the politics of economic policy-making in zimbabwe

The Politics of Economic Policy-Making in ZimbabweAuthor(s): Carolyn JenkinsSource: The Journal of Modern African Studies, Vol. 35, No. 4 (Dec., 1997), pp. 575-602Published by: Cambridge University PressStable URL: http://www.jstor.org/stable/162006 .

Accessed: 09/05/2014 08:48

Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at .http://www.jstor.org/page/info/about/policies/terms.jsp

.JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range ofcontent in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new formsof scholarship. For more information about JSTOR, please contact [email protected].

.

Cambridge University Press is collaborating with JSTOR to digitize, preserve and extend access to TheJournal of Modern African Studies.

http://www.jstor.org

This content downloaded from 169.229.32.138 on Fri, 9 May 2014 08:48:25 AMAll use subject to JSTOR Terms and Conditions

http://www.jstor.org/action/showPublisher?publisherCode=cup

http://www.jstor.org/stable/162006?origin=JSTOR-pdf

http://www.jstor.org/page/info/about/policies/terms.jsp


The Journal of Modern African Studies, 35, 4 (I997), pp. 575-602 Printed in the United Kingdom (C 1997 Cambridge University Press

The Politics of Economic Poilcy-Making in Zimbabwe

by CAROLYN JENKINS*

THERE are two remarkable features of post-independence economic policy-making in Zimbabwe: the very limited nature of the changes made by the new government in i980, and the complete reversal of policy announced in I990. It was surprising that a more radical transformation had not been introduced soon after independence,1 since this had been achieved by a civil war prompted not only by the denial of even basic rights to the majority of the population, but also by an extremely inequitable distribution of economic resources. The volte-face in i990 was also unexpected, because it required a repudiation of governmental rhetoric at a time when the economy was by no means in a state of crisis, even though under stress. This article attempts to understand these policy shifts.

The literature which deals with political and economic interactions is very large. Much of it attempts to ask why some developing countries liberalise and others either do not, or liberalise only in a piecemeal fashion. However, the principles derived from this work apply generally to any economic policy package adopted by a government, and throw some light on changes in policy-making in Zimbabwe. Some of the most useful insights are reviewed in section i.

History matters in the study of change. The path taken in the past can eliminate options, because of inherited structures, institutions, ideologies, attitudes, and values (including apartheid, colonialism, and nationalism).2 Section ii provides a sketch of the constrains placed by

* Research Officer, Centre for the Study of African Economies, University of Oxford, and Research Associate, Centre for Research into Economics and Finance in Southern Africa, London School of Economics. The author is grateful to Ramani Gunathilaka for research assistance, and to John Knight for valuable comments.

1 Zimbabwe's independence dates formally from i 8 April i 980. The unilateral declaration of independence in i 965 was never recognised by the international community although, in effect, Britain had never interfered in the affairs of the colony, which from its establishment had controlled its own army and police force.

2 See, for example, R. Matthews, 'The Economics of Institutions and the Sources of Growth', in Economic Journal (London), 96, i986, pp. 903-i8; Douglass North, Institutions, Institutional Change and Economic Performance (Cambridge, I 991 ); and John Harriss, Janet Hunter, and Colin Lewis, The New Institutional Economics and Third World Development (London, I995).



576 CAROLYN JENKINS

the past on the room for manoeuvre in I980, limiting the changes made by the new majority government.

Prevailing ideas are also important in shaping change. The liberation movement in Zimbabwe espoused a socialist ideology, similar to that adopted, at least nominally, by governments in most of the continent's ex-colonies. Although Zimbabwe attained its independence late enough to learn something from African policy errors, the swing to economic liberalization had not yet commenced: it was only during the I98os

that the African crisis deepened, and that communism collapsed in Eastern Europe, leaving even more regimes dependent on aid from Western countries and institutions. Section III summarises the theoretical and pragmatic foundations of Zimbabwe's interventionist policy stance.

The interaction of domestic imperatives and international pressures is obviously significant in determining final outcomes. During the first half of this century Zimbabwe (Rhodesia) was particularly affected by the interests of Britain, South Africa and, later, the United States, in the sub-region. During the I 980s, the new government tried to manage the economy independently of outside influences, and policy-making was dominated by domestic pressures. This is discussed in section iv. External influences have, however, become more compelling since Zimbabwe adopted a structural adjustment programme in I 990 and thereby lost some autonomy in economic policy-making. This is examined in section v.

I. LESSONS FROM THEORY AND EXPERIENCE

In the political economy of development, theories of policy-making now almost invariably stress the role of interest groups in maintaining the status quo, while economic restructuring is explained by 'state autonomy',' by which is meant the ability of a government to ignore pressures from domestic groups, rather than the latter's independence from foreign actors. Protectionist policies may not necessarily be introduced because of interest-group pressures,4 but once trade or

3 Thomas M. Callaghy, 'Toward State Capability and Embedded Liberalism in the Third World: lessons for adjustment', in Joan Nelson (ed.), Fragile Coalitions (Washington, DC, i989); Joan Nelson, Economic Crisis and Policy Choice (Princeton, i990); Stephen Haggard and Robert Kaufman (eds.), The Politics of Economic Adjustment (Princeton, I992); Robert H. Bates and Anne Krueger (eds.), Political and Economic Interactions in Economic Policy Reform (Princeton, I 993). Bates and Krueger do not use the term 'state autonomy', but stress the importance of the delegation to technocrats of power to decide economic policy.

4 John Waterbury, Exposed to Innumerable Delusions (Cambridge, I993), argues that state-led industrialization and protectionism in Egypt, India, Mexico, and Turkey was not the result of



ECONOMIC POLICY-MAKING IN ZIMBABWE 577

racial barriers are in place, powerful coalitions develop to defend the benefits which accrue.

Policy is, therefore, frequently the outcome of the relative strengths of different class or sectoral interests,5 which aim to preserve or improve their position in the distribution of income. The most obvious lines of divergent interests are between export-oriented (in Africa, primary commodities) and import-substituting (manufacturing) interests, although other important distinctions are between liquid-asset holders (likely to profit from devaluation and financial deregulation) and fixed-asset holders (who frequently require cheap imports), and between foreign-owned and domestic enterprises. In Africa, agriculture and mining have typically favoured free trade, but because political power is usually concentrated in urban areas, groups favouring industrial protection have tended to have more influence on government. Other situations in which divergent interests are evident include structural adjustment policies and expressly redistributive policies, which inevitably affect negatively those groups which are economically and often politically strongest. Although they have an incentive to perpetuate their institutional structure, their perceived best interests may change in response to new circumstances. This change is typically incremental; revolutions usually only occur when conflicts between groups with divergent interests cannot be mediated within the current framework.

Generally, therefore, outcomes are determined by politics. Where a state is structured to respond to interest groups, solutions favourable to more concentrated interests prevail. In electoral systems where numbers count, politicians are more likely to champion causes that favour numerous, small voters, even sometimes at the expense of 'big interests'.6

The ability to implement and sustain new policies varies. Regimes that are constitutional have performed as well (or as badly) as those that are authoritarian in managing fiscal and monetary policy during

interest-group pressures, but of ideology, state-building, and geopolitics. Similarly, Alice H. Amsden, 'The State and Taiwan's Economic Development', in Peter B. Evans, Dietrich Rueschemeyer, and Theda Skocpol (eds.), Bringing the State Back In (Cambridge, i985), pp. 78-Io6, finds no evidence of successful societal pressures behind East Asia's interventionist economic policies.

5 For example, Alberto Alesina, 'Macroeconomics and Politics', in NBER, Macroeconomics Annual, 1988 (Cambridge, MA, i988). This literature is reviewed in Robert Kaufman and Stephen Haggard, The Political Economy of Democratic Transitions (Princeton, I995), pp. I9-23.

