Zimbabwe Economy

The Zimbabwe economy is mainly sustained under normal circumstances by agriculture, mining, tourism and manufacturing. In the early 80 into the early 90s the economy of Zimbabwe was one of the strongest in the region of southern Africa. In fact SADC a regional body endorsed Zimbabwe responsible for food security because of its bussling agriculture.

Since the mid 90s the economy of Zimbabwe experienced contraction after the introduction of a structural adjustment programme prescribed by the World Bank. Economic decline accelerated in year 2001 when the government sanctioned the invasion of productive commercial farms owned by a minority white population. Agricultural productivity fell sharply in the years that followed and investor confidence heavily damaged.

What followed was a free fall of the Zimbabwe currency from stable levels in the 90s to highly volatile hyper-inflationary dizzy levels from 2003 going forward.

The demise of the Zimbabwe currency took with it the Zimbabwean economy affecting the people of Zimbabwe through severe job losses as businesses shut down and people were laid off. In 2007 the unemployment level in Zimbabwe was estimated to be hovering around 80% and climbing.

Most people turned to the informal sector leaving the state coffers empty due to tax evasion. The Zimbabwe economic decay crept rapidly into the public service provision sector such as hospitals, schools and universities. Professionals left these institutions due to poor compensation given in a despised Zimbabwe dollar.

The tourism sector was not spared. The political chaos and violence targeted at opposition supporters and white people in general by hordes of ZANU PF party thugs drove the sector to its knees. Key tourist countries such as the UK, USA and Japan warned their nationals to travel to Zimbabwe with extreme caution.

Due to the fixed exchange rate controlled by the government, visiting Zimbabwe became astronomically expensive with a simple cup of coffee costing as much as $10.00 on credit card. Major international credit card companies such as VISA and Master Card withdrew their cooperation with
Zimbabwean banks making it impossible for visitors to use international cards in Zimbabwe.

The Zimbabwe economy was not spared in the manufacturing sector. Capacity fell to less than 30% due to obsolete equipment, professional exodus and sharply falling local demand in addition to inconsistent and poor electricity supply from the state electricity company ZESA.

On the political front seizure of white owned commercial farms often was accompanied by threats to do the same in the mining sector. This brought severe distress on would be international investors in the sector leading to closures and wait-and-see attitude by investors. The final nail was the enactment of a law forcing foreign investors to give a 51% share to indigenous Zimbabweans.The law is now under consideration to be reversed under pressure from the opposition in parliament.

All in all the economy of Zimbabwe shrunk sharply by over 50% over the intense 10 years of political and economic erosion. Yearly GDP growth dropped into negative territory for many consecutive years. Cities in Zimbabwe could not hide this terrible destruction manifest through bad infrastructure such as roads. Local governance became a nightmare for most city councils.

Zimbabwe economy outlook 2009 and beyond

The creation of the inclusive government in 2009 gave a ray of hope with the immediate stabilization of the economy and hope for Zimbabwe economic recovery. This was a SADC solution to Zimbabwe problems. Inflation was cut over night from about 230 million per cent to about 3% by the introduction of the use of multi-currencies. The national working budget was pegged at US1.5 billion by the new tough finance minister from the opposition - Tendai Biti.

Slowly goods started returning to shop shelves in the Zimbabwe economy as business confidence significantly improved. Even advertising by business in local newspapers which had virtually dried up returned with vigor.

Bill board and street advertising also rebounded due to the stable currency regime and somewhat promising new Zimbabwe economic policies.

The immediate and mostly talked about benefactors of the new currency regime were mobile phone companies. These registered near immediate profits running into multi-millions of dollars. They also almost overnight raised their combined mobile penetration rate to over 40% from about 10% a few years before.

In late 2009 the amount of foreign currency in the Zimbabwe economy system was almost reaching US$700 million as compared to $44million in February of the same year a few months after the introduction of the system. Most money in circulation can be attributed to remittances by over 4 million of Zimbabwe's population  in the diaspora.

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