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Zimbabwe: Future is bright but…

For almost two decades Zimbabwe has waited patiently for a better future. Since 1997, Zimbabwe has suffered economic decline partly due to sanctions but also economic mismanagement, political uncertainty and an unfriendly investment environment.

The Ritesh Anand Column

The impasse with the West following the introduction of the land reform programme in 2000 has left the economy in a very fragile state.

Only now do we see a thawing of relationships with the Europeans following the recent visit by a business delegation from Britain, the first in over 20 years.

So what hope is there for the people of this country? Is there some light at the end of the tunnel? What will the next decade look like for Zimbabwe?

It is estimated that the economic cost of the lost decade is over US$15 billion. Is this figure realistic? Well let’s do the maths. In 1997, Zimbabwe had a GDP of US$9,5bn.

Over the last 17 years average economic growth in Africa has been around 6% with many African countries experiencing much higher rates of growth, but let’s take the average.

Assuming Zimbabwe grew at the rate of 6% over the last 17 years, Zimbabwe’s GDP would today be around US$25,8bn versus the current estimate of US$11bn. This translates to an estimated loss of income US$15bn.

It’s worth noting that this is the estimated opportunity cost and this figure may well be higher or lower. However, given the strong rise in commodity prices over the period I’m inclined to believe that growth in Zimbabwe would have been higher over this period.

According to the IMF, per capita GDP in 1997 was US$762, by 2008 this had fallen to a meagre US$268. Over the same period per capita GDP in Zambia rose from US$400 to US$1 247 and today is estimated at US$1 780.

Zimbabwe on the other hand remains below 1997 levels at $583. Once again, assuming 6% growth Zimbabwe’s per capita GDP would have reached US$2 050 making it amongst the highest in Africa.

Its interesting to note that per capita GDP is lower today than it was at Independence in 1980, while per capita GDP has almost trebled in Zambia over the same period.

According to economics professor, Tony Hawkins, we are marginally poorer today than we were in 1960. The economic cost has been significant.

It would be interesting to see what this chart would look like 20 years from now? When will Zimbabwe emerge from the rut and regain its rightful place as the jewel of Africa. What is the catalyst for change and what does government need to do encourage growth and development in Zimbabwe.

A recent report by the International Crisis Group titled Zimbabwe: Waiting for the Future (Africa Briefing N°103. Johannesburg/Brussels, 29 September 2014), highlights the following:

To avoid prolonged uncertainty and possible crisis, Zanu-PF should:

Decide conclusively at its December congress who will replace President Mugabe were he to be incapacitated or to decide not to seek re-election in 2018;

Seek to rebuild trust and collaborations with domestic and international constituencies by (i) holding an inclusive national dialogue with the opposition and civil society on political, social and economic reforms; and (ii) clarify and act on key policy areas, eg, indigenisation, land reform and the rule of law, as well as anti-corruption initiatives; and

Discipline members who engage in voter intimidation, fraud or other offences.

The political opposition, needing to reestablish its credibility, should:

Establish a consultative mechanism, in conjunction with civil society, that seeks consensus and dialogue across the political spectrum on priority — in particular economic and governance — reforms; and

Review 2013 election flaws through a forward-looking agenda that addresses major concerns projected for the 2018 polls (ie, voters roll and anomalies in electorallegislative amendments).

The Sadc and AU should:

Encourage Zimbabwe to address election-related concerns identified in their respective2013 observation mission reports.

China should:

Encourage Zimbabwe’s government to promote political inclusiveness and policycoherence in efforts to resuscitate the economy.

Countries implementing sanctions and other measures against Zimbabwe (ie, the EU, US and Australia) should promote a coherent position that:

Clarifies what measures the government should take to expedite removal of remaining sanctions; consolidates re-engagement and development support contingent on progresswith economic and governance reforms;

Takes visible steps to strengthen democracy-supporting institutions, including anindependent judiciary and human rights and election institutions, as well as supportcivil society’s capacity to monitor and protect constitutional rights.

Zimbabwe is running out of time and needs to act decisively to stem the sharp decline in economic activity. The solutions are fairly straightforward. There needs to be political will and support for economic reform. We can no longer ignore the economic challenges facing Zimbabwe.

We need to develop an inclusive investment policy and restore investor confidence. We need to respect property rights and eliminate corruption that has become rampant in Zimbabwe. We need to hold ourselves to account and increase our capacity and productivity.

If not, future generations will suffer much like the present generation has over the last 20 years. The future looks bright but much depends on policies, productivity and political will.

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