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Zimbabwe: a pre-election overview and recovery scenarios
Diana Games for the South African Institute of International Affairs (SAIIA)
March 2005

http://www.sarpn.org.za/documents/d0001143/index.php

Executive Summary
Zimbabwe, a country which has experienced a drop in GDP of more than 30% in the past three years, has been classified by the United Nations as having the fastest shrinking economy in the world. It has also gone from being a country that boasted one of the most successful economies on the continent to one stalked by famine. It is now ranked 90^th on the list of the world’s 94 poorest countries. Only one person in 10 still has a formal sector job, half the figure of 1980.

Inflation is rampant, exports have fallen from US$2.3 billion to around US$1.2 billion in 2003, foreign currency remains scarce, domestic debt is at record highs, the black market is still thriving and the land programme has fallen well short of expectations both in terms of people resettled and productive capacity generated. Even optimistic growth projections for a post-Mugabe Zimbabwe suggest that it will take 15-20 years to regain the living standards of the mid-1990s because of the breakdown of the country’s economic backbone – agriculture.

The Zimbabwe economy has continued to show its resilience in the face of massive economic problems and in the process has metamorphosed into a different animal. As the well-structured formal economy has contracted, a large informal economy has emerged which includes a thriving, but illegal, black market boosted by trading in scarce commodities – including foreign currency – and by hyperinflation. Remittances from Zimbabweans abroad, amounting to millions of dollars a month, have also served to prop up this ‘new economy’ and, ironically, served to legitimise claims by the government that things are not as bad as they have been painted outside the country.

Government borrowing – and spending – has continued unabated, despite ballooning domestic debt. Government interventions in the economy have been ad hoc and crisis-driven, although the appointment of a new Reserve Bank governor in December 2003 and his tough monetary policy have offered some relief. During 2004, as inflation starting coming down and the foreign exchange problems began to be managed – albeit with limited success – there were predictions of a slow economic turnaround. It is too soon to say how sustainable that might be.

Despite government’s claims to the contrary, the land seizures that began in 2000, were still under way in 2004. While the remaining white commercial farmers continue to be threatened and evicted, a second wave of activity has opened up, with government officials and other beneficiaries of the land seizures now evicting settler farmers. President Robert Mugabe’s attempt to persuade the elite to give back land grabbed in violation of the one-man, one-farm regulation has had limited success.

Agricultural activity is still declining, while the provision of inputs for new farmers continues to be a problem. By the middle of the 2003/04 growing season there had been limited planting by new farmers, although some activity continued on the remaining white-owned farms and on farms legally owned by the black elite. However, projections are that production will be at least 30% down on 2002/03. Despite repeated claims by the government that all is well in agriculture and that production will soon reach normal levels again, the country has had to import hundreds of thousands of tonnes of maize and wheat. Even President Robert Mugabe himself admitted on national television in early March 2005 that only 44% of the land seized from white farmers was being utilised.

On the political front, pre-election activity over months leading up to the 31 March 2005 poll indicated an increase in repression, a further tightening of political space for the opposition, a clampdown on freedom of speech and association, violent harassment of opposition supporters, continuing human rights abuses and a skewing of the electoral process, in spite of undertakings made to the region that the election would be free and fair.

Mugabe signed up to the Southern African Development Community (SADC) election guidelines for free and fair elections in August 2004, but has failed to meet almost any of the criteria. However, SADC has not reacted publicly to mounting evidence of this failure and the South African government, long seen as a Mugabe and Zanu-PF apologist, has reacted in true form. Both President Thabo Mbeki and his foreign minister, Nkosazana Dlamini-Zuma, have both, at different times, declared themselves satisfied that the election would be free and fair.

The main opposition party, the Movement for Democratic Change (MDC) decided only in early February 2005, under pressure from many quarters including several SADC countries, to reverse its boycott of the elections, on the basis that not taking part may result in its further marginalisation even though participation might equally serve to legitimise a fraudulent election.

Zimbabwe’s current problems stem from bad governance and a breakdown of law and order. Getting rid of Mugabe and/or a change in the overall leadership of the country are necessary but not sufficient conditions for economic and political recovery.

Other key issues that need to be addressed include:

• The holding of free and fair elections, deemed to be so by independent observers from the local, regional and international community, based on their willingness to observe, and not on their selection by the government;
• The running of the election by truly independent institutions;
• Unhindered political participation by opposition parties in the political process;
• A return to the full and unconditional rule of law, under an independent judiciary;
• A constitutional and legal review to overturn and remove legislation introduced over more than a decade and aimed at building a one-party state, suppressing opposition to the government and keeping ZANU-PF in power;
• Negotiations on arrears to the multilateral institutions to unlock new funding flows into the country from the IMF, World Bank and donors;
• Addressing the country’s massive domestic debt;
• Introducing proper fiscal management;
• Reigning in and reprioritising government spending;
• Addressing the land issue in consultation with all stakeholders to find ways to legally redistribute land and restore ownership;
• Encouraging commercial agriculture through various measures including incentives, training, extension programmes, provision of equipment and funding;
• Tackling the brain drain and skills shortages;
• Rebuilding deteriorating infrastructure through public-private partnerships;
• Rehabilitating ailing key parastatals and driving forward the privatisation programme;
• Restoring a macroeconomic climate conducive to trade and investment and the encouragement of manufacturing and export-driven growth;
• A total re-evaluation of monetary policy to address foreign and local currency shortages, exchange controls, interest rates and financial stability and growth;
• Building capacity; and
• Rebuilding confidence in Zimbabwe as a preferred investment and tourist destination.

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