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This article provides information about the impact of economic structural adjustment policies:
Since 1991 the Zimbabwean dollar has been devalued repeatedly and, after the crisis that started with the land restitution process, has become almost worthless. The generous liberalisation of the economy culminated in the lifting of protectionism. This opened the door of domestic industry to cheaper imports and resulted in the closing and downsizing of many labour- intensive industries.
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South Africa’s decision to impose a tariff on Zimbabwe’s textile exports exacerbated the situation. And the severe drought in the country significantly affected agricultural output, which is the main source of foreign currency. Thus, between 1991 and the year 2001, Zimbabwe’s GDP declined culminating in a negative growth of -11.5%.
Zimbabwe is South Africa’s largest trading partner on the continent. The country largely exports primary goods to South Africa and is dependent on South Africa for fuel and electricity. The trading balance is in favour of South African exports of mainly manufactured products to Zimbabwe. South Africa’s protectionism ensures that Zimbabwe’s goods remain less competitive in South Africa and this has also contributed to the downturn in the latter’s economy in the 1990s.
Unemployment is rampant and an exodus of young skilled professionals has been in progress for many years now with South Africa, Britain, North America and even Australia being the preferred destinations. Economic policy reforms have thus resulted in declining employment opportunities. The fact that Zimbabwe is facing a rapidly increasing unemployment crisis is evident in the percentage drop of the total population formally employed, which dropped from 18% in 1965 to 112% in 1996.
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In 1990 Zimbabwe embarked on a programme of economic reform (ESAP) and 1991 -92 saw one of the worst droughts in living memory – with close to 70% of the population living in the rural areas and dependent on agriculture for their livelihood, this constituted a major disaster. One result of these events was increased migration to the urban areas by people in search of employment.
A further drought in 1995-96 compounded the effect. By 1995 the effects of the AIDS pandemic were becoming more visible and since then families have had to assume increased support systems, particularly for orphaned children, as breadwinners die. Worsening economic conditions plus ever increasing corruption and crime have been the norm since 1995.
Today we frequently see newspaper articles stating that thousands have been retrenched, businesses are closing, unemployment is soaring, etc. Inflation has moved from 15% in 1990 to an all time high of 70% in October 1999 and 56% in 2000. Zimbabwe’s unemployment rate is set to reach an unprecedented 70% in 2002. The economic analysts said that it was imminent that failure by the economic stakeholders labour, business and government in creating opportunities to stimulate industrial expansion would lead to increases in unemployment.
The income distribution in Zimbabwe is still one of the most unequal in the world: a survey on consumption shows that while the rate of consumption among the richest 20% of the country’s population is 55.7% the poorest 20% constitute only 4.6%. The incidence of poverty has increased in Zimbabwe as a result of ESAP. The Poverty Assessment Study undertaken by the Zimbabwe Government in 1995 indicated that 62% of the population was living in poverty.
According to the report 42% of the population belonged to households, which were below the ‘food poverty line’; and 62% of the population belonged to households whose incomes were adequate to meet basic needs. In addition, the report indicated that the incidence of poverty was higher in rural areas, where 72% of households had incomes below the ‘total consumption poverty line’ compared to 46% in urban areas.
Cutbacks in public expenditure entailed the end of many public subsidies, set in motion the introduction of user fees for education and health, and meant that the poor could not afford these crucial amenities. This coupled with high inflation, rising costs of living and the decline in real wages, resulted in not only widespread poverty but also disillusionment with the present ZANU-PF regime.