Since 1980, the Zimbabwean economy has been experiencing uneven rates of economic growth, that is, it had been fluctuating but generally the annual average growth rate was about 3,2% from 1980 to1990. This growth rate was rarely above the population growth rate of about 2,9%. This was thus a good indicator of economic growth. This was accounted for by many bumper harvests which took place during that season between 1980 and 1990 meaning that the nation was food secure compared to the 1990 to 2000 decade. Evaluation of this food security was based on the total amount of grain in the country during a specific time period in relation, at a national level.
In Zimbabwe, the consumption period that was considered was equivalent to the marketing period from 1 April to 31 March of the next year. The most staple grains used included maize, which contributed over 70% of the calorie requirements. Maize production then started to decline from the year 2000 to date, whilst similar trends occurred in wheat production as well. This decline was probably due to the displacement of white commercial farmers who had irrigation infrastructure for agriculture production especially wheat.
Increase production in the 1980s was due to improved technology and improved agricultural services to smallholder sector. The smallholder sector increased production and accounted for 60% of the marketed maize output to the GMB(Grain Marketing Board). At the peak of production in 1980, GMB held over 3years of food security reserves and over 8 years supply of small grains. This thus established Zimbabwe as a food basket and cornerstone for the southern African region during times of political instability in other countries. Food insecurity however started in the next decade between 1990 and 2000 but was immediately mitigated by the stocks of reserve grains from the GMB and food imports. Unfortunately for the next decade this food insecurity paradox was very difficult to solve due to the decreased food production and very low reserves to sustain the nation during that period.
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
Government spending on provision of public services was to be reduced and the public was to contribute in providing their own public services.
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.