2010 Millenium Development Goals Status Report: Zimbabwe

from UN Development Programme
Published on 27 Oct 2010 View Original
Zimbabwe - The Development Context

The country's economic performance since independence in 1980 can be broken down into three periods: the post-independent era of 1980-90, the economic liberalisation and ESAP period of 1990-2000, and the crisis period of 2000-2008.

At Independence in 1980, Zimbabwe inherited a dual and diversified modern economy operating alongside a large subsistence peasant agricultural sector that was skewed in favour of the racial minority.

During the first decade of independence, 1980-1990, real GDP growth rate averaged 3-4% per annum and reached a peak of 7% in 1990. During this period, public expenditure was geared towards the social sector and the expansion of the rural infrastructure, with the aim of reducing social and economic inequalities. Such spending led to strong positive indicators in education and health.

The period of economic liberalisation, 1990-2000, saw the implementation of the Economic Structural Adjustment Programme (ESAP) that was introduced in response to poor macro-economic indicators. The key elements of the reforms were an emphasis on export-led policies, monetary policy reforms in the form of liberalised interest regimes and exchange rate policies, government divestiture from public enterprises, and the liberalisation of labour markets.

However, recurrent droughts, coupled with shortcomings in terms of implementation of the necessary fiscal adjustments, led to a decline in real GDP growth. Between 1991 and 1995 growth averaged only 1.5% per annum.

The introduction of cost-sharing measures in the health and education sectors under ESAP reversed the gains achieved in these areas, with severe consequences for the poor and vulnerable groups who could not afford the user fees. By 1997, the economic crisis had deepened such that the government replaced ESAP with the Zimbabwe Programme for Economic and Social Transformation (ZIMPREST), 1996-2001.

Notwithstanding the introduction of ZIMPREST, the onset of the land reform programme and the decline in the output of the commercial farming sector, in exports, and in inputs for the manufacturing sector, together with a growing budget deficit and severe foreign exchange shortages, contributed to further declines in GDP from 0.0% in 1998 to -7.4% in 2000 and subsequently -10.4% in 2003. From 2000 to 2008, Zimbabwe's economy suffered a further decline, with GDP shrinking by an estimated 40% between 2000 and 2007. Extremely high levels of inflation ensued, with profoundly negative consequences for development and the eradication of poverty.

During this same eight-year period, Zimbabwe faced serious economic challenges that eroded its capacity to remain competitive in regional and international markets. Following the land reform programme the country faced sanctions from some western countries and the withdrawal of funding by the Bretton Woods institutions.

By 2003, the population living below the total consumption poverty line (TCPL) stood at 72% and this may have further increased with the prolonged crisis. In the same year, structural unemployment was recorded at 63%. Current estimates suggest a figure of up to 80%.

Another consequence of the declining economy has been the out-migration of large numbers of both skilled and unskilled labour. A significant percentage of the population now resides outside the country, mainly in South Africa and in the United Kingdom. This brain drain has severely compromised the capacity of both the private and public sector.

The economy has also faced daunting challenges in the face of global crises, shocks and vulnerabilities, especially during the period 2007-2008. The rise in price of imported food and fuel, the global recession, and the impact of climate change have all impacted on the country's development prospects generally, and progress on the MDGs specifically.

Notwithstanding the poor performance of the economy, Zimbabwe has been able to make significant progress in a number of key areas of the MDGs, such as universal primary education, where enrolments in primary schools have consistently been relatively high, with net enrolment ratio (NER) of 91% in 2009. (The NER is, however, down from 98.5% in 2002.) The country is also on course to attain gender parity in both secondary and primary education.

Zimbabwe has also experienced a gradual decline in HIV and AIDS, as demonstrated by the trend in prevalence rates for the past decade. The estimated rate for HIV and AIDS in adults (people aged 15 and above) declined from 23.7% in 2001 to 18.4% in 2005. The national HIV and AIDS 2010 Report shows the adult prevalence rates to have been 16.1% in 2007, 15.1% in 2008, and 13.7% in 2009. This consistent reduction is a significant achievement. With the formation of the Government of National Unity (GNU) in February 2009, the future outlook of the country looks promising, and the subsequent launch of the Short-Term Emergency Recovery Programme (STERP) has contributed significantly to the stabilisation of the political and economic situation. Positive economic trends began to show in the first quarter of 2009 following the adoption of the multi-currency system, which eliminated hyperinflation. Capacity utilisation figures in both manufacturing and services have also shown some encouraging improvements, although infrastructural deficits, particularly in terms of power generation and distribution, still constitute constraints on this nascent economic turnaround. These positive economic developments are still to translate into significantly improved levels of employment.