FORTY YEARS OF SIX ECONOMIC SEASONS IN ZIMBABWE
Like the changing weather seasons we humans have planned our lives around, economies undergo cycles with a high peak (summer) and a low trough (winter), with citizens planning and hoping for a spring transitioning into summer, and not too long an autumn before a short and mild winter. But unlike the weather, whose seasons fit into a clearly defined period, economic cycles are subject to local, national, and global forces that produce long and variable seasons that often last for years. Ideally, governments and businesses hope for a relatively short spring leading to a long summer of economic boom, and then two sharp and short periods of autumn and winter during an economic downturn, before a steady recovery period of spring is followed by the longest possible summer of economic boom.
For Zimbabwe, the forty-year period 1972-2012 can be divided into six economic seasons: the Winter of National Liberation War (1972-79), the Spring of a New Nation (1980-86), the Summer of Structural Reconfiguration (1987-1996), the Autumn of War Veterans (1997-2000), the Winter of Fast Track Policies (2000-2008), and the Spring of Inclusive Government (2009-2012). The next season is expected to a Summer of Sustained Growth, but it is not only difficult to predict, but it will depend on how government responds to local, national, and global politico-economic conditions.
In explaining the post-independence economic development of Zimbabwe, two leading economists from the Zimbabwe Institute divided the period 1980-2005 into three ‘economic policy epochs’: controlled growth (1980-1990), ESAP and start of crisis (1991-2000), and national destruction (2001-2005). The application of a ‘weather seasons analogy’ to these epochs further enriches the discussion by introducing the dynamism of the transitions between the epochs.
The seeds of the Winter of National Liberation War (1972-79) were sown in the late 1950s. Although preparations for the armed struggle had started in 1964, and the first guerilla attack was in 1966, 1972 saw the commencement of large-scale guerilla attacks on Southern Rhodesia by African Nationalist combatants operating from bases in Mozambique, Zambia and Angola. The Lancaster House Conference to prepare a constitution for a new Zimbabwe opened the door to the 1980 elections, and the commencement of the Spring of a New Nation (1980-86) – full of promise, hope, and confidence that this new nation would avoid the mistakes made by countries that got independence in the 1960s.
While citizens in the rest of the country were enjoying the Spring of a New Nation, those living in Midlands and Matebeleland were going through the Winter of Gukurahundi (1982-85). Operation Gukurahundi of 1982 ended with the death of over 20,000 people and brought to a close a thirty-year fierce struggle for power that had started in 1963 between ZANU and ZAPU. By 1986, ZAPU had accepted that it was no longer the equal of ZANU in the political struggle, and the Unity Accord signed between the leadership of the two parties on 22 December 1986 gave birth to ZANU(PF. Mugabe was later to call Gukurahundi “a moment of madness” but did not agree with those who characterized it as “genocide”.
The Summer of Structural Reconfiguration (1987-96) marked a period of significant economic growth and recovery throughout the country, as demonstrated by growth rates in GDP per capita, with expansion in the provision of services in education, health, water and sanitation, and transportation, and a steady rise in employment opportunities and prosperity. It was also a period of expansion in government spending, in particular to support a military incursion into Mozambique to combat the Mozambique National Resistance (RENAMO). This combination of domestic spending and foreign military engagement placed the Zimbabwe economy under severe pressure and laid the ground for an Economic Structural Adjustment Programme (ESAP), endorsed by the IMF and World Bank. The ESAP of 1991-96 was doomed to fail as spending continued to outstrip economic growth. The hope and excitement ushered in by independence in 1980 had sixteen years later given way to disillusionment as jobs and other economic opportunities for the majority declined.
The abandonment of ESAP coincided with an onset of the Autumn of War Veterans (1997-2000). Many ex-combatants from the ZANU military wing (the Zimbabwe African National Liberation Army – ZANLA) who had not been absorbed into the structures of government found themselves among the ranks of the unemployed, ranks which were swelled by demobilized soldiers and retrenched civil servants. The army of unemployed ex-combatants made economic demands and threatened to bring down the very government they had fought to bring into power. Without time to adjust policies and bring about increased economic growth, government in late 1997 started printing money in order to meet its rising commitments. The sudden increase in money supply, the DRC war, and general economic decline led to a crash of the local currency on 14 November 1997 – ‘Black Friday’  – which was to mark an important point in the onset of Autumn of War Veterans. The era of trying to reconfigure the inherited Rhodesian economy of import substitution had come to an end; nationalist forces were gathering to demand a new and more equitable economy, but government was ill-prepared for it.