6 Robert H. Bates, 'Social Dilemmas and Rational Individuals: an assessment of the new institutionalism', in Harriss, Hunter, and Lewis (eds.), op. cit. p. 46.



578 CAROLYN JENKINS

the I 980s, although populist regimes are usually characterised by instability.7 On the whole, new democratic governments appear to have greater difficulty than more established regimes (of either type) in sustaining stable macro-economic policies.8 Heightened expectations and renewed opportunities for social groups to engage in political activities place particular pressures on incoming leaders.

Authoritarianism tends to develop where (i) ethnic divisions persist, (ii) political institutions are weak, (iii) the sense of 'nationhood' is shallow, (iv) technical and administrative capacity is limited, (v) economic dependence on other nations is extreme, and (vi) there are unfulfilled (and unfulfillable) popular aspirations. Single-party rule becomes institutionalized by means of constitutional changes, and political opposition is marginalised through co-option, harassment, and patronage.9 Statism may be characteristic of either 'socialist' or ' capitalist' regimes: there is extensive state intervention in the economy, restrictive controls over the private sector, and a tendency to resort to force to preserve 'national unity'. The state also becomes the major source of upward mobility, status, power, and wealth as the administrative class preserves its power through patronage networks. Much blame for inefficient policies has been placed on the political system being dominated by competition for access to public resources.

This literature is useful in explaining the evolution of economic policy-making in Zimbabwe during the i98os. All of the themes raised here emerge in section Iv. The country had a vocal, sophisticated, and diversified economic elite, which was predominantly white, and whose interests potentially conflicted with those of the newly enfranchised majority. Despite the somewhat abrupt political change, it was not inevitable that there would be a sharp adjustment in economic structures, including the distribution of income and wealth, and the pattern of employment. The eventual outcome would be determined by politics, and those in power would need to weigh the conflicting pressures of strong (white-dominated) interest groups well-accustomed to dealing with politicians, as well as the weaker but more numerous

7 Rudiger Dornbusch and S. Edwards, The Macroeconomics of Populism in Latin America (Chicago, i991).

8 The greatest difficulty is faced by weak authoritarian governments because of a 'vicious cycle' of political and economic reform: if they liberalise because the costs of repression are too high, the new freedoms may be used to protest against further economic adjustment. See Kaufman and Haggard, op. cit. 1995, p. 23.

9 Potentially strong lobby groups, like trade unions, are dealt with in the same way: their leaderships are suppressed or co-opted, which weakens the ability of labour to assert its own interests. SeeJohn Healey and Mark Robinson, Democracy, Governance and Economic Policy (London, I992), p. 90.




voters whose expectations of redistribution were high. Moreover, there was a possibility that the fledgling democracy would try to contain divisions in its electoral base by shifting in the direction of authoritarianism and patronage.

With conflicting pressures on the government, caution predomin- ated: historical constraints were ultimately compelling in limiting the economic changes introduced by the new leaders after i980, and in setting the course for political developments thereafter.

II. ORIGINS OF CONFLICTS AND THE SHAPING OF STRUCTURES

Much has been written about Zimbabwe's transition from colonialism to democracy, and there are still debates about the interpretation of many past events. It is not possible to do justice to the variety in the literature in a discussion of this length. In any event, the history has been ably reviewed in a political economy context by others.10 However we need to consider, albeit briefly, the primary constraints on the new government's room for manoeuvre.

I. Tribal Mistrust

The first non-racial government in Zimbabwe had to contend with mistrust between the leaders of the ruling party, which was supported by the majority Shona tribe, and of the main opposition, which was supported by the Ndebele, whose invasions in the i840s had provoked tribal hostility. When resistance to white minority rule began in the Ig60s and I970s, black opposition was divided, and ideological differences occurred along ethnic lines. The moderates, like Joshua Nkomo, who led the Zimbabwe African People's Union (Zapu), were initially willing to wait for British intervention to secure their rights; the militants, including Robert Mugabe, who took over the leadership of the Shona-dominated Zimbabwe African National Union (Zanu), saw little or no alternative to an armed struggle. The lack of co- operation between Zanu and Zapu during the civil war expressed itself in ethnic conflicts after independence."1 In all post-independence elections, voting has occurred along clear tribal lines. Because 8o per

10 See, for example, Jeffrey Herbst, State Politics in Zimbabwe (Berkeley, Los Angeles, and Oxford, I 990), and Tor Skalnes, The Politics of Economic Reform in Zimbabwe: continuity and change in development (Basingstoke and New York, I1995). Also, Colin Stoneman (ed.), Zimbabwe's Inheritance (Basingstoke and London, I98i).

" This persisted in spite of cosmetic unity in the formation in I 976 of the Patriotic Front (PF) by the two parties, which simply gave rise to Zanu (PF) and PF-Zapu.



580 CAROLYN JENKINS

cent of indigenous people are Shona, this has consistently secured victory for Zanu. In order to reduce ethnic tensions, the Government was reluctant to allow for diversity among indigenous people, and increasingly saw itself as the sole legitimate voice of black aspirations.

2. The Importance of the Rural Vote

Demographic facts mean that rural voters are of great importance, not least since black urbanization rates are low. At independence, an estimated 25 per cent of the total population (only IG68 per cent of black people) were living in urban areas of over Io,ooo inhabitants. This ratio increased to 28 per cent by I990 - although it is possible that residents in black townships were underestimated. Even if dependency ratios are higher in the rural areas, maintaining their support is vital for any government. The rural vote has been reliable: initially because the war was fought in the countryside, which is where Mugabe concentrated on building his support-base, and subsequently because the Government has ensured that the rural population is fed, especially during droughts.

3. Racial Hostility

An indisputable legacy of Zimbabwe's pre-independence history was racial hostility. Early thefts of land and cattle from the indigenous people by the settlers gave the 'land issue' particular significance, while subsequent discriminatory practices required affirmative action and redistribution to reverse. The 'war of independence' inevitably served to intensify racial hostility, perpetuated as mutual mistrust thereafter since the negotiated settlement did not end the tension. In fact, it means that the undefeated settler state remained not only strong, but also defiant and antagonistic to the political programme of the new regime.

4. The Lancaster House Agreement, I979

For the first decade after attaining independence Zimbabwe's political leaders were constrained in implementing a full socialist programme by the constitution to which they had agreed in I979 (in return for promises of aid). This negotiated settlement limited freedom of action particularly in respect of cheaply acquiring land for redistribution. As the impetus for reform slowed, however, the



ECONOMIC POLICY-MAKING IN ZIMBABWE 58i

Lancaster House Agreement became a convenient excuse for governmental inaction.

5. White Dominance of the Economy

At independence the modern sector of the economy was almost entirely owned and managed by whites, even though they made up only 3-8 per cent of the population. Under their control were the best lands, the mineral concessions, the industries, the financial sector, and the majority of freehold rights in urban areas, as well as professional, managerial, and skilled jobs. Over go per cent of marketed agricultural output came from white (or foreign-owned) farms, which provided 35 per cent of employment in the formal sector and over one-third of exports. Not only did constitutional provisions make it difficult forcibly to change the ownership structure, but it was easy for economic elites to play on fears that falling production would follow too rapid redistribution. Mugabe's use of external bases from which to launch attacks on Rhodesia after Mozambique's independence in I975 meant that he observed the devastation to that country's economy which followed the exodus of some go per cent of its settlers. The potential for white flight was, at least in part, a motivating factor behind Mugabe's policy of reconciliation after the war.

This constraint was probably decisive in limiting the changes made after independence. The Government was wary of attacking the interests of the white business and farming community. The complexity of the economy, which was relatively developed by African standards, made it vulnerable to a loss of white confidence, and settler-dominated interest groups were not slow to remind political leaders of the consequences of a loss of output if their production was impeded.

