How Robert Mugabe's government ruined Zimbabwe's promising future - a report

A Report on the economic mismanagement and its effect on development in Zimbabwe

(Mack Shapeero - November 2021)

1. Overview

The Republic of Zimbabwe has experienced significant volatility and economic hardship since the 1990s with the economic crisis intensifying from 2000 onwards. A country with the agricultural and resource wealth such as Zimbabwe should be expected to have prospered like its colonial predecessor Rhodesia which had experienced sustained economic growth between 1945 – 1975. This creates the question, why has Zimbabwe developed into the state it is now? Why is the economic situation of the country worse now than at its independence in 1980? This report will analyse why the development of Zimbabwe has come to a halt and the reasons why. It will also be investigated how the mismanagement of the economy and the nature of Zimbabwe’s government has had profound impacts on wider social relations. The report will conclude with a forecast on the future of Zimbabwe and its development.

2. Economic mismanagement

The reason for why Zimbabwe’s development has failed since the 1990s is due to the mismanagement and exploitation of the country by Robert Mugabe’s government. Critics argue that the profound damage that has been done by Mugabe and his government will take generations to address (Onslow, 2019). Zimbabwe’s mixed economy is strongly controlled by the government, this subsequently limits private freedoms and due to the economic situation has encouraged corruption and limited foreign investment. To understand how the government is mostly responsible for the mismanagement of the economy. Mugabe’s impact must be analysed and how his policies have affected the development of Zimbabwe.

Zimbabwe’s development relies on two key economic drivers, that are the agricultural and mining sector which are integral to the economy (KPMG, 2017). The agricultural sector employs most residents and produces tobacco for export and food crops for domestic consumption. On the other hand, the mining sector accounts for up to half of all export earnings (KPMG, 2017). This creates the question, why is Zimbabwe not as wealthy as its landlocked neighbour Botswana? The answer to this is the nature of the government and the high control it has on the economy. It can be argued that from a developmental perspective, Zimbabwe is now in a worse economic situation now than at its independence in 1980. The damage caused by Mugabe’s government during his 37-yearlong rule has had a profound impact on the development of Zimbabwe.

The economy has experienced significant volatility ever since the 1990s. Mugabe’s economic policies have only damaged development. The choice of an Emergency Structural Adjustment Programme and associated domestic austerity only helped to drain the value of the Zimbabwean Dollar and accelerated domestic social and political challenges as the economy began to tank. Mugabe’s decision to give war veterans larger pensions and deciding to intervene in a war in the Democratic Republic of the Congo deeply impacted the financial resources of Zimbabwe’s public purse (Onslow, 2019). This contributed to the economic meltdown as the state would begin to face a debt crisis like many other African states. As the economic growth began to stall in the 1990s due to politically motivated indigenisation policies such as land redistribution. The farmland seized from white owned farms under the Land Acquisition Act of 1992, with the process picking up in 1999 with the year 2000 being a turning point, these actions significantly affected development. By 2000, 4000 white farmers lost their farms and overnight the agricultural output which had been decreasing since 1995, dropped (Petroff, 2017). By 2006, around 500 of the original 6000 original commercial farms were still operational (Davis & Vitoria, 2016). The government had sabotaged its own economy, with the only people benefiting from these economic decisions being the ruling elite (Sevenzo, 2019).

Following the land redistribution campaign and fall in the agricultural output, an immediate food shortage along with the worst famine in 60 years due to 2 years of bad harvests and the extended dry spell impacted development. The chronic shortages of goods led to inflation as the central bank printed more money to finance imports. At the peak of the economic crisis prices were doubling every 24 hours. Cato Institute Economists estimated that monthly inflation peaked at 7.9 billion percent in 2008 (Petroff, 2017). The economic situation that had been progressively getting worse since the 1990s culminated in the economy shrinking by 18% in 2008. The Zimbabwean dollar had effectively become worthless and in 2009, the currency was abandoned and replaced by the US dollar and eight other currencies as legal tender (Petroff, 2017). The dollarization of the Zimbabwean economy has meant that the government does not control the supply of money and the current economic state as well as the nature of the government has led to limited foreign investment and a severe liquidity crisis (USAID, 2020).

