1990 to 2000
THE TURNING POINT
In all the challenges that the Zimbabwean government had faced between 1980 to1990 there was need for government to come up with a progressive policy of economic reconstruction for the country in order to promote economic growth. This chapter focuses on 1990 to 2000 and the chapter will highlight some of the policies that the government came up with and some of the results of these policies within the economy. Some of the questions that will be addressed will include the fact that was it in this decade that was the turning point or was this decade a mere reflection of the inevitable decline of the Zimbabwean economy.
In an effort to deal with the economic challenges that the Zimbabwean government had been facing in its first decade of independence the government came up with the Economic Structural Adjustment Programme popularly known as ESAP in 1991.
Zimbabwe’s adjustment program contained the usual collection of Bank-inspired reforms – trade and currency de-regulation, devaluation of the Zimbabwe dollar, movement towards high real interest rates, the lifting of price controls, chopping of “social spending” and removal of consumer subsidies. All were standard ingredients of “liberalisation,” as were the Bank’s and IMF‘s increasing emphasis on reduction of the government deficit, civil service reform and shedding of public enterprises. And finally, there was the string of large loans and credit facilities from the Bank, the IMF and international donors, aimed at supporting the country’s balance of payments and government’s plans for substantial private sector infrastructural development. At the outset, it was estimated that roughly US$3 billion over five years would be needed from overseas donors to make the reforms work. Zimbabwe would spend its way into a new free market on borrowed money.
The ESAP optimistically projected that the implementation of these measures over a five –year period would lead to a five per cent annual growth, a reduction of the budget deficit to five per cent of the GDP by 1995, a reduction of the external current account deficit to four per cent of GDP and reduction of the debt service ratio to 20 per cent by 1995.
This had consequences economically as well as socially, it is fair to say ESAP was the beginning of a new political or economic philosophy that the government had embarked on and this would have dire consequences and David Coltart, MDC Senator, who has been a human rights lawyer in Zimbabwe since his return to the country in 1983 commented on his opinion on ESAP, he argued:
“As we look at what is happening in Zimbabwe it appears as if we are moving away from a centrally controlled economy to a free-market, capitalistic economy. We are seeing a drift from state ownership or state control to African styled privatisation in which the key players are well connected men and women not too far from the seats of power. Government has not actually admitted yet that structural adjustment marks a shift from socialism to capitalism and a free-market economy. Indeed Government, or rather the ruling party, every now and then reiterates its commitment to socialism/Marxist-Leninism, but this flies in the face of what is actually happening in the country. Furthermore, in all the television programmes organised by Government they have not actually come out and said that they are now committed to capitalism. In my view, the term “structural adjustment” in Zimbabwe is simply a smoke screen or a euphemism; it is a convenient phrase to disguise the “U” turn that Government is now taking”.
As aggressive as this may come across it really does make sense, the idea of socialism here seemed to have disappeared to more of a capitalist system that will as a result low income workers, the poor and unemployed suffered as a result of this shift. Moreover, there was a shift in emphasis in the redesign of the state’s social programs, away from a concern with issues of equity and access, towards a system of management driven primarily by the problem of how to administer the supply of services given defined, limited resources. The negative social and economic consequences of this shift were immediately and abundantly clear for ordinary Zimbabweans. Of particular note was the rapid deterioration in the country’s acclaimed health and education sectors.
On the Health sector Public expenditure on health care declined by 39% in 1994-95. This decrease implied diminished spending on common drugs, extension and preventative health services, specialist facilities and treatment, and other components of quality health care delivery. At the same time, the government’s stricter enforcement of a user fees system erected barriers to health care in the way of poorer social groups who were, typically, those most in need of health services. Decreased access to prenatal consultancies, equipment, necessary facilities and, not least of all, drugs. A more widespread, essential problem involved diminishing drug supplies. Between 1988/89 and 1993/94, the real value of the national revolving drug fund, allocated to the agency that supplied approximately 80% of drugs dispensed to public and private health institutions, declined by 67%, resulting in shortages and the growing use of private channels to secure drugs and equipment. In 1992 doctors and nurses began referring to “ESAP deaths”, described as deaths caused by the inability of patients to pay for the minimal length of time in the hospital, or for prescription medicine. The Minister of Health, Dr. Timothy Stamps has acknowledged that only one in ten Zimbabweans can afford to pay for their own health care. Yet fees remained in place, largely at the insistence of ESAP policy makers. Meanwhile, accounts from rural clinics and hospitals have urgently noted the near collapse of health care services under the weight of cutbacks and imposed self-reliance. Professional morale and service delivery within the public health system has wilted. Many doctors, nurses and technicians have been tempted into the higher-paying, better equipped local private sector, or out-of- country altogether. According to a 1993 UNICEF study, health services had fallen by 30per cent, twice as many woman were dying in childbirth as had before 1990, and fewer people were visiting clinics and hospitals because they could not afford it.