6. Black Inexperience in Administration

The exclusion of blacks from senior administrative positions in the pre-independence civil service meant that the new administration was dependent on white experience. The civil service was expanded rapidly in a process of indigenisation, but many blacks were suspicious that approved policies might not be implemented by hostile white public servants. Whether or not this actually happened does not alter the fact that related allegations were frequently cited by politicians as a reason for governmental inaction. More importantly, inexperience made it difficult to deal authoritatively with settler-dominated pressure groups,



582 CAROLYN JENKINS

which were articulate and accustomed to dealing directly with the central regime. The historical exclusion of blacks from the most influential lobby groups, including trade unions, meant that attempts to express black concerns were comparatively weak. The ability of white negotiators to dominate discussion about the economy reinforced the perception that the Government lacked control of its own economy.

7. The System of State Controls over the Economy

There were strong incentives to maintain the economic policy package of the pre- I 980 era. Not least among these was the wish of the new leaders to influence an economy over which they had no other means of control. Furthermore, high growth, particularly of manufacturing, had occurred in the past behind import barriers, and was believed to be possible again; and, historically, policy interventions favourable to agriculture had raised farm incomes. The benefits of controls for a few generated a belief that the same system could provide benefits for many if it were simply expanded.

There were likely to be conflicting interests in the Government's economic interventions. The extensive controls, which were part of the Rhodesian legacy, were of private benefit to industrialists, who wanted to see them maintained after independence. There were, however, fears as to how these instruments would be used by a regime espousing Marxist-Leninist ideology. Pressures from foreign investors wanting more freedom to repatriate profits were also likely. Conflicting concerns of lower-level management, afraid of competition and wanting the maintenance of the status quo, and labour, demanding higher wages, greater job security, fewer disciplinary restrictions, and greater opportunities for promotion, were inevitable. Overarching these concerns of various interest groups was Zimbabwe's need for more production and more employment creation, which required, among other things, a reduction in uncertainty to encourage investment.

8. Economic Dependence on South Africa

Uncertainties about state controls over the economy were aggravated by the inherited economic dependence on South Africa, which had been greatly strengthened following the unilateral declaration of independence (UDI) by Ian Smith in i965. The Pretoria regime's




hostility to Mugabe, and its readiness to disrupt developments in Zimbabwe, meant that fear of possible South African actions affected many of the major policy decisions taken after i980.

The immediate problems faced by the new leaders after independence included the need to demobilise and employ the armed forces, to deal with intermittent violence, and to stem or accommodate the accelerating white exodus. The task of planning and executing social and economic reconstruction proved to be even more difficult, not least since Zimbabwe had inherited entrenched historical inequities and a society of interest groups of differing strengths and conflicting expectations. The Government had to balance black aspirations with the imperative of creating a favourable climate for domestic business, and was constrained by hostility from those who controlled the economy, and by conflicting concerns between urban-based interests and rural voters. It was unable to achieve a united black support base because of ethnic divisions as well as sectoral interests. Its hands were tied to some extent by the interim constitution, and by its economic dependence on an antagonistic neighbour.

These factors were important in determining the direction taken by Zimbabwe's first majority government. The party in power, however, espoused a socialist ideology that was strongly influenced by prevailing ideas about how to achieve development, and by practice elsewhere in Africa. Although economic policies were tolerant towards the private sector during the i980s, they coexisted with an ideology of state intervention. Determined adherence to socialist rhetoric made liberalisation at the end of the decade unexpectedly swift.

III. THEORETICAL IDEAS AND PREVAILING IDEOLOGIES

The governments of almost all developing countries adopted either socialist or state-led industrialization after World War II. The liberal world view appeared indefensible: capitalism had proved to be predatory, violent, and unstable, a view articulated by John Maynard Keynes as early as I933, and there was a desire to experiment with alternative economic systems. In Africa, and elsewhere, the experience of colonialism reinforced this view. The Marxist doctrine that profits



584 CAROLYN JENKINS

were a result of the exploitation of labour generated the perception that poverty was the result of exploitation of the poor by elites, and, more generally, of poorer nations by richer ones. This increased the appeal of 'African socialism'.

There were other factors which appeared to add justification to inward-looking, interventionist policies. The expansion in international trade which followed the second world war was more rapid in manufactures than in primary commodities, and many economists believed that earnings from primary exports, in particular, could not increase significantly, requiring industrialization for both prosperity and development.12 Furthermore, ideas in development economics were affected by the 'big push' view of state-led industrialization, and by infant-industry arguments for protection.13 The Soviet Union's apparent success with rapid industrialization under a command economy seemed to be worth emulating, and new arguments surfaced in the I 98os for state-directed export-oriented growth based on the East Asian experience.14

The leaders of newly independent countries almost all viewed state- managed development in political as well as economic terms: that it was vital in fostering national unity and the power of new governments - including, for example, in Indonesia, India, Ghana, and Tanzania. In countries undergoing revolution, the views of political elites, frequently Marxist, were important in framing policy stances. This was particularly so in poor countries, where constraints in the form of long- standing institutions were largely absent or destroyed.

During the i98os, there was a significant shift in the ideology of development economics. The oil shocks and exchange-rate instability of the I970S caused an acceleration in inflation, which was crushed in industrialized countries by severe monetary contraction. Although international financial collapse was averted, the price was high, and paid mainly by the poorer (and heavily indebted) nations, many of which experienced difficulties in servicing their debts. Their rescheduling was increasingly made contingent on economic adjustment,

12 See, for example, Raul Prebisch, 'Commercial Policy in the Underdeveloped Countries', in American Economic Review (Nashville, TN), 49, May I959, pp. 25I-73. For a review and critical analysis of the 'elasticity pessimism' literature, see Marian Radetzki, A Guide to Primary Commodities in the World Economy (Oxford, i990).

13 A new set of arguments (different from earlier views ofJohn Stuart Mill, Friedrich List, and others) was propounded by, for example, Tibor Scitovsky, 'Two Concepts of External Economies', in Journal of Political Economy (Chicago), 62, 2, I954, pp. I43-5i; Gunnar Myrdal, Rich Lands and Poor (New York, I 957), pp. 96-7; and Paul Rosenstein-Rodan, 'Notes on the Theory of the "Big Push"', in T. Morgan et al. (eds.), Readings in Economic Development (San Francisco, i963).

14 For example, Amsden, loc. cit.




dictated by neo-liberal principles,15 as economists in the member-states of the Organisation of Economic Co-operation and Development (OECD) became less tolerant of the lack of growth in poor countries, ascribing weak performance to unsuccessful populist policies. The dependence of many developing nations on OECD aid has meant that, increasingly, their domestic policy-making is subject to the dictates of foreign institutions.

In Zimbabwe, as elsewhere in Africa, socialist thought was the alternative to colonialism, which was identified with capitalism. The rhetoric of the Patriotic Front (PF) was Marxist-Leninist, which was relatively rare in a continent where the predominant ideology had been 'planning'. Although the restructuring of Zimbabwe's economy was intended to be gradual, there was an explicit long-term goal of socialist transformation.16 Furthermore, the policy of import-substituting industrialization, pursued by Smith's regime, was maintained, both because it was seen as a way to reduce dependence on the rest of the world, and since it had been associated with high economic growth between i965 and I973. The political counterpart to the pursuit of state-led industrialization was the rallying cry of 'national unity', which was eventually coupled with the drive for a one-party state.

Unexpectedly, when it took the reins of government, Zanu (PF) back-pedalled on its hard-line Marxist-Leninist approach, although not on its rhetoric.17 Its policies included (i) a little nationalization, (ii) a little land resettlement, (iii) careful safeguarding of existing economic interests, (iv) labour market interventions in favour of the black employed, (v) increased spending on public services, (vi) the extension of agricultural services to peasant farming areas, (vii) the establishment of co-operatives, and (viii) the granting of equal status to men and women under the law.

