Globalist Perspective

Dateline Zimbabwe: Who's to Blame?

Why does Zimbabwe's current economic troubles have their roots in the country's politics?

Too far gone and gone too far.

Takeaways


Zimbabwe, once a vibrant and diversified economy, had been a hope for Africa’s future. Today, it is a country in deep crisis and the signs of collapse are everywhere.

The economy has contracted in real terms in each of the past five years, inflation is in triple digits, the local currency has lost 99% of its value and almost half of the country faces food shortages.

Unsurprisingly, up to one-quarter of the population has fled the country. Many of the “costs” of the recent economic collapse in humanitarian terms are evident.

Zimbabwe’s recent economic crisis is so deep that it has set the country back more than half a century. In 1953, the average person living in then-Southern Rhodesia had an average income of $760 per year (in constant 1990 U.S. dollars at purchasing power parity rates). In mid-2005, the average Zimbabwean had fallen back to that level, wiping out the income gains of the past 52 years.

The scale and speed of this income decline is unusual outside of a war situation. In fact, the income losses in Zimbabwe have been greater than those experienced during recent conflicts in Côte d’Ivoire, the Democratic Republic of Congo and Sierra Leone.

The government’s frequent claims of external plots to destabilize Zimbabwe encompass a long and increasingly irrational list of saboteurs, such the International Monetary Fund, the British government and an international gay conspiracy.

In occasional bouts of official schizophrenia, the government sometimes combines these threats, such as President Robert Mugabe’s public rant against Tony Blair as the “the gay government of the gay United gay Kingdom.”

Another recent example is the claim in the Herald, a government mouthpiece, that the United States, at the behest of the UK, is now controlling the weather in order to cause a drought in Zimbabwe.

While these outbursts suggest either cynical propaganda or growing paranoia among the leadership, they are simply not credible explanations of the crisis.

A less hysterical version of external blame could be related to the cutoff of international aid. Certainly, donors have withdrawn hundreds of millions of dollars in aid from Zimbabwe and the government could plausibly argue that this precipitated the crisis and contributed to any additional infant deaths.

An alternative explanation, and a favorite of President Mugabe (as well as some relief organizations and even visiting IMF missions), is that severe drought is primarily responsible for the collapse in output in Zimbabwe.

On the face of it, this seems possible, especially since so much of Zimbabwe’s economy is based on rain-fed agriculture and the country faces a regular cycle of rainfall variability.

Economist Craig Richardson, using rainfall data from Zimbabwe’s own Department of Meteorology, has shown that this argument does not hold up to the evidence. He shows that the “drought” between 2000 and 2001 was only about 22% below average — and less severe than at least 12 other recent low-rainfall periods.

More importantly, Richardson shows that the tight historical relationship between GDP growth rates and rainfall cycles over two decades no longer held after 1999. Indeed, when rainfall recovered, the economy continued to decline.

Comparing Zimbabwe to its neighbors, data suggest that rainfall patterns are regional. Since 1948, there has never been a two-year period in which an important drop in rainfall in Zimbabwe’s maize-producing regions was not associated with a corresponding drop in Zambia and Malawi as well.

Despite this pattern, Zimbabwe’s decline in maize production has been dramatically greater than its neighbors’ over the past five years. National maize production fell 74% from 1999 to 2004, while in Malawi it fell just 31% and in Zambia it actually increased. Thus, it appears that Zimbabwe’s unlucky weather does not sufficiently account for its economic collapse.

If neither the drought, donor withdrawal nor nefarious economic plots explain the depth and persistence of the crisis, this leaves few other plausible culprits than misrule. In many ways, it seems obvious that Zimbabwe’s current economic difficulties are linked to specific government policy decisions.

Author Samantha Power even used Zimbabwe as an example of “how to kill a country,” suggesting ten ways in which Mugabe destroyed his country’s economy.

The list of misgovernance is long. The policy of land seizures and the chaotic disruption on the farms is likely the main reason the staple maize production fell by three-quarters. This impacted rural incomes, exports and food security. Indeed, Zimbabwe once exported food, but now requires massive food aid.

In addition to the frontal attacks on agriculture, the rest of the economy suffered from the undermining of property rights and absurd macroeconomic management.

The government has run huge budget deficits (22% of GDP in 2000) and printed money to cover the gaps — with the predictable results of high inflation (which hit 620% in November 2003).

Overall, manufacturing has shrunk by 51% since 1997 and exports have fallen by half in the past four years. Political troubles combined with the abandonment of sensible economic policy also closed off most of the aid tap, scared away most foreign investment and chased much of the talented workforce out of the country.

While many of these actions appear economically irrational, they may be explained in a perverse political logic. It can hardly be a coincidence that the economy began its precipitous fall just as the ruling party unleashed a wave of political violence and repression directed against a rising opposition movement.

Most noticeably, the forcible appropriation of commercial farms seems calculated to undermine the financial and popular support for the opposition.

Unfortunately, the mismanagement and economic lunacy continues today. Inflation remains in triple-digits, the 2005 budget includes a more than tripling in public expenditure and the government clings to propaganda — such as its implausible forecast of 28% growth in agriculture this year.

This suggests that — regardless of rain clouds or imaginary foreign scheming — economic misrule will continue to cost Zimbabweans not only their children’s opportunities for a better life but, for many, any life at all.

Michael Clemens, a research fellow at the Center for Global Development, co-authored this report.

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About Todd Moss

Todd Moss is Vice President for Corporate Affairs and Senior Fellow at the Center for Global Development (CGD).

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