Challenges and Solutions of Zimbabwean Economy

CHALLENGES AND SOLUTIONS OF ZIMBABWEAN ECONOMY 1
CHALLENGES AND SOLUTIONS OF ZIMBABWEAN ECONOMY
Student Name
Institutional Affiliation
Facilitator
Course
Date

CHALLENGES AND SOLUTIONS OF ZIMBABWEAN ECONOMY 2
Introduction
Zimbabwe is among the poorly performing nations in terms of economic growth in the
Sub-Saharan Africa Region. The economy of the nation significantly shrunk after the year 2000
resulting in sluggish economic growth and a higher unemployment rate which was estimated to
be 95 percent. Due to the participation of Zimbabwe in the Democratic Republic of Congo war
from the year 1998 to 2002, the nation’s economic growth deteriorated and its hundreds of
millions of dollars were drained as a result. Zimbabwe has poor economic policies which deter
free trade in the nation1. As a result, its economic freedom has decreased to a poor score of 40.4
and according to the 2019 Index. The nation has been ranked position 175 in terms of economic
freedom. It’s 40.4 score of economic freedom is a decrease of 3.6 points due to lower efficiency
of its judiciary as well as lower monetary and business freedom. In terms of economic growth,
Zimbabwe has been ranked position 45 out of the 47 countries in the Sub-Saharan Africa region
and its economic growth performance is below that expected both at the regional and world
levels.
The new government under the leadership of President Emmerson Mnangagwa is trying
its best to reform its economy and foster economic growth but the promised measures have still
not been implemented2. In this report, various challenges faced by the Zimbabwean economy and
various solutions have been discussed.
1 Alois S. Mlambo. A history of Zimbabwe. Cambridge University Press, 2014.
2 Tor Skalne,. The politics of economic reform in Zimbabwe: continuity and change in
development. Springer, 2016.

CHALLENGES AND SOLUTIONS OF ZIMBABWEAN ECONOMY 3
Challenges Facing the Zimbabwean Economy
The sluggish economic growth of Zimbabwe has been resulted by various challenges
some of which include corruption, unemployment, hyperinflation, foreign currency crisis, trade
imbalances and fiscal imbalances among others.
Corruption
Corruption refers to fraudulent actions by those trusted to occupy positions of leadership
in order to illicitly acquire benefits. It mainly takes forms namely embezzlement or bribery.
Corruption has been rampant in Zimbabwe and has highly restrained its economic growth. It has
actually subjected the nation to extreme poverty by undermining its economic growth. According
to Transparency International Zimbabwe has been estimated to be losing $1 billion on an annual
basis due to corruption with intense corruption cases been noted among the police and the
officials of the local government3. The land which was meant for agriculture was taken from the
white farmers and was owned by army generals who had no idea about farming and as a result
the farms just fell into disarray. This made the nation’s agricultural output to be crippled4.
Businesses for people with political connections are highly supported instead of the nation’s
overall entrepreneurship. Most of these corrupt businesses just end up collapsing. In a nutshell,
3 "Zimbabwe Losing $1 Billion a Year to Corruption: Report." Reuters. October 04, 2016.
Accessed April 25, 2019. https://www.reuters.com/article/us-zimbabwe- corruption/zimbabwe-
losing-1-billion-a-year-to-corruption-report-idUSKCN1241R9.
4 Sam, Moyo. "The political economy of land redistribution in the 1990s." In Land reform
in Zimbabwe: Constraints and prospects, pp. 73-82. Routledge, 2017.

CHALLENGES AND SOLUTIONS OF ZIMBABWEAN ECONOMY 4
corruption has deprived Zimbabwe resources which could have improved its economy and as a
result, the economy has deteriorated.
Unemployment
Unemployment is endemic in Zimbabwe. The nation’s unemployment rate stands at 95
percent. This has highly contributed towards the increased poverty in Zimbabwe which stands at
80 percent. Many workers in Zimbabwe receive a monthly pay of ZWD200 billion which is just
$60. This has highly lowered the living standards of Zimbabweans who have very little to spend
hence leading to the deterioration of the nation’s economy.
Hyperinflation
Zimbabwean economy has highly been affected by hyperinflation which led to the
nation’s adoption of the U.S dollar as its currency from the year 2009 when the inflation rate was
estimated to be around 80 billion percent5. This has highly undermined the nation’s economic
growth as investors face difficulties in investing in this nation and the current businesses
experience problems in their daily operations. This has led to lower output productivity in the
nation hence lowering its economic growth.
Foreign Currency Crisis
5 Nkomazana, L. and Niyimbanira, F., 2014. An Overview of the Economic Causes and
Effects of Dollarisation: Case of Zimbabwe. Mediterranean Journal of Social Sciences, 5(7),
p.69.