Policy Implementations
Accompanying the erratic economic growth in the 1980 to 1990 decade was the very low rate of employment creation which was seen less than 10000 jobs being created in the formal sector for that period annually. The number of school leavers that joined the labour market was estimated at 200 000per per year making the question of unemployment a critical problem that was faced by the economy of that time. The poor economic growth thus resulted in stagnant or declining per capita real incomes expressed by decreasing standards of living.
This was followed by the decreasing gross investment thus many industries closed as they had been operating below capacity. Exports however grew but importations were restricted leading to shortages of raw materials and other inputs therefore resources became more and more scarce. Government spending on the provision of publics services was also very high then for example the provision of free primary education and free health also added by defence expenses. This left the government then being budget deficit but it was financed by both internal and external borrowing giving rise to public debt.
Other exogenous factors such as weather changes and the unstable world market commodity prices which affected agriculture negatively since 1980. The country was highly indebted and because of this indebt, through the help of the world bank’s funding engaged itself in ESAP(Economic Structural Adjustment Program) between 1991 so as to improve the economic status and food security status of the nation.
This structural adjustment program was meant to properly manage the BOP(Balance of Payment) of the country, to reduce the fiscal deficit of the country whilst increasing economic efficiency of the nation through engaging private sector investment and export oriented production.
The government thus began decontrolling agric prices and marketing systems in order to align them to market forces. It involved moving away from a set of uniform prices to a more liberalised way in which prices were directly influenced by the variations of both the internal and external forces of supply and demand. This promoted competition and availability of commodities on the market.
ESAP was done during the first 3 years after 1990 with the objective of achieving a gross domestic product(GDP) growth rate of 5% per annum and 20% of the GDP being diverted for investment.
Some of the major areas of policy addressed included:
-The Budget: Public finance
Taxes were restructured in such a way that would encourage savings and investments so promote growth, compared to the high tax rates
-Expenditure
Government spending on provision of public services was to be reduced and the public was to contribute in providing their own public services.
-Parastatals
No more subsidies to account for parastatal losses were to be provided by the government
-Trade was liberalised through promoting exports and investment whilst protecting the domestic industry and reducing tariffs.
-The size of the Bureaucracy was to be reduced to minimise costs of wages .
-Public sector project evaluation was introduced to reduce wasting of funds
-Price decontrol was done to increase efficiency and competition
During ESAP,. The agricultural sector flourished so well.
Another macroeconomic policy was STERP(Short Term Emergency Recovery Programme) was introduced in Zimbabwe during the period of stunted economic growth (recession) and hyperinflation in 2008. It was a 9 month program focused on issues such as political and governance issues, social protection programs, supply side reforms, labour markets, national employment policies as well as utilities, amenities and infrastructure issues. Since it was done in environment of low productivity capacity, jobs were lost due to the sustained negative GDP economic growth also resulting in the devaluation of the local currency leading to food shortages, poverty and all sorts of poor standards of living.
STERP’s main objectives were to recover the levels of savings, investments and growth whilst laying the basis for a more transformative mid to long term economic program that was going to turn Zimbabwe into a productive state. The agricultural sector flourished after the introduction of STERP which required land auditing to be done, to address the security of tenure whilst arresting farm disruptions and putting in place market based funding arrangements for agriculture.
Increased agricultural production could also have been accounted for by the good rains during the 2008/2009 agricultural seasons. Government support also, through providing finance to the local farmers and introducing contract farming as well as creating cooperative partners with SADC could have contributed to the increase in agricultural production. Food security status improved after these developments of liberalised agricultural markets in the pursuit of STERP.
STERP was however established during periods of severe resource constraints, against the background of limited domestic revenues, and condiltinalities over external financial supporting the continued sanctions environment.
Analysis of these programs
ESAP
It was a good program to engage in to some extent, but somehow it was a wrong decision. During the periods of market relaxation, agricultural activities expanded well. However farmers were exposed to an increased degree of world market price fluctuations and thus responded according to the fluctuations in which the environment would be very volatile and unfavourable sometimes. African countries exports plummeted continuously because of this, reducing exports.
The poor who could not afford basic social goods and services such as education became more poor, more illiterate and unhealthy as they lacked the money required for acquiring these basic goods as a result of reduced government spending. They became less and less food secure . food insecurity was further stirred up by loss of jobs or failure to obtain jobs as the bureaucracy’s size was being reduced leaving a lot of people in poverty and unable to achieve basic goods and services.
The local infantry industry was partially destroyed due to trade liberalisation decreasing agricultural production and increasing import dependency syndrome. Monopolists benefited more from the price decontrolling policy whilst the disadvantaged remained food insure and unable to purchase the expensive food stuffs or even the agricultural inputs.
Foreign investors improved their nation’s food securities and economic growth at the expense of our nation as they siphoned resources from this side, leaving the local people food insecure to their foreign lands. Little government intervention was felt as the forces of demand and supply were meant to take control increasing inefficiency of most parastatals from not accessing subsidies when they incurred losses. This then created inflation and shortages of basic commodities which resulted in the declining of the nation’s food security.
There was no incentive to engage in rural farming by the local farmers since the government had ceased developing the rural infrastructure for mobilising resources from the urban areas to the rural areas and vice versa.
STERP
STERP was an advantageous program to the nation because it managed to resuscitate business activities in Zimbabwe. These not only created employment but generated income which could be used to secure agricultural inputs such as seed and fertilizer or even importing the food stuffs from other food secure nations therefore improving the foods security situation of the nation.
The introduction of the multi-currencies in the country helped reduce hyperinflation, this thus stimulated a self correcting mechanism of prices improving on availability of basic food commodities that were unavailable on the open shelves thus increasing food security of the nation as a whole.
The risks and uncertainty perspectives by the investors was thus erased as the economic status of the nation improved. More and more investors were confident in investing in the nation thus the nation could save more, produce more agricultural commodities or even buy more food commodities to improve the country’s food security.
More farmers produced more because of the increased incentive to produce and increased agricultural services offered by the government such as credit as the financial services’ provision was normalised despite being ineffective. This also enhanced supply responses.
REFERENCES
1. Free search engine
2. Ministry of Finance, (2009), STERP2, Ministry of Finance, Harare, Zimbabwe
3. Rukuni et al, (1994), Zimbabwe’s Agricultural Revolution, UZ Publications, Harare, Zimbabwe