How deep is the Zimbabwe crisis?

How deep is the Zimbabwe crisis?
President Emmerson Mnangagwa and his Vice Presidents, Constantino Chiwenga (left) and Kembo Mohadi (right)

President Emmerson Mnangagwa and his Vice Presidents, Constantino Chiwenga (left) and Kembo Mohadi (right)

By Munyaradzi Mugowo

ZIMBABWE’S crisis is not a typical economic downturn to which governments usually respond with countercyclical adjustments to mitigate downside risks and stabilise the economy.
It is a multi-faceted condition of self-reinforcing instability with deep political, policy and institutional roots dating back to the 1990s.
By the time long-ruling president, Robert Mugabe, resigned in November 2017, the crisis had escalated to a national emergency with government fighting all sorts of economic fires including encroaching economic recession; resurgent inflation; an extremely dire fiscal position; crippling shortages of foreign currency and cash dollars; a critical balance of payment (BoP) position; mounting sovereign debt distress; high and semi-permanent unemployment; fragile financial markets; persistent liquidity crunch; and declining social services. An important conclusion I have reached is that these macroeconomic vulnerabilities are a side-shoot of prolonged State fragility; deeply-entrenched structural bottlenecks; ruinous ideologically-inspired policies and unresolved institutional failures, which have seen a major economic crisis erupting every decade since independence.
From the macroeconomic imbalances of the late 1980s, which prompted the adoption and half-hearted implementation of the Economic Structural Adjustment Programme in the early 1990s, up to the present crisis under dollarisation, the underlying challenges have remained fundamentally the same.
If we designated the mid-1990s as an economic watershed, we would prove beyond doubt that the current crises bear the DNA of the “lost decade” — Zimbabwe’s longest and deepest crisis, stretching from 1998-2008, which ended with dollarisation in 2009.
For instance, foreign currency shortages and cash crises are recurrent while unemployment; fiscal constraints; economic informality; investment constraints and BoP problems are persistent.
The same holds true for banking crises ― which have hit the economy twice in the last 15 years ― and inflation, which has generally persisted throughout Zimbabwe’s four decades of independence. Recent deflation episodes under dollarisation only highlighted cyclical movements in aggregate domestic demand arising from liquidity challenges in the economy, but could not change the economy’s long-run inflation trend.
On account of space constraints, I will concentrate on Zimbabwe’s fragile statehood and defer all issues related to the state of the Zimbabwean economy to my next article.
Contrary to popular belief, the post-Mugabe transitional agenda is not an attempt to turn around a failed economy but an arduous mission to resuscitate a failed State and rebuild its capacity to function normally again.
In fact, the best way to describe Zimbabwe’s crisis is not by its failure as an economy for it is only an after-effect, but by its fragility as a State since it integrates all the underlying issues contributing to Zimbabwe’s crisis — economic, political, legal, institutional, structural and policy vulnerabilities.
Zimbabwe is classified as a fragile State by all international organisations which monitor and assess the fragility of States worldwide — the Fund for Peace (FFP), the World Bank and the Organisation for Economic Cooperation and Development (OECD).
The FFP, a US-based NGO which focuses on the problems of weak and failing states, rated Zimbabwe number 165 out of 178 in the 2017 Fragile States Index, which is calculated on the basis of 12 groups of economic, political, social, cohesion and cross-cutting indicators. With a score of 101,566, Zimbabwe was found to be “very fragile”. Compared to its score the previous year, Zimbabwe’s fragility actually worsened in 2017.
Using an expanded methodology, the OECD also rated Zimbabwe’s fragility adversely.
In 2016, the country also featured in the lowest category of the World Bank’s harmonised list of fragile states, scoring 2,4 on the Country Policy and Institutional Assessment (CPIA) framework. Any country scoring 3,2 and below on a scale ranging from one to six is considered fragile. The lower the score, the higher the level of fragility.
The World Bank’s CPIA framework measures a country’s capacity to mitigate and adapt to conditions of vulnerability across four clusters of fragility indicators namely economic management; structural policies; policies for social inclusion and equity; and public sector management and institutions.
Zimbabwe’s fragility spans all the four areas of State function, none of which is outside government control. Factors that have contributed to the country’s fragility include:
nLaw and order institutions ruthlessly extorted civilians and meted out political and human rights brutalities against those who challenged the status quo;
nThe civil service was bloated, inefficient and generally unwilling to provide social services;
nGovernment continued to borrow for consumption even though it was already choking under rising domestic and external debt;
nAbout 70 percent of State-owned enterprises were insolvent, posting losses every year and accruing more debts. Many of them also failed to account for funds and to produce audited financial statements for as many as 10 years;
*The national schools examinations council leaked papers every year with no control measures being taken;
*The informal market for foreign currency serves individuals, business organisations and individuals;
*The national soccer administration failed to pay a coach and got the country suspended from World Cup competitions;
Self-serving tyrants appointed relatives and cronies to top positions in government and government institutions;
Government clung to controversial and ideologically-inspired policies/laws even if they blocked aid and investment;
*Impoverishment increased to alarming levels while government splashed millions of public funds on vehicles, allowances and other benefits for its high-ranking officials;
*Unable to finance its budget deficit in 2017, government used an RBZ overdraft facility to credit the bank accounts of its payees by way of RTGS transfers without issuing cash dollars. Since the bank balances created were not supported by foreign currency reserves and cash dollars, the overdraft facility effectively created artificial money for the purpose of sustaining the operations of an undisciplined government.
*Government institutions obtrusively flouted tender rules and still got away with it;
*Nearly every licensed driver has had to bribe issuing officials;
*The Auditor-General’s reports exposing rampant corruption and embezzlement of public funds were flagrantly ignored;
*And no action taken where public funds are diverted from infrastructure, social services and social protection to rewarding loyalists and bootlickers of the ruling elite. and a failed economy which, besides producing the world’s highest inflation in history, also produced one of the world’s highest unemployment records;
*Some top government officials have headed public institutions for more than 20 years without retiring. Others have been recycled from one institution to the other.

Munyaradzi Mugowo is an economist, researcher and consultant on mineral economics, industrial policy, development economics and social policy. He is the managing consultant of Ziopra Consulting P/L and can be reached at


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