The sudden economic contraction of 1998 following ‘Black Friday’ led to price increases, food riots, and emergence of political opposition to ZANU(PF) from within its alliance partner, the Zimbabwe Congress of Trade Unions (ZCTU). The Movement for Democratic Change (MDC) grew out of the ZCTU to campaign for more political space, a new constitution, and a new pro-labour economic programme. A new constitution was formulated and put to a referendum in 2000. ZANU(PF) campaigned for ‘yes’ vote, but lost the referendum, bringing to an end the Autumn of War Veterans. This also marked the end of economic growth in Zimbabwe and the onset of several years of decline, while the rest of Africa continued to show positive growth.
The Winter of Fast Track Policies (2000-2008) began with the invasion of white-owned commercial farms by groups led by ZANLA ex-combatants, completing what was started in 1894 and aggressively resumed in 1972 – the taking back of African land occupied by European colonial settler farmers during the period 1890-1950. Government efforts to buy land from white farmers after 1980 had failed to meet the demand for better land by Africans living on land with marginal soils in the colonial Tribal Trust Lands (also referred to as African Reserves and after 1980 re-named to Communal Areas). Lack of adequate funding, refusal by white farmers to release land into the market even under ‘willing seller willing buyer’ principle, and a growing antagonism between ZANU(PF) leadership and Western Governments, all combined to trigger a nation-wide invasion of land owned by white farmers who had in 1999 joined the MDC in large numbers.
The rapid decline in economic production associated with the Fast Track Land Reform Program (FTLRP) only increased the number of unemployed people and drove more of them towards the MDC’s promise of prosperity. Government’s use of price controls, money printing, elite corruption, and threats to the private sector only gave more ammunition to MDC leadership. The impact of money printing on the economy was catastrophic as incomes and savings in Z$ became virtually worthless (from US$0.04 in 1998 to virtually zero in 2004).
For the masses of poor peasant farmers waiting to benefit from the FTLRP, there was the promise of a better socio-economic future; and ZANU(PF) developed a second policy promising a transfer of shares from private (predominantly white-owned) firms to the state and the African population – giving rise to the Indigenization and Economic Empowerment policy in 1998 and later the Act of 2007. This combination only accelerated economic decline, and government responded by an even faster printing of money, which culminated in the highest hyperinflation rate in the world (while the enforcement of price controls drove goods from the formal to the informal markets).
Real GDP was projected to have fallen by over 6% in 2007, driven by output declines in all sectors. Frequent electricity shortages, deteriorating infrastructure, fuel and foreign exchange shortages, the rising impact of the substantial emigration of skilled workers, and uncertainties over property rights all contributed to the decline.
Inflation had spiraled to hyperinflation levels . The official consumer price index significantly understated price pressures due to the fact that many of the goods with controlled prices were not regularly available in the formal sector, but were recorded with no price increase or only a negligible increase in the official basket. This led to a severe downward bias in the official inflation estimate.
The external debt situation remained difficult, with the public debt as a proportion of GDP having more than doubled during the period 1980-2006. At the end of October 2007, official reserve assets, reported by the authorities using the template agreed with IMF staff, stood at about one month of imports. This was greatly inadequate in view of Zimbabwe’s substantial official external arrears of over US$1bn and pressing import needs.
Private sector financial intermediation had dried up and banking sector assets and profitability had already been eviscerated in real terms. While the RBZ’s standard stress tests pointed to limited systemic credit and exchange rate risk, the role of the banking sector in financial mediation was continuously declining.
Shortages of food, fuel, and electricity had further undermined social conditions. Hyperinflation had eroded the purchasing power of wages and salaries, and intensifying price distortions worsened shortages of basic goods. Price controls and freezes since June 2007, although some of them were later relaxed, made food shortages more severe, encouraged informal activity, and seriously damaged business confidence. The situation was doing long-term damage to the Zimbabwean economy. Private sector investment was virtually zero, infrastructure was deteriorating, and skilled people, such as teachers, doctors, nurses, and technicians, were leaving the country, particularly for South Africa.
It is in this environment that the elections of 2008 led to a defeat of ZANU(PF) by MDC, followed by violence against supporters of opposition parties, and the commencement of negotiations to stop a national slide into an expanded conflict. The Southern Africa Development Community (SADC) in 2008 appointed South Africa to mediate between ZANU(PF) and MDC, and this culminated in the signing of a Global Political Agreement (GPA) on 15 September 2008, laying the framework for the formation of an Inclusive Government in which ZANU(PF) and MDC would equally share ministerial positions, with Mugabe retaining the Presidency with two Vice-Presidents, and the MDC getting a newly-created post of Prime Minister and two Deputy Prime Ministers.