In education the same contradictions between cost savings and rising social need have emerged to threaten the country’s celebrated post-independence advances in primary and secondary education. In the primary sector in particular, real per capita spending and average spending per pupil fell to the lowest levels since independence. While government’s declining investment undermined the quality of education, its imposition of user fees effectively barred easy access to education for hundreds of thousands of students from poorer households. The overall result of fee imposition was a decline by as much as 5% in enrolments by children in urban primary schools, despite a growth in the potential school-going population. Over time, the government has established a relief system and in 1995, government spent $53 million helping 265,000 students with tuition and examination fees. But this still fell far short of the actual basic need, and did not begin to address additional heavy school attendance expenses including school levies, materials, uniforms and other costly items. And the economic benefit to government from the imposition of cost-sharing fees? In 1992-93, educational charges raised only $50 million – or 0.5% of budgeted government expenditure. To further elaborate on the consequences of ESAP on health and Education Mlambo states that ESAP provided harmful to Zimbabweans educational and health care reforms. Indeed it can be said that, by 1995 Zimbabwe was undergoing what essentially amounted to a counter revolution as well as the impressive gains made in the first decade of independence in education and health were being eroded by ESAP. The government of Zimbabwe was itself forced to admit in 1996 that because of ESAP, the gains made earlier in the provision of health services were in serious danger of being reverted. It stated:
During ESAP, Government resources have decreased so that real expenditure on health has declined because of a combination of raising costs, inflation, declining value of the Z$, emergence of costly diseases such as AIDS and TB. . . The gains that have been made to date are therefore under threat.
During the early 1990s, workers and the unemployed moved towards mass action and responded to the impoverishing effects of ESAP with strike action. The Zimbabwe Congress of Trade Union (ZCTU) gradually distanced itself from the state became more confrontational, and in this way was able to assert its autonomy. It organised a march against the government’s economic reform programme in June 1992, but the event was poorly attended and brutally quashed by the police; the future of the ZCTU as a body able to mobilise workers against government and employers came under threat. However, workers became more and more agitated as their real wages continued to decline. Then there was a public sector strike of June 1996 was the largest strike organised by civil servants in post-independent Zimbabwe the eight week strike by teachers, doctors, nurses and other government workers was supported by student groups, human rights organisations and churches. The state responded by making them illegal, detaining union leaders and refusing to negotiate, the strike nearly paralysed the country and delivered a blow to the governments cultivated image of unchallenged authority.
Indeed, by 1995, a growing number of studies had begun to document the negative impact of ESAP on the poor majority of Zimbabweans. For instance the government’s decision to deregulate prices and remove subsidies for basic consumer goods in 1991 caused severe hardships for the Zimbabwean poor. The poor all of whom battled to afford basic goods as prices skyrocketed and workers real wages declined. Under structural adjustment, woman and children’s suffering intensified, as poor households relied increasingly on these groups’ reproductive labour to sustain themselves.
The plight in rural population also worsened during this period there was a de-industrialisation of the agro-industrial sector, and rural poverty intensified as a result of ESAPs adverse effects on the agricultural output of the poor. It also exacerbated national and rural income inequalities. The combined result of the reduction in government extension and agricultural input services, the introduction of a tight and more expensive credit, and the deterioration in rural roads was a severe decline in both peasant agricultural productivity and peasant earnings and furthermore structural adjustment increased pressure on rural land and natural resources as retrenched urban workers either sent their families to their rural homes or went with them. In an extended survey of factors that conspired to derail ESAP, one analyst identified them as:
- Technically deficient implementation owing to poor design
- Speculative surge of imports
- Late disbursements of funds by donors including the world bank
- Punitive interest rates and contraction in foreign investment
- A major drought in 1990-91 necessitating food imports
In light of the impact of Structural adjustment on society and the economy it must be noted that this was a process that contributed to the decline of the Zimbabwean economy, it was not sudden but one event led to the other and ultimately affected the Zimbabwean economy. However it was not until 1997 that all hell broke loose. It was Friday 14 November that the Zimbabwean dollar collapsed, a day referred to as “Black Friday”, when the Zimbabwe dollar lost 7.1% of its value against the United States dollar. The stock market subsequently crashed, wiping away 46% from the value of shares as investors scrambled out of the Zimbabwe dollar. Debates are inconclusive on the real cause of Black Friday. According to Professor John Makumbe a political scientist “Black Friday” was as a result of the suspension of the War Veteran Compensation Fund, because of this the war veterans marched and physically confronted President Mugabe at State House and demanded payment for their contribution in the war. They argued that it has almost been two decades and they have nothing to their name yet they fought and liberated the country, the police could not stop them because some of them were war veterans so they were not stopped and demanded payment and the President had no option but to pay them Z$50 000 and Z$2000 dollars a month. He argued that this had never been done before and to make matters worse it was unbudgeted for and the impact on the economy was that it collapsed.