The political will for redistribution and socialist-oriented measures appears to have been lost early in the i98os. The specific repudiation

15 The evolution of the 'neo-orthodox' approach that has dominated reactions to poorer countries by the Bretton Woods institutions, and by the Governments of the United States, Germany, and Japan, is traced by M. Kahler, 'Orthodoxy and its Alternatives: explaining approaches to stabilization and adjustment', in Nelson (ed.), op. cit. pp. 33-6i. The view that macro-economic imbalances have causes deeper than excess demand, requiring market-oriented structural reforms, also coincided with growing opposition to 'big government' in the US and Britain.

6 Republic of Zimbabwe, Growth with Equity. An Economic Policy Statement (Harare, I981), p. 3, and Transitional NJational Development Plan, Vol. I (Harare, i982), p. i.

17 It has been argued that Marxist-Leninist rhetoric was always a thin mask for a lack of agreement within Zanu (PF) on substantive issues, rather than defining party 'strategy'. See Skalnes, op. cit. p. 75.



586 CAROLYN JENKINS

by the Government in I 984 of a programme funded by the International Monetary Fund (IMF) because some of the conditions were unaccept- able suggests, however, that the early loss of momentum was not a result of a conversion to neo-liberal thinking in Zimbabwe. Even so, later, in i990, a structural adjustment programme was adopted. The decision to change development strategy is so fundamental that it will never be made lightly: because structural change threatens so many entrenched interests in society, most governments will not initiate it without an overwhelming number of factors pushing it forward. Frequently a change of regime is required to effect a reversal of strategy, but this was not the case in Zimbabwe. However, the Government with its left-leaning ideology had taken power when, world-wide, ideology was moving rightwards. This at least made the shift in strategy at the end of the I98os possible, even if it does not explain it.

IV. THE POLITICS OF ECONOMIC POLICY-MAKING AFTER I980

The actions of Zimbabwe's first majority-rule government show it to be preoccupied with maintaining control once power had been grasped. This is not to say that the new leaders had no intention of expanding the capacity of the economy and redistributing resources more equitably. Early policy statements contained a strong emphasis on rural development, on improving access to public services, and on job creation. It was acknowledged that the settler community was important for contributing both capital and skills, and this was a factor in the strategy of reconciliation. However, the ruling class very quickly became a new elite, and its desire to hold on to power came to dominate its policy stance. As much as whites were needed to keep the economy functioning, so the black rural vote was needed to maintain Zanu (PF) in power. The Government adopted a two-pronged political manifesto: reconciliation and national unity. In practice the former meant the toleration of continued white control of the economy, and the latter came to mean one-party rule.

I. The Political Economy of Reconciliation: Co-opting the Settlers

There was, at least initially, mutual distrust between the settler community and the new Government. Whites felt politically isolated and marginalised, and were afraid of a deterioration in living standards, especially in education and health, yet they were trapped by exchange controls, which discouraged emigration. The introduction of legislation




to protect labour, and the indigenisation of the civil service, appeared to give substance to the ruling party's Marxist-Leninist rhetoric. Govern- ment officials, on the other hand, blamed 'reactionary' whites for conspiring with South Africa to undermine Zimbabwe's independence.

The economic expression of the politics of reconciliation was contained in the early policy statement of Growth with Equity in i98i: more rapid growth would protect minority livelihoods and increase the resources available for redistribution, which would occur as the economy was reoriented in a socialist direction. Mugabe was wary of the economic consequences of alienating the white population, and assurances were given that there would be no large-scale nationalisation, that no farmers who had a use for land would suffer expropriation, and that the white population was generally welcome to participate in the new Zimbabwe."8 At any rate, the Lancaster House Agreement entrenched the principle of protection of private ownership, and it has been argued that this laid the foundation for reconciliation."9 Despite this and other reassurances, Mugabe made conflicting statements, which unsettled the white population, notably in i98i when he threatened the take-over of white-owned farmlands for the purpose of resettling peasant farmers.20 These warnings were repeated: for example, in October i983, abrogation of the Lancaster House Agreement was threatened if the British Government withheld aid.

The problem of mutual distrust was aggravated in Parliament, where the Rhodesian Front - later Republican Front, later Con- servative Alliance of Zimbabwe (CAZ) - tended to dominate economic discussion, because of both more experience in debate and a greater understanding of the economy. Support by whites for the CAZ in the i985 elections left Prime Minister Mugabe feeling betrayed by their apparent non-response to the policy of reconciliation, and increased his mistrust of the commitment of the settler community to a non-racial democracy. The following year a two-thirds majority over- turned the Lancaster House provision for 20 seats to be reserved for whites in Parliament, and, although Mugabe proceeded to allocate I I to those who were already members, this reduction of their influence cause whites to look for new channels to express their interests. Almost concurrently the formulation of economic policy was centralised, with

18 Financial Times (London), 20 May i980. " Ruth Weiss, Zimbabwe and the New Elite (London, I994), p. xiv. 20 Financial Times, 3 April 198I.



588 CAROLYN JENKINS

the Prime Minister (who became executive President in i987), the Minister of Finance, Planning, and Development, and the Minister of Industry and Commerce being made responsible for drafting policy. Middle-ranking members of Zanu (PF) and Parliament itself were marginalised. The most effective way of influencing policy formulation was therefore to deal directly with the Ministers responsible.

Strong, white-dominated lobby groups already existed, the most influential being the Confederation of Zimbabwe Industries (CZI), the Zimbabwe National Chamber of Commerce (ZNCC), the Employers' Confederation of Zimbabwe (EMCOZ), and the Commercial Farmers' Union (CFU). These represented the most powerful economic interests, and had lobbying expertise built up under previous regimes. A shift to dealing directly with those in power through these organizations made representatives of white interests much stronger outside Parliament than ever the CAZ would have been inside. At the same time, an internal brain drain from the public to the private sector deprived the Government of its best talent, making it difficult to build capacity which could match interest groups in the private sector.

Most of the lobby groups, with the possible exception of the CFU, shunned publicity and opted for quiet diplomacy. This strategy suited the senior politicians of Zanu (PF), since agreement could be reached without the Government being seen to be acceding to white pressure. Dealing with single, purposeful, articulate groups was also easier for Ministers, who preferred, for example, dealing with the main employer organisation rather than with disparate groups representing labour.

By the I990 elections, white politicians were almost absent from the political process, but representatives of white interests were more powerful at the level of policy inputs than Zanu (PF) itself- or black lobby groups, which were still struggling to find their place in the national political process. The strong influence of settler-dominated organisations did encourage the creation of at least partly autonomous African interest groups which advocated redistribution and better opportunities. However, Zanu (PF) tried to direct their internal affairs, and undermined their effectiveness. This was exacerbated by insufficient financial resources and weak organizational abilities. The Government also tried to promote racially unified interest groups, but these were not successful, because white and black farmers and business people continued to have diverging interests.21

The politics of accommodating the settlers had implications for

21 Skalnes, op. cit. pp. 76, 93, and ioo-i.




economic policy-making. The theory reviewed in section I would lead to the expectation that the representatives of white interests would lobby hard to maintain the status quo, from which they had benefited in the past. This indeed occurred, with the CFU, for example, lobbying hard against resettlement on the grounds that it might threaten the output of large-scale commercial farms.22 On the other hand, strong pressure from farmers' representatives in Parliament in I980 and I98I,

and later from the CFU, helped to avoid the mistakes of other African post-independence regimes, which have held down agricultural prices in order to have a cheap supply of food in urban areas.23 Food prices in Zimbabwe have been better for all farmers than in many other African countries.

