Fri Oct 21 13:17:25 CAT 2016

Changing picture of the economy

By unknown | Sep 20, 2007 | COMMENTS [ 0 ]

By the early 1990s the rosy economic picture of the previous decade started to change in Zimbabwe.

By the early 1990s the rosy economic picture of the previous decade started to change in Zimbabwe.

Twin deficits in the fiscal and current accounts caused severe shortages of foreign exchange. That led to reductions in net domestic investment and a rapid increase in unemployment, which caused Zimbabwe to adopt a market-based, IMF-supported Economic Structural Adjustment Programme, or ESAP.

The short-term results of the ESAP were discouraging, in part because of factors such as drought, a failure to control the rising fiscal deficit, a lack of official enthusiasm and incorrect policy-sequencing.

Unintended consequences also arose from the implementation of the orthodox adjustment and liberalisation programmes in Zimbabwe in this period.

The patrimonial regime undermined the purpose of the externally imposed conditions, to the extent of its being prepared to forsake the modern state sector in Zimbabwe. The regime preferred protecting, and often expanding, the scope of the neo-patrimonial state that the external financial resources made possible.

These externally encouraged market-based reforms included fiscal restraint, which led to fewer social services and less job security in the government sector. Tariff reductions led to the closure of inefficient industries.

The net effect was mounting opposition to the ESAP from civil society and trade unions, and a decline in political support for Zanu-PF.

The Mugabe government responded by adopting populist, essentially patrimonial policies aimed at buying back political support from the key constituencies it was losing.

One of these policies was announced in 1998: the plan to transfer white-owned farms to Africans.

No one disputed the need for expedited land reform, but the new methods left much to be desired.

The land reform scheme should have been implemented in a rational, consultative, law-abiding, strategically planned and well-funded manner. An orderly transfer of land with proper funding for agricultural entrepreneurs could have yielded sustainable growth and stability. Instead, agricultural output has been hammered.

These developments, with the adoption of currency controls and military involvement in the DRC, increased the fiscal deficit still further. And together they led to suppressed exports and rising inflation.

The hardships associated with these developments consolidated the opposition, to which the government responded with more rounds of patrimony, resulting in a deepening of the crisis.

A vicious circle of vain attempts at crisis management unfolded as the 1990s drew to a close. A huge payout to war "veterans" in 1997 probably was the tipping point, beyond which lay only mounting economic misfortune.

A steady deterioration in social indicators from the early 1990s had been gradually filtering into political opinion.

This was reflected in the rise of the urban opposition, first as the ZCTU, then as the MDC.

l This is an edited version of an address to the Economic Society of South Africa Biennial Conference this month by the University of Pretoria' s Raymond Parsons, and convenor at the National Economic Development and Labour Council (Nedlac). Document with full address on


Login OR Join up TO COMMENT