While negotiations on the composition of the Inclusive Government were going on, the RBZ and Ministry of Finance continued with their efforts to address the country’s economic problems. In late 2008, the RBZ Governor issued a hundred-trillion Z$ note (having removed close to 15 zeros from the currency in the previous two years). Within a week, the blue note had gone down in value from US$100 to US$0.1. Citizens stopped accepting the Z$ for their goods and it was effectively abandoned as a medium of exchange.
On 29 January 2009, Patrick Chinamasa as acting Minister of Finance presented to Parliament a budget statement that took some critical steps towards economic reforms – officially allowing the use of foreign currencies alongside the Zimbabwe dollar, relaxing price controls, and stopping the RBZ quasi-fiscal activities and money printing. Government adopted the US$ for denominating its budget, payment of taxes, and trading on the Stock Exchange. At the same time, the Ministry of Finance was to work with the RBZ to pay civil servants’ allowances with coupons denominated in hard currency and to be exchange for US$ in the market.
While the budget statement signalled the end of fast-tracked land reform and hyperinflation, the Spring of Inclusive Government was delayed until 11 February 2009, when Prime Minister Tswangirai announced that Zimbabwe civil servants would be paid in hard currency. In the lead-up to this announcement, extensive discussions had been held between the in-coming Government economic team and International Financial Institutions (IFIs) on how formal dollarization could be attained, as the Government team concluded that the choices were either to pay civil servants with Z$ (as good as not paying them) or pay them in a hard currency. Given the difficulties of formal dollarization without official engagement with the United States of America, the new Minister of Finance, Tendai Biti, in the 18 March budget statement to Parliament announced the adoption of a Multi-Currency System (MCS). Thus, within two months, Chinamasa and Biti had announced the critical monetary policy that was to mark the end of Winter of Fast Track Policies and the commencement of Spring of Inclusive Government.
In 2009, those who had seen themselves as waging a war for economic liberation during the previous decade found themselves sharing power in the Inclusive Government. The Spring started out quite chilly, though, with all services having practically collapsed and government having no money to finance the recovery. The first priority was to stabilize the economy, which the MCS did by halting hyperinflation overnight, after which the private sector restocked shops and supermarkets within a fortnight – the South African economy had the capacity to meet this demand. The funding of services was more difficult. In February 2009, at least US$45m was needed to pay every government employee US$100 (without contributions to pensions and medical aid) and meet the minimum Government expenses, but only collected US$25m; the balance had to come from private borrowings. The focus from March 2009 shifted to increasing government revenue, which rose from US$25m a month to over US$100m by year end, a major success story under the Summer of Inclusive Government. In two years, the revenue had recovered to almost the 2000 levels, and had by 2012 surpassed them.
This dramatic economic recovery sent the strongest signal that the stabilization strategies as outlined in the two phases of Short-Term Economic Recovery Programs (STERP I and II) were working, and gave hope to many that the Spring of Inclusive Government was indeed setting the stage for a Summer of Rapid Growth after the 2013 elections; but some feared that that it would give way to a Winter of Uncertainty for unknown duration.
 The government has presented the large-scale farm invasions that started in 2000 as marking a struggle to liberate the economy from white race-based capital, both local and international. The idea of a new African struggle for Economic Liberation/Freedom has also inspired sections of South African politicians and population to rally around the idea of Economic Freedom Fighters.
 Danile Ndlela and Peter Robinson (2007) ‘A New Zimbabwe – Sustainable Growth and Transformation’, ZimConsult and The Zimbabwe Institute, Cape Town, South Africa.
 The first Operation Gukurahundi was carried out within ZANU’s military wind (ZANLA) in December 1974 and lede by Urimbo and Nhongo to put down the Nhari-Badza rebellion.
 As the War veterans demanded Government payout as compensation (of a lump sum amount plus monthly allowances) for their role in the liberation way, the Svosve people (100km east of Harare) invaded a white-owned farm in November 1997, and government published the first list of 1,471 farms to be compulsorily purchased. The farmers tried to block the purchase orders in the courts as they believed the sums on the table did not reflect the market value.
 The Zimbabwe dollar fell by 71.5% against the US$, and the stock market crashed by 46%.
 The nationalists in ZANU(PF) often cited a famous TV news clip showing the leader of MDC seated on a sofa while white farmers wrote out cheques, and farm workers sat on the grass in their blue overalls.