Overall, although old controls were maintained and extended, the Government did not interfere with existing private enterprise, and did not seek to intervene in sectors, like finance, that had previously been left alone. The fundamental structure of ownership remained intact,24 and this left private-sector power entrenched.25

With time, however, the Government's attempts to extend the benefits of controls to the majority generated strains in the economy, and reduced both absolutely and comparatively the benefits for whites. Bureaucratic delays and shortages of foreign exchange in particular, became irksome. This undermined business support for maintaining the status quo. As pointed out earlier, although interest groups may have strong incentives to preserve existing structures, they evolve readily in response to changing conditions. Manufacturing, the

22 Arguments surfaced early after independence in Parliament concerning the inefficiency of farming outside of the large-scale commercial sector versus the inequity of preserving the existing distribution of land. See Parliamentary Debates (Harare), Vol. I, i980, pp. 399-423, and Vol. 4, 198I, pp. 596, and 62 I-2.

23 On this and related concerns, black and white rural area MPs supported one another in Parliament, as may be seen from ibid. Vol. I, i980, pp. I042-72, Vol. 2, i98i, pp. 966-80 and II 30-I, Vol. 3, I982, pp. 755-71, etc. They were assisted by the Minister of Agriculture, the former president of the CFU, who continued to be sympathetic to the difficulties of farmers operating in a risky environment.

24 There was some increase in state ownership, although no programme of nationalisation, and the redistribution of land after independence was much less than promised.

25 Accommodation went further than permissive economic policy. The Government's attitude towards private schools, for example, was far more sympathetic than towards private medical services - indeed, the former received grants per capita that were I64 per cent of those made to government schools. The debate on the I98 I Education Bill involved explicit threats by whites in terms of emigration and adverse donor community reaction, and was far more acrimonious and racist than that over the i98i Medical Services Repeal Bill, although it ended with the white opposition pronouncing the Minister of Education 'very competent, very reasonable, very pleasant'. Parliamentary Debates, Vol. 2, I981, p. 488. As government officials joined the ranks of the elite, incentives for greater equality in education diminished further. According to Weiss, op. cit. p. 1I4, new private schools mushroomed from I 2 in I 980 to 40 in I 99 I.



590 CAROLYN JENKINS

previous beneficiary of protectionism, began to lobby for liberalization, because its representatives increasingly saw the costs of controls as being greater than the risks of reduced protection. Whereas, previously, economic associations had limited their concerns to sectoral policies, from about I987 macro-economic policy generally, and trade policy in particular, became the subject of bargaining between the Government and interest groups (with the involvement of the World Bank).

In the Cabinet, opinion was divided between the 'technocrats' (headed by the Minister of Finance, Bernard Chidzero) and the Marxist-Leninist 'ideologues' (especially Mugabe). The 'technocrats' themselves, including the leadership in the central bank, were not always in agreement, and it is possible that Chidzero was isolated on the question of liberalization in i987. However, despite continuing opposition from the President, there was accord on a policy framework paper by i990, and the Economic Structural Adjustment Programme (ESAP) was commenced at the end of the year.

Even if Chidzero was the primary mover behind the change in policy strategy, the 'education campaign' waged by the private sector and the World Bank was an important factor in shifting sufficient members of the Cabinet behind the proposed change.26 It is usually very difficult to put together a pro-adjustment coalition. Alone, politicians would have found it difficult to overcome the prejudice against liberalization as undermining African control, especially as there was no immediate crisis in I 990 which required foreign aid. However, it had become clear to some influential policy-makers that the long-term policy package was unsustainable - although Mugabe appeared to remain ambivalent towards the ESAP, and many of its opponents continued to assert that it was not necessary. In spite of this, the Government proceeded swiftly on trade and financial-sector liberalization, exceeding even the expectations of the most influential of the private-sector interest groups, the CZI.

In summary, the policy of reconciliation resulted in whites securing representation through interest groups, which were strongly linked with the executive branch of government outside electoral politics. This enabled them to safeguard their economic interests, by protecting themselves from redistribution of their assets, and by giving them a

26 One of the most persuasive arguments was that the existing development strategy was not delivering jobs. The general concern about unemployment was certainly an important factor in helping Bernard Chidzero to persuade sufficient of his colleagues in the Cabinet to back the programme so as to gain approval. See Hevina Dashwood, 'The Relevance of Class to the Evolution of Zimbabwe's Development Strategy, i98o-i991 ', in Journal of Southern African Studies (Abingdon, Oxfordshire), 22, I, I996, p. 40.



ECONOMIC POLICY-MAKING IN ZIMBABWE 59I

disproportionate influence in the formulation of economic policy. When existing conditions no longer served the needs of the manufacturing sector in particular, they were influential, if not decisive, in bringing about a fundamental shift in development strategy.

2. The Political Economy of National Unity: Securing Control of Government

Several writers view the call for 'national unity', at least to some extent, as anti-democratic, submerging the differences among the indigenous population- most obviously, but not exclusively, ethnic differences - and concentrating power in the hands of a few.27 Initially ill-defined, the call after I985 was clearly for a one-party state, although the Government probably saw an additional benefit in this as a means of dealing with ethnic conflicts.

Zanu (PF) showed itself unwilling to accommodate political diversity within the black community. Black minority parties were publicly vilified as inclined towards South Africa. With Zapu, which had almost universal support among the Ndebele, Mugabe initially sought a coalition, offering senior cabinet positions to several members, despite mistrust between the leaderships of the two parties. The strategy, which was also adopted elsewhere in Africa, was to eliminate the strongest opposition by absorbing it. Even then, Zapu politicians were subjected to harassment. When in i982 arms caches were found on Zapu farms, Mugabe took the opportunity to try to solve the ethnic division by force. The armed conflict in Matabeleland lasted from i983 until i987. During the campaign for the i985 elections, intimidation was used to persuade Ndebele to vote for Zanu (PF), but support for Nkomo remained strong. The military strategy clearly had not worked, and 'unity talks' began in i985.

These talks were a complete victory for Mugabe. When the agreement was signed in 1987, Zanu (PF) had conceded hardly a single point. Zapu received very little of its original demands: just three ministerial posts. The final irony came when Nkomo eventually agreed that his party should be merged into Zanu (PF). Clearly Zapu leaders had realised that there was no other way of getting into government; they would not win an election, and the most senior members there-

27 For example, Jonathan N. Moyo, 'The Dialectics of National Unity and Democracy in Zimbabwe', in Ibbo Mandaza and Lloyd Sachikonye (eds.), The One-Party State and Democracy: the Zimbabwe debate (Harare, I99I), p. 87, and Christine Sylvester, Zimbabwe: the terrain of contradictory development (Boulder, Oxford, and Harare, i99i), p. i6i.



592 CAROLYN JENKINS

fore safeguarded their careers and settled for ministerial posts. The merger removed the final obstacle to a one-party state, and therefore the need to write it into the constitution.28 A unicameral legislature was introduced in I 990, and, in the same year, the constitution was changed, so that the leader of Zanu (PF) became automatically also Head of State.

As in other African countries, authoritarianism became a feature of the Zimbabwean state. This is particularly true of the President, who requires that he be consulted on all ministerial decisions. Dissent has led to humiliation, demotion, or even sacking. Against citizens state repression has been selectively applied: for example, the response to student and worker demonstrations, especially during I 988-9, has been aggressive, while press freedom has substantially been maintained. Nevertheless, oppressive laws introduced prior to independence were kept on the statute books and used to support the post-I980 regime. The most noteworthy of these was the state of emergency, introduced after UDI, and renewed every year until i990.

