Zimbabwe in numbers: Part 1

Zimbabwe’s Real Gross Domestic Product (GDP) increased from about US$4bn in 1965 to above US$16bn on the turn of the century (adjusted for inflation). The droughts of the early 1980s and early 1990s saw GDP in levels decreasing, however, between early 1980s and 1990s, GDP accelerated significantly. After a couple of wrong policies coupled with mismanagement of the economy, GDP fell by about half (from around US$16bn to about US$8nb) in 9 years to 2008. Economic and political stability that came after the inclusive government saw capacity utilization increasing in nearly all sectors of the economy and with it GDP increased significantly from a low of about US$8bn in 2008 to about US$14bn in 2013 and it has stagnated thereafter.

If the Zimbabwean income, measured by GDP, is to be equally divided amongst all Zimbabwean we will get what we call GDP per capita (income per person). GDP per capita was at its pick in 1974 at about US$1,400 per person per annum.  Between this period and the year 2000, GDP per capita revolved between US$1,100 and below US1,400. After 2000, this income per person decreased drastically to levels below US$600. Like what happened with GDP, after the inclusive government, the GDP per capita took an upward trend. However, the increase was short-lived as the trend turned downwards after 2014.  What these numbers tell us is that an average Zimbabwean is much poorer today (in relative terms) than a person who lived in 1975 (by about 35%). This is to say, if an average Zimbabwean earned US$1,000 in 1975, the same person is now earning US$650.

The recent decline in economic growth is attributed to poor land redistribution policies that greatly contributed to a decrease in agriculture output’s contribution to GDP from about a high of 24% to about 13% in 2015. Manufacturing (in general) contributes about 28% to GDP saw a dramatic decline due to a drop in capacity utilisation driven by falling demand and increased uncertainty. The service sector has managed to strive contributing about 59%. This goes to show that in a period of more than 50 years, the leaders of the country and the policy makers were busy crafting and implementing policies that were not only unsuccessful but highly effective at running down the economy

After independence from Britain in 1980, the gross capital formation (GCF) as a percentage of GDP ranged between 15% and 24% for the years up to and including 1995. The Zimbabwe government led by Robert Gabriel Mugabe gave less priority towards physical infrastructure investment which saw GCF tumble from a high of 24% of GDP in 1994 to about 3% of GDP in 2006. However, when the economy showed some signs of improvement after 2008, GCF to GDP ratio increased but that was also short-lived as the ratio significantly decreased in 2012 to only 12% and the ratio has been hovering around 11-12% for the past 6 years.

If one is to walk down the streets of Zimbabwe, it is impossible for one not to notice the depth at which physical assets have depreciated in the country, let alone, a stagnant accumulation of capital investment in the country. The roads are in extremely poor state, the buildings (housing and office infrastructure) have depreciated beyond suitability for human occupation (at least most of them). The railway lines and railway transport are near non-existence, the electricity generation for the country has failed to increase the required capacity to meet the country’s electricity needs. Moreover, the existing methods or equipment currently being used at the power station are not only using archaic technology, but also are in very poor shape that disruption of electricity generation is a daily norm. The distribution system is in sheer need of a facelift. Waterborne diseases such as cholera are on an increase due to poor water purification systems across many (if not all) cities/towns in the country. Zimbabwe still uses the same old pipes from the 1970s to distribute its water and water supply interruptions are the order of the day. Investments in internet technology have also been lagging behind most developing economies.

Notwithstanding the 1982-83 and the 1992 drought, the value added as a proportion of GDP went down, on the average, compared to their 1960 levels. The value added as a percentage of GDP was at its worst level in 1992 due to the likely effects of the worst drought in living memory of Zimbabwe. The figure for that year is very close to that of 2014, even in the absence of drought, which explains how the economy has deteriorated over the years.

Except a significant decrease in expenditure in 2007-2008, the government expenditure has been trending upwards, increasing from a low of 11% in 1965 to 25% in 2016. Given the decrease in capital expenditure by the Zimbabwe government, it indicates that most of government expenditure is funding recurrent expenditure, something which is not sustainable over the longer term.

Website link for Tutsirai Sakutukwa: https://sites.google.com/site/tutsisakutukwa/home

Website link for Marshall Makate: https://econmakfaraim.wordpress.com/