwe’s tourism industry. Power, fuel and water shortages are among the factors that currently deter potential travellers to the country. Visitors without access to local currency or e-payment systems have difficulty paying for goods and services. Restaurants and hotels are dependent on generators, and food supplies may be limited. Overly complex or unduly burdensome licensing requirements may also act as an impediment to business.
The state will remain one of the chief economic actors in Zimbabwe. But it must work for the economy, not against it. Improved governance and reform of SOEs is vital. Moreover, it is imperative that economic reform does not increase the bureaucratic or administrative pressures on the civil service. And improving the efficiency and effectiveness of citizens’ everyday interactions with the state – by speeding up the process of getting a passport, fixing traffic lights or filling potholes will help to build trust over time.
Meanwhile, the government needs to communicate its strategy clearly,72 so that ordinary Zimbabweans understand the need for change and feel like they have a stake in the reform process. The statistical and technocratic approach should always be complemented by real-world perspectives on how specific policies affect the lives of ordinary people. A ‘real people, real numbers’ approach is vital.
Linked to this, changing perceptions of doing business in Zimbabwe, in order to attract the investment that the country sorely needs, will be contingent on effective policy change that fosters a more conducive business environment, backed up by case studies of successful regional or international investment.
At present, opinions as to what economic policies Zimbabwe needs tend to be deeply polarized. A key suggestion from the Zimbabwean private sector is for the establishment of a national economic commission, with a remit to forge a broad-based consensus on long-term economic policy. Policymaking would also benefit from a national youth strategy, to ensure that the citizens who represent the future of Zimbabwe have a voice in their economic future.
The expansion of private enterprise in Zimbabwe must be built on the maxim that ‘small is beautiful’. Most Zimbabweans rely on small-scale agriculture and informal business or mining. These are the areas that offer potential for growth, but that currently rely on fragile fundamentals such as ageing energy and transport infrastructure and inadequate education and healthcare systems. Creating pathways to formality and upscaling over time will be vital to success. New infrastructure projects will need to be small-scale, widely spread across the country, and funded and operated through public-private partnerships or joint ventures with domestic and/or international partners.
Attaining long-term economic growth and sustained development in Zimbabwe will require deep structural economic and political reform. Clear and consistent policies, and broad stakeholder consultations, are imperative to success. But the challenges are not insurmountable, and there are significant opportunities for short-term gains along the way.
72 The competing political narratives on Zimbabwe’s economic crisis continue to be played out on the world stage. Within a day of each other, first Tendai Biti and then SB Moyo published articles in leading US international relations magazines. See Moyo, S. B. (2019), ‘Economic Isolation is Hindering Zimbabwe’s Transformation’, Foreign Policy, 21 August 2019, https://foreignpolicy.com/2019/08/21/economic-isolation-is-hindering-zimbabwes-transformation/ (accessed 6 Sept. 2019).