To guarantee control of the state, it was necessary to secure rural votes. For this reason, there has been considerable identity between the expression of government rural policy and the views of communal (mostly subsistence) farmers.29 The earliest economic policy statements placed considerable emphasis on rural development. This was to be expected, as the PF had been strongly supported by the peasantry during the liberation war. Government initiatives included some resettlement, although less than planned ;30 the extension of agricultural services, health, education, and pricing policies for communal farmers; and the provision of food aid during droughts. Later there was a shift

28 The electorate had become increasingly less compliant with respect to one-party rule. This had been favoured in I985 by 6o per cent but opposed by 6o per cent in i990 (significant at the 95 per cent confidence level), according to a survey of voters that year. See Jonathan N. Moyo, Votingfor Democracy: electoral politics in Zimbabwe (Harare, I992), p. I44. Student demonstrations against corruption in I 990 included opposition to single-party rule, on the grounds that it would exacerbate the problem of corruption.

29 Brian Raftopoulos, Beyond the House of Hunger: the struggle for democratic development in Zimbabwe (Zimbabwe Institute of Development Studies, Harare, I99I), pp. 2 and 26. The small-scale peasant farmers living on land held by communal tenure were excluded from the benefits of agricultural policy measures by the previous regime.

30 Slowness to resettle emerged very early. The issue resurfaced prior to elections, particularly towards the end of the i980s, and appeared repeatedly in the Parliamentary Debates of i98i, with the Government providing a variety of reasons for non-performance, including (i) the Lancaster House Agreement, and (ii) non-co-operation by commercial farmers (Vol. 3, p. I537), (iii) squatters taking over farmland earmarked for resettlement (Vol. 4, pp. 78 and 576), (iv) non- preparedness of the 'land development team' (Vol. 4, p. 565), (v) non-availability of suitable land, and (vi) peasant conservatism and unwillingness to move (Vol. 4, pp. 6i8-i9). Also, (vii) the slowness of aid flows to pay for the purchase of farms (Financial Times, I 0 October 1983), and (viii) drought (ibid. Ij5 April 1983).




in emphasis in policy statements; for example, in the i986 First Five- rear National Development Plan, there was less concern with redistribution, and greater priority was given to productivity and growth. Nevertheless, food aid had become an effective way to gain rural support, and is now a permanent feature of policy, even in non-drought years.31 The countryside has responded by voting decisively for Zanu (PF) in both I990 and I995.32 It is noteworthy that, in spite of the expression of tribal loyalties in these elections, there is apparently no ethnic bias in the provision of public services.33

The social welfare policies have contributed to excessive increases in government spending. For example, until the mid- I970S the agricultural marketing boards ran on a no profit-no loss basis. At the end of that decade they began to run deficits, because the Government was reluctant to pass on price increases to consumers during the civil war. After I980 the addition of communal farmers to the marketing arrangements added enormously to costs. By the early I 990s the deficit of the Grain Marketing Board alone amounted to 5 per cent of GDP, and, in total, government spending on subsidies has been larger than the wage bill for most years since the mid-ig8os.

The financing of budget deficits, which averaged I o per cent of GDP during the i98os, contributed to macro-economic difficulties during the decade. Financing the equivalent of Io per cent of GDP each year not only has damaging effects on investment and consumption, but the debt-servicing problem increases cumulatively. This was an important factor in pushing the Government towards adopting the ESAP in I 990.

In summary, the policy of national unity achieved a de facto one- party state. It also meant that the issue of black advancement (outside the public service) was sidelined in post-colonial political wrangling over how to constrain divisions and maintain votes, leaving the problem of redistribution for a later stage. Spending on social services was easier than embarking on a restructuring of the pattern of ownership in the economy. This strategy contributed to future economic problems by generating large deficits, which needed to be financed, with either inflationary or crowding-out effects (or both), and with external debt implications. To some extent, this made the

31 Nick Amin, 'State and Peasantry in Zimbabwe since Independence', in European Journal of Development Research (London), 4, I, I992, p. I47.

32 However, whereas 54 per cent of registered voters appeared at the polls in i990 - see J. Makumbe, 'The i990 Zimbabwe Elections: implications for democracy', in Mandaza and Sachikonye (eds.), op. cit. p. 185 -in I995 the proportion was less than one-fifth.

3 For example, Herbst, op. cit. p. I 74, notes that the distribution of rural health centres is quite evenly spread across all provinces.



594 CAROLYN JENKINS

ESAP inevitable. Nevertheless, spending on social services and agricultural assistance in the rural areas has been successful in safeguarding rural support for the Government, in spite of growing voter apathy.

3. The New Elites

Independence brought with it the opportunity for quick advancement and enrichment, especially in the state sector, encouraging the adoption of sometimes corrupt practices, capitalist-type production, and colonial lifestyles for a few, contrary to socialist rhetoric.

The existence of a comparatively large private sector in Zimbabwe has meant that the new elites are more broadly based than simply a powerful political group which dispenses patronage. Black accountants, doctors, lawyers, and journalists formed a professional elite; few blacks entered manufacturing, since they lacked capital and the necessary expertise, but new entrepreneurs tended to trade, and some became a commercial elite; and they were joined by small-scale commercial farmers who bought former white farms. What was common to all of these was the tendency to move into former white suburbs, and to adopt the lifestyles that characterized these enclaves. Increasingly the interests of the old white and new black elites began to converge. This had at least two consequences: it underlined their interdependence, further strengthening the position of whites, and it undermined the will to redistribute resources to lower-income groups.

The fortunes of black elites increased markedly after independence, but public-sector salaries, although high, were insufficient to enable top civil servants to keep up with the conspicuous consumption of their professional black neighbours. The result was an early rash of cases of fraud and corruption, which resurfaced in the mid-ig8os.34 By I993

fraud in the parastatals and corruption in the public service had reached seemingly epidemic proportions. Leaders appeared to be unrestrained by any principles in their conduct; political office was extensively used for private benefit, and public administration became a system of patronage. Frequently resources intended for the poor were

34 Since i986, almost every quarterly report on Zimbabwe by The Economist Intelligence Unit (EIU), London, has contained one or more new fraud or bribery cases, and one recorded the uncovering of II 4 cases in three months. There is scarcely a Ministry which has not been publicly implicated; most parastatals are involved and the police services are riddled with misconduct. When the best known (Willowvale) case - of Ministers acquiring cars with scarce foreign exchange at controlled prices, and reselling them for up to five times the amount paid - was made public, only Chidzero was exempted by name from accusation. EIU, i989 (I).




appropriated for personal gain: for example, Ministers, MPs, and civil servants were granted leases to state farms, some of which had been intended for resettlement.35 Successive reports of the Comptroller and Auditor-General from the mid- I98os offered evidence of unauthorized expenditures and other irregularities under a variety of departmental heads. Apart from the fact that short-term costs to the economy are raised when dishonesty becomes endemic, it is extremely difficult to reverse corruption once it takes hold, even when/if there is a change in leadership.

Government resolve to deal with corruption, and with other serious offences by politicians, has faltered. Mugabe has usually allowed the due process of law,36 but has frequently granted an official pardon to those convicted.37 In I984 a Leadership Code was promulgated by the Government, which was intended to restrain corrupt practices by placing limits on the acquisition of wealth by political leaders. Ministers and members of the central committee, as well as provincial, district, and branch leaders were prohibited from receiving more than one salary or income from rented property, from owning farms in excess of 5o acres, and from establishing businesses. However, the Code has been easily circumvented by transferring to relatives the formal title to farms, businesses, and luxurious homes.38

The alliance of the elites has generated resentment among those who have not yet benefited economically from the transition to majority rule, although the Government is not so unpopular as to have encouraged a large swing in support towards the new anti-corruption party. Numerous authors comment on the worsening position of low- income earners in Zimbabwe during the I980s, although few are in a position to provide statistical evidence.39 It is argued that most

35 It was estimated in I993 that civil servants, Cabinet Ministers, MPs, and Zanu (PF) party officials owned some 8 per cent of commercial farmland. Weiss, op. cit. p. I87.