In 2010, Robert Mugabe responded to international sanctions by threatening to seize all western-owned investments. This kept prospective investors away from Zimbabwe who could have helped ease its economic crisis. The focus in the 2010s changed from the farms to mines, with the government ordering most diamond miners to halt activity and abandon their facilities with a plan for a state-run entity to take over operations (Petroff, 2017). Even since Mugabe’s deposition in 2017, the country still struggles to earn cash since it has strangled its top export industries. Zimbabwe has had frequent bank run ins in 2016 to finance imports as a severe drought had affected its domestic food production, this has only increased its national debt (Petroff, 2017). Currently, Zimbabwe is still struggling economically due to the nature and economic mismanagement of the economy by the ruling ZANU-PF party.

3. The Impact

Class - inequality

Post 2000, the social crisis that followed the economic meltdown ensued. Between the 1990s and 2000s, unemployment began to increase as industrial activity shrank and by 2006 75% of the country was unemployed (Mugabe and Zimbabwe: 50 years of struggle, 2017). In fact, as the economic meltdown progressively became worse after 2000, the shrinking of industrial activity led to an increase in unemployment, with an estimated range of up to 70% of the labour force becoming unemployed (Murisa, 2010). This economic decline has affected the social reproduction capacities of both urban and rural households. The formal sector urban employment shrank from 3.6 million in 2003 to 480 000 in 2008. In addition, as the value of the Zimbabwean Dollar crashed due to rampant inflation caused by the economic crisis, the ordinary people have suffered severely. Additionally, the vital tertiary sector has also been impacted, the most susceptible economic sector at present accounts for 57% of the GDP (KPMG, 2017). This has led to a decrease in opportunities available for the people of Zimbabwe and an increase in the informal economy. As of 2014, 94.5% of employment has been reported as informal as the economy has shifted from formal to informal (USAID, 2020).

Furthermore, the dollarization of the economy has only increased the hardship faced by ordinary Zimbabweans. Since foreign investors are hesitant to invest in the country due to the volatility of the economy regarding its currency issue and liquidity issue due to the fall in industrial development (KPMG, 2017). It is harder for Zimbabweans to find high paying and skilled jobs due to the economic environment that the country faces. Therefore, due to the mismanagement of the economy, high unemployment, the development of Zimbabwe’s economy and sectors has fallen short of being able to provide opportunities and employment. Due to the economic climate and low quality of life that has come as consequence of economic mismanagement, up to four million Zimbabweans have emigrated from the country (Ndlovu, 2013).

Another impact has been an increase in corruption. It has essentially become a norm as the only way around the high control of the government and its bureaucracy is through corruption (Tizora, 2009). Mugabe’s government has also plundered an estimated $16 billion dollars in resources and diamonds. The looting of the country’s financial resources has effectively impacted its health system making it difficult for ordinary people to receive adequate treatments and afford hospital bills (Onslow, 2019). The corrupt nature of the government has significantly hampered development. Additionally, the economic mismanagement has also led to a deterioration in education as the tertiary education sector has been underfunded and school attendance has fallen as the economic situation has worsened post 2000 (Onslow, 2019).

Most Zimbabweans today live under the poverty line with 63 percent of all households living in poverty and 16 percent in extreme poverty (USAID, 2020). The economic hardships and poverty that the ordinary Zimbabwean faces has come as a direct result from the economic mismanagement by the government. The failure of the government to create a stable environment has destabilized the state as it has failed to create a secure environment for domestic and foreign investment (USAID, 2020). Zimbabwe’s food security has also been ruined due to the commercial agriculture sector’s collapse as the state now relies on small scale, rain-fed agriculture that is susceptible to climate change. It has been difficult to produce sufficient yields to feed the population (USAID, 2020).

