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.
Context: A Deepening Economic Crisis and a Record of Reform Failure
Zimbabwe’s current programme of economic reform is being pursued by the government of Emmerson Mnangagwa in the context of a deepening economic crisis that has placed huge pressure on ordinary citizens. Rolling power blackouts have crippled both industry and home life. Fuel is in short supply, and so is cash. The cost of living continues to increase, often on a weekly basis. And many Zimbabweans, especially in the cities, spend a large part of their daily lives in queues for essential goods and services. Persistent socio-economic pressures have led to human capital flight, with, by 2014, more than 3 million Zimbabweans estimated to have left the country since 20006 – the population of Zimbabwe currently being around 15 million7 – notably depriving the economy of the highly skilled workers needed for industrial growth. Violence erupted in Harare in January 2019, sparked by a sharp rise in fuel prices, and again in August. Security forces have been deployed to quell protests in Harare and Bulawayo, and in smaller towns such as Marondera, in 2019.8
Serious environmental and climate pressures have exacerbated Zimbabwe’s economic crisis, and have weakened citizens’ resilience. The late and minimal rains during 2018/19 have led not just to poor harvests, but also to energy shortages as the country remains dependent on hydroelectric energy generation. The pressure on relief systems that this has caused has been further compounded by the destruction caused by Cyclone Idai in the east of the country in March 2019. As at July 2019, some 3.5 million Zimbabweans – equivalent to around a third of the rural population, were reported to be dangerously food-insecure; and it was projected that more than 5.5 million people would be food insecure by early 2020.9 Severe environmental pressures at the local level are evident in the repeated food crises affecting Zimbabwe, underscoring the need for investment in irrigation for agriculture and improved water management.
Despite this current context, Zimbabwe could conceivably be well positioned to ‘leapfrog’ into environmentally sustainable practices as it upgrades its agricultural and manufacturing capital, as well as its electricity generation. Moreover, the Institute for Security Studies (ISS) makes the case that, under what it terms a ‘Great Zimbabwe’ scenario, with improved quality of public services, an efficient and independent civil service, and commitment to better policy formulation and implementation, including on transparency, Zimbabwe could see per capita income accelerate compared with its current trajectory (see Figure 1).10 However, under its alternative, ‘Things Fall Apart’ scenario, the government of Zimbabwe ‘fails to resolve the financial crisis, the quality of government accountability and delivery of basic services such as WASH [water, sanitation and hygiene] stagnates … deepening concerns of insecurity both within and outside of the country [will] deter foreign investment’ and result in significantly lower growth.
Figure 1: Zimbabwe GDP per head to 2040 under three projected scenarios, constant US $
— Source: Welborn, Cilliers and Kwasi (2019), Great Zimbabwe: Alternative prospects to 2040, using IMF data and International Futures Model version 7.36.
Figure 1: Zimbabwe GDP per head to 2040 under three projected scenarios, constant US $
The stakes are high, and the long-term record of reform efforts in Zimbabwe does not inspire confidence. Reforms to encourage private sector growth have been attempted since the 1980s,11 but have been undermined by inconsistent implementation of legislation and policy, deep-seated corruption, politically expedient and profligate state spending, overvalued exchange rates, and shortages of both foreign exchange and critical skills. Successive programmes laid out plans for fiscal consolidation, SOE reform and improving the environment for doing business, but each time failed to deliver. For example, the 2013 ZIMASSET plan was contingent on an unattainable 7 per cent growth rate. The 2015–16 ‘Lima process’ of reform and re-engagement with international financial institutions sought international finance as a stimulus, which did not materialize.12
The TSP and Vision 2030 must draw on the lessons of earlier, failed reform efforts, which have meant a legacy of low confidence in the ability of Zimbabwe’s government to deliver effective change. International investors, governments and the international financial institutions are all important partners in supporting reform, but the ordinary Zimbabweans who ought to be the main beneficiaries of reform, and the critical audience for government communications, must also have the opportunity for input into policymaking.
6 Mugwagwa, N. (2014), ‘Zimbabwe: How Can the Diaspora Contribute to Development?’, World Bank Blogs, 28 January 2014, https://blogs.worldbank.org/voices/zimbabwe-how-can-diaspora-contribute-development (accessed 26 Sept. 2019).
7 World Bank (2019), ‘Macro Poverty Outlook – Zimbabwe’, April 2019, http://pubdocs.worldbank.org/en/750841492188177908/mpo-zwe.pdf (accessed 26 Sept. 2019).
8 Amnesty International (2019), Open for Business, Closed for Dissent: Crackdown in Zimbabwe during the National Stay-Away, https://www.amnesty.org/download/Documents/AFR4698242019ENGLISH.pdf (accessed 26 Sept. 2019).
9 UN News (2019), ‘Zimbabwe: Droughts leave millions food insecure, UN food agency scales up assistance’, 19 July 2019, https://news.un.org/en/story/2019/07/1042881 (accessed 26 Sept. 2019).
10 Welborn, L., Cilliers, J. and Kwasi, S. (2019), Great Zimbabwe: Alternative Prospects to 2040, Southern Africa Report 23, International Institute for Security Studies (ISS), https://issafrica.s3.amazonaws.com/site/uploads/sar-23-2.pdf (accessed 6 Sept. 2019).
11 A small domestic market pre-independence, followed by years of international isolation, meant a long history of little competition and a manufacturing sector dominated by a very few firms.
12 For more detail on the Lima Process, see Chitiyo, K., Vines, A. and Vandome, C. (2016), The Domestic and External Implications of Zimbabwe’s Economic Reform and Re-engagement Agenda, Chatham House Research Paper, https://www.chathamhouse.org/sites/default/files/publications/research/2016-09-08-zimbabwe-economic-reform-re-engagement-chitiyo-vines-vandome-final.pdf (accessed 6 Sept. 2019).