36 For example, it was reported in i988 that, since i 980, I77 civil servants had been convicted of corruption in Harare alone, and that 758 cases were pending, a third of which were police officers. However, in i989 there were student demonstrations against corruption, and one of the demands was that 12 unpunished cases be brought to justice. EIU, i988 (2) and i989 (i).

37 For example, soon after independence, a murder charge was brought against Edward Tekere, a popular radical figure and a close associate of Mugabe. The President allowed the prosecution to proceed in i980, and Tekere was found guilty. He was acquitted under the I975

Indemnity Act, but dropped from the Cabinet. Also, pardons were granted to Ministers found guilty of corruption during the Willowvale scandal. EIU, i980 (3), i98i (i), and i989 (4).

38 Some politicians were reported as having said openly that they would leave politics if the Leadership Code was enforced. EIU, I989 (i).

39 One attempt is that of Robert Davies, David Sanders, and Timothy Shaw, Liberation for Development: Zimbabwe's adjustment without the Fund (Florence, Unicef, I 99 I), Innocenti Occasional Papers No. i 6. They argue that both absolute poverty and income distribution have worsened in the rural areas since I983.



596 CAROLYN JENKINS

peasants were actually marginalised in agricultural policies, and that, on average, whites were better off at the end of the decade than they had been at the beginning, which implies that their interests were in fact protected by the Government.40 Eventually, the acquisition of assets by the political elite reduced sharply the incentive for direct or fiscal redistribution, and contributed to the shift in development strategy away from socialism towards one that explicitly encourages private wealth accumulation. The convergence of interests between rulers and domestic and international capital has been advanced as the explanation for the ESAP.4

4. International Pressures

Foreign influence on Zimbabwe potentially arises from several sources: past and present bilateral aid donors, the international financial institutions, partners to treaties, and South Africa. External circumstances, of course, have also been important, especially in the I 980s with the ending of the cold war and the reduction of socialist role models to a very few countries.

Zimbabwe was a colony from i890 to i980, but with more political (and military) autonomy from Britain than virtually any other colony has ever enjoyed. Although UDI was not legal, Rhodesia was de facto independent, and the war to overthrow Smith's minority regime was waged against the settlers and not Britain. Support for the liberation movements prior to independence had left Zimbabwe with little sense of obligation to a foreign power. Zanu (PF) had received backing from China, which made few demands on the new leaders and was not involved directly in the cold war. Zapu had received military support from the USSR, and the Zanu-dominated Government was cool towards those who had supported rivals for power. The country therefore was never a Soviet satellite. Most aid, and promises of aid, came from the West.

At the I 98 I Zimbabwe Conference on Reconstruction and Develop- ment, where 45 donor countries and organizations were reminded of their Lancaster House pledges, US$i,900 million was promised for development, of which between I o and 30 per cent was tied, depending

40 See, for example, Sylvester, op. cit. p. io8, and Weiss, op. cit. p. 157. These sentiments also emerged in interviews conducted by the author in I994 and I995.

41 Lloyd M. Sachikonye, 'Structural Adjustment, State and Organised Labour in Zimbabwe', in Peter Gibbon (ed.), Social Change and Economic Reform in Africa (Uppsala, I993), p. 254. This is not to suggest that liberalization is less suitable for economic development; the point is that there was a shift in emphasis at the political level.




on the donor. In the end, not all pledges were honoured, and some were very slow in arriving. The Zimbabwean Government borrowed large sums at commercial rates on foreign markets, at least partly in expectation of receipts of aid. When the promised flows did not materialism, the country was left with a serious debt-servicing problem, which finally pushed the Government towards the ESAP. While foreigners are not responsible for Zimbabwe's debt difficulties, they are culpable for creating expectations that they did not fulfil.

The foreign debt mushroomed rapidly. By the first quarter of I983, aid from the IMF was 'expected', and a standby facility of 356 million special drawing rights (SDRs) was agreed after the Government had promised 'to work on' cuts in public spending.42 However, the I 984-5

budget deficit exceeded IMF limits, and by the end of the year the programme broke down, with the Government asserting that it could get by without the IMF,43 and without rescheduling debt. This turned out to be true: Zimbabwe continued to service its debt for the entire decade, albeit at the cost of the private sector. When the country finally adopted a World Bank-sponsored structural adjustment programme in I990, it was not in danger of default.

It is important to note that Zimbabwe was not in crisis when it adopted the ESAP. There were evident and severe problems: loose fiscal policy and balance-of-payments deficits, both of which neces- sitated tight monetary policy, meant in the long term that there was very little new investment. The reluctance of foreign investors to inject capital into the economy meant that aid had to be sought to provide foreign exchange for external debt service, as the need to run current- account surpluses was reducing growth potential. Nevertheless, in i990, growth was positive, and the external debt service ratio had fallen to around 23 per cent from the 34-40 per cent range in the middle of the i980s. The problems were therefore of a long-term nature.

As argued above, there were internal pressures for liberalisation from both the private sector and 'technocrats' in the government. From I987, together with the World Bank, they began a well-publicised public debate on the issue of liberalisation,44 at the centre of which were

42 EIU, i983 (i) and (2).

4 The World Bank continued to fund projects in Zimbabwe, including the successful export-promotion programme, even after the agreement with the IMF broke down.

44 Dashwood, loc. cit. p. 34, argues that the peasants, the working class, and the petty- bourgeoisie were excluded from the decision-making process, and inadequately informed of the debate, although this was 'well-publicised' from the point of view of those with access to newspapers, television, and business seminars.



598 CAROLYN JENKINS

the problems created by foreign-exchange and price controls, and the need for deregulation. The emphasis in the framework papers of both the Government and the World Bank on gradualism, and the provision of additional temporary export subsidies, indicate the willingness of both parties to accommodate private-sector concerns so that its support could be secured.

The international financial institutions (IFIs), particularly the World Bank, were therefore influential rather than instrumental as regards the decision taken to adopt a structural adjustment programme at the end of i990. Early toleration by the World Bank of slippage indicated that Zimbabwe had a degree of autonomy in determining the pace of adjustment. This changed in the mid-iggos, when domestic policy was more constrained by the IFIs, as explained below.

Zimbabwe's treaties have had little effect on its economy, with the possible exception of accession to the Lome Convention in I980, which gave preferential access to the European market. These agreements are therefore not discussed. However, as pointed out previously, the presence of a large, dominant, hostile neighbour was a constraint on the new Government, whose relationship with Pretoria during the i98os

was formal and correct. The fact that there were few official contacts generated difficulties when, for example, South Africa reneged on the trade agreement which existed with Rhodesia on the matter of protective tariffs on textiles, or when there were border disputes between customs officials. However, the biggest problems with South Africa stemmed from fears in Zimbabwe that its neighbour would react with force to anything which threatened white interests, and the actual destabilization policy pursued by Pretoria, which included support for the Ndebele uprisings in the mid-I 98os.45 This may have slowed down the process of redistribution at a time when the Government still had the political will to effect it.

In summary, external pressures have modified but not determined economic policy in Zimbabwe. The Washington-based IFIs played a part in the adoption of the ESAP, but their influence would not have succeeded in changing policy while the balance of internal opinion was opposed. Once reforms were implemented, however, the influence of the World Bank and the IMF grew considerably. Domestic industrialists, together with the 'technocrats', were convinced of the need for at least some liberalization, and supported the reform initiative, although the pace at which the Government moved to liberalise the

45 EIU, i983 (3).




economy surpassed the desires of non-export-oriented groups within the manufacturing sector.46

V. ECONOMIC POLICY IN THE I990S

Zimbabwe initially had a degree of autonomy in determining the pace of adjustment under the ESAP. Some aspects of reform - trade, price, foreign-exchange, and financial-sector liberalisation - were car- ried out swiftly, but little progress was made on tax and public expenditure reform. Rapid liberalisation of prices may not necessarily be evidence of a regime's commitment. It may be interpreted as being the 'easy' part of adjustment programmes - easier than structural reforms - and done so as to 'buy' non-compliance on more difficult issues like privatization or civil service reform, or at least to slow down these measures. Moreover, price reforms are easily monitored, and the technical difficulties cannot be used as an excuse for delay.