Gender

Due to the economic climate, women have assumed a more traditional role. The gender-based differentials have become more apparent as it has become part of all aspects of Zimbabwean society. Due to unemployment, more men have moved into sectors that have traditionally been dominated by women therefore decreasing the employment and earning opportunities for women (USAID, 2020). Additionally, in sectors that women typically dominate, i.e. in the agricultural sector where women are responsible for more than 65 percent of total employment, women usually do not control the economic resources, instead male family members oversee conducting transactions. Women still face inequality today in Zimbabwe even though they are represented in government, with 60 of the 270 seats in the National Assembly exclusively reserved for women (Ingham, et al., 2020).

Health/HIV

The collapse of the health system has led to a high mortality and morbidity rates, with overstretched high rates of diseases such as HIV and Malaria. Since 2000, worsening economic conditions and rising costs have destroyed the health system. Due to corruption and the economic climate, the health service has become underfunded and thus is too expensive for the average Zimbabwean (Onslow, 2019). However, the health system has produced results with an HIV prevalence rate declining from 20% in 2006 to a current rate of 15% (USAID, 2020). Yet the economic mismanagement of Zimbabwe by its government has affected the health service and has made it difficult for ordinary people to afford it. Additionally, HIV is still a prevalent issue in the Southern African region where Zimbabwe is located and without proper investment to combat and treat the disease, the number is likely to stay high.

4. Forecast

It will be an immense task for Zimbabwe to manoeuvre itself out of its present situation.

The economic mismanagement under Mugabe has profoundly damaged the country and will take generations to address. The IMF only expects inflation to increase (KPMG, 2017). At present, Zimbabwe’s inflation is at a predicted 53% for the end of 2021 (Ndvolu, 2021). Additionally, the oppressive and controlling style of government that is still present under Mnangagwa is unlikely to change. Mnangagwa has also failed to uphold his promises and combat corruption effectively (Noyes, 2020). Climate Change is presenting itself to be a challenge on Zimbabwe’s development, thus the nature of government must change if the country is to prosper and survive (USAID, 2020). Even if the government were to change significantly, the external debt of 7.1 billion dollars which is equivalent to 51% of the GDP will prove itself to be a challenging hurdle (USAID, 2020). Additionally, after clearing the debt, Zimbabwe will still face challenges to borrowing with international financial institutions to finance development (USAID, 2020). There is opportunity albeit slim, if the situation of Zimbabwe were to improve and the government were to change, the economic situation and its wider challenges could improve.

Bibliography

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Davis, D. P. & Vitoria, B., 2016. Drivers and Implications of the Structural Shift of the Private Sector in Zimbabwe. [Online] Available at: https://assets.publishing.service.gov.uk/media/587e0056ed915d0aeb000163/Growth_and_resilience_in_Zimbabwe_FINAL.pdf [Accessed 10 November 2021].

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KPMG, 2017. Zimbabwe Economic Snapshot H2, 2017. [Online] Available at: https://assets.kpmg/content/dam/kpmg/za/pdf/2017/12/KPMG_Zimbabwe_2017_V2.pdf [Accessed 6 November 2021].

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Ndvolu, R., 2021. Zimbabwe Sees Inflation as High as 53% at Year-End: Sunday Mail. [Online] Available at: https://www.bloomberg.com/news/articles/2021-10-03/zimbabwe-sees-inflation-as-high-as-53-at-year-end-sunday-mail [Accessed 13 November 2021].

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Sevenzo, F., 2019. Robert Mugabe Colonized His Own Country. [Online] Available at: https://foreignpolicy.com/2019/09/06/robert-mugabe-colonized-his-own-country/ [Accessed 21 October 2021].

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Books:

Noyes, A., 2020. A New Zimbabwe? Assessing Continuity and Changer After Mugabe. Santa Monica: RAND Corporation.

Films:

Channel 4 News (2017) Mugabe and Zimbabwe: 50 years of struggle. [Online video]

Availble at: https://www.youtube.com/watch?v=mnMyLUM9yJI [Accessed 23/10/2021]