With the ZCTUs ability to organise and mobilise masses for protest during this period it was further strengthened by growing frustration with the slum in the economy and by the government unbudgeted gratuity of payments to war veterans (Black Friday). Notably the general strikes and stay-away of this period were joined not only by workers alone but by other urban social groups, including the unemployed and the students, and by civil society organisations working for human rights and democratisation. In this way a broad alliance between and others in the fight for workers’ rights and social justice was born and cemented. Some of these demonstrations were severely crushed by the police.
The year 1998 opened up with an intensification of pressure on the state by the workers and civil bodies. By the end of 1997 several key economic indicators pointed to the challenges facing the state: as a percentage of gross domestic income, the share of wages dropped from 54% in 1987 to 39% in 1997, while the ratio of profit increased from 47% to 61% during the same period; real wages fell from an index of 100.6 between 1985 and 1990 to 86.0 between 1996 and 1999 employment growth declined from an index of 2.4 to 1.5 and inflation increased from 11.6% to 32.6% during the same period; poverty levels increased from 40.4% in 1990/91 to 63% in 1996. As a result of this in January 1998 food riots, in response to the steep rise in the cost of mealie meal, erupted in the capital city and smaller towns such as Beitbridge, Chegutu and Chinhoyi. The response of the state was brutal, ten people were killed and hundreds arrested and assaulted by the security forces. This was accompanied by more collective union actions, and the emergence of a coalition of workers, student intellectuals, humans’ rights organizations and women’s groups to from one of the most effective social movements in the country’s history, The National Constitution Assembly (NCA).
It was clear at this point that the economy was going downwards and that there was need for immediate government intervention in order to deal with the state of the economy, however this was not done instead the government decided to send troops to the Democratic Republic of Congo, a move that will not only strain government budget but that also increased government expenditure in a foreign land.
In October 1998 thousands of Zimbabwean troops were deployed to the Congo by the Government. At this time inflation was already high at 30%. The Zimbabwean Government maintained that the troops were in the region to promote peace. However, the problem that arose with this intervention was that it had not been budgeted for and the Congolese were not paying the bill for the soldiers who were deployed by Zimbabwe. It is said that more than half of the Zimbabwean ministers were against the war. However, various senior members of Government privately benefitted from the war and did nothing to stop it; a planned demonstration by the public about the war was quashed. The deployment went ahead and as the Congolese did not meet the cost of the war, the Government printed money to meet the deficit that resulted. This in turn resulted in inflation more than doubling in 1998. With the state of the economy the Zimbabwean army should have never been involved in that war considering that it was not budgeted for and also considering the state of the economy due to the effects of ESAP as well as the black Friday situation. This war should have never been one that Zimbabwe should have been involved in. What the country should have focused on then is a number of austerity measure, especially cutting government spending, policies of investment and infrastructural development which would create jobs, revival of industry to encourage export of local products internationally so as to bring in foreign currency. These are some of the things the government should have focused on in order to improve the state of the economy.
Due to the increasing demonstrations the government was under attack and it gambled. It offered a new constitution in 1999 which in return for cementing presidential powers it promised to redistribute white owned farm land and with the economy in seemingly terminal decline white commercial farmers and black trade unionist found common cause and against the new constitution and from this the MDC was formed. The Movement for Democratic Change (MDC) led by Morgan Tsvangirai. With the rise of a new political party a new era in politics in Zimbabwe began, the rise of the MDC would become a game changer in the political sphere of Zimbabwe in the next decade.
- Vusani, M (2015) ‘Economic downfall of Zimbabwe from 1980 to 2008’