The severe drought of I99I-2 provided justification for the Government's reluctance to engage in cutting expenditure. When, however, it became clear that no progress had been made in reducing the size of the budget deficit after the agricultural-sector recovery in I993-4, the IMF began to apply pressure for compliance. This marked a turning point in the ability of Zimbabwe to maintain autonomy in taking decisions about economic policy.

Autonomy is a function of both the degree to which the country is indebted and the extent to which the IFIs regard the ESAP as a 'success'. For as long as adjustment appeared to be achieving something, donors were unlikely to withhold aid on the grounds of inadequate compliance with conditions, and Zimbabwe could continue to be complacent about aspects of the programme. However, increased foreign borrowing expanded both indebtedness and aid dependence, reducing the Government's ability to determine economic policy independently. Zimbabwe's foreign debt rose from 45 per cent of GDP in I990 to 75 per cent in I994, falling to 67 per cent of GDP at the end of I995. Around 95 per cent of this is government debt (including the parastatals). The country's vulnerability to external shocks, like drought, forces it periodically to raise its external borrowing.

In early I995 the IMF suspended balance-of-payments support after

46 During an interview in early i996, lamenting the difficulties caused by tariff reductions under ESAP, a senior CZI official said: 'I know we pushed for tariff reform; we never thought that they [the Government] would go this far!'



6oo CAROLYN JENKINS

the Government failed again to meet its commitments to reduce the budget deficit, which reached I4 per cent of GDP in I994-5 against a target of 7 per cent. The suspension of support from the IMF resulted in other donors withholding aid; for example, the European Union announced that it would give Zimbabwe US$32 million for drought relief, health, and education, but would block all other disbursements until IMF/World Bank conditions, and specifically fiscal targets, were met.

The second five-year phase of the ESAP, which focuses on privatization, was due to begin in i996. By March agreement still had not been reached between the Government and the IFIs, who were unwilling to begin talks with Zimbabwe on new funding for reforms until after the national budget was presented in July. However, the I 995-6 budget out-turn was still above target, with the deficit in excess of Io per cent of GDP. Cost-cutting measures were provided in the i996-7 budget, but by September i996 it was clear that these would not be implemented: a civil service strike over pay was ineptly handled with the Government arresting and then releasing strike leaders, firing and then rehiring strikers, and finally capitulating completely to wage demands. Within one month, the purchase was announced of 48 top- of-the-range Mercedes Benz cars for the use of visiting dignitaries.

There were reports of disagreement within Zanu (PF) over whether to proceed with privatization, which is another reason why the programme may have stalled.47 The stand-off with the donors has made the Government more antagonistic to reform. Mugabe, who had always been ambivalent about the ESAP, threatened on several occasions in I 995 and I 996 to re-impose some price controls, and to cap interest rates. In July I 996 a range of tariff increases was announced, as high as 75 per cent on some imports, in contravention of IMF conditionality. Four days later these were repealed, evidently under pressure from the IFIs. Early in I997 substantial tariff increases were announced - and maintained. Such actions are damaging not only to relations with donors but, more seriously, to investor confidence.

Government frustration at the loss of domestic control over economic policy is expressed in recalcitrance over other issues. For example, it was suggested that the President's procrastination - for over a year -

over the appointment of a new Finance Minister was, at least partly, an assertion of independence in the face of donor pressure to confirm an incumbent as quickly as possible.

4 Reuters, 22 March i996.



ECONOMIC POLICY-MAKING IN ZIMBABWE 6oi

The land issue was raised again during the I 995 general election campaign, with the Government suggesting that it might seize holdings for redistribution without full compensation. At a Zanu (PF) conference in December I 995 both Mugabe and the Minister for Lands and Water Resources justified the threat to seize white-owned farms on the grounds that the Government had no money, and called on donors to prove Z$ ,ooo million to fund the resettlement programme. The Minister also took the opportunity to allude to plans to redistribute the country's scarce water resources away from white commercial farmers to black peasants. The issue persists, with further requests, particularly to the British Government, to provide aid for resettlement. Even if the confrontational rhetoric is only for effect, it is exacerbating uncertainty for domestic and foreign investors.

In the I99oS economic policy-making has been largely reactive: either to crises, like drought, or to donor pressure. Aid dependence means that the country will limp along the path of reforming in accordance with conditions. However, until the budget deficit is addressed, macro-economic imbalances will continue to undermine the effectiveness of the liberalization implemented earlier. The combination of high inflation and high interest rates is discouraging investment and reducing real private consumption. At the same time, the programme of poverty alleviation and redistribution has stalled completely.

SOME CONCLUSIONS

Why did the expected change in policy direction not occur in i980? Although many forces interacted to prevent this, the primary factors included (i) effective pressures by strong white-controlled interest groups, which managed to persuade Mugabe and his Ministers not to kill the cash cow; (ii) the convergence of interests of the old white and new black elites, which reduced the will to redistribute and increased the desire for personal enrichment; (iii) the suppression of black demands for economic advancement by groups outside the ruling party; and (iv) the greater ease of engaging in social spending than more fundamental economic restructuring. Additional constrains included (v) South Africa's hostility, and (vi) the constitutional limitations of the Lancaster House Agreement.

Why was there a reversal of strategy in 199o? Post-independence policies had become unsustainable, primarily because of a huge increase in the public debt. There appears to have been a meeting of minds on the need for change between top-level government



602 CAROLYN JENKINS

'technocrats' and World Bank officials, who were cognisant of the long-term difficulties of the economy, and strong white groups whose interests, at least on balance, were perceived to lie in deregulating prices, imports, and foreign exchange.

The final abandonment of the socialist agenda in i99o means that Zimbabwe's Government now has no specific programme of redistribution, and current policies are oriented towards the private sector. In order to maintain the support of as many voters as possible, indigenisation has become a political issue, and the land question has been revived. Increased participation by black Zimbabweans in the economy has become the means of improving their welfare, and many believe that affirmative action in favour of indigenous groups is the best way of achieving this.

In Zimbabwe's debate about liberalization the focus was on deregulation and trade. This was at least in part because the private sector played a leading role in the debate, and its concerns involved the constraints of foreign-exchange shortages and administrative controls. In other African countries where structural adjustment programmes have been introduced to deal with triple-digit inflation and hopelessly over-valued exchange rates, and where the private sector is usually too small and weak to participate in the debate, adjustment has centred on fiscal reform and foreign-exchange market liberalization. In Zimbabwe, there has not only been little progress in fiscal reform, but public debate on this issue has been limited. It is important that this should change, as the financing requirements are threatening to undermine the effectiveness of the structural reforms.

The ongoing Economic Structural Adjustment Programme has apparently deepened the shift away from pro-poor policies, and any attempt to reduce government spending will be seen as further intensifying this process. In fact, the poor are helped not only by social

spending but also, and possibly more so, by the rapid creation of jobs. For this reason, growth and investment should remain important distributional goals for the Government, and, if persistent budget deficits are contributing to macro-economic imbalances, then fiscal reforms, including greater tax efficiency,48 are urgent.

48 This does not imply that the economy is under-taxed. According to the World Development Report (Washington, DC, 1995), Zimbabwe's ratio of tax revenue to GDP at 30 per cent in I993

was higher than in other African economies which reported this statistic, except small mineral economies, like Namibia and Botswana. Most of the others were below 2o per cent.



the politics of economic policy-making in zimbabwe

Documents