NGO Jobs in Zimbabwe

Country Brief- Zimbabwe

In September 2008, a Global Political Agreement (GPA) was signed between the then ruling Zimbabwe African National Union-Patriotic Front (ZANU-PF) and the two MDC factions of the Movement for Democratic Change (MDC), which made up the opposition.  Five months later on February 11, 2009, A Government of National Unity (GNU) was formed with Morgan Tsvangirai as prime minister, and a new cabinet was sworn in on February 13, 2009.

On February 11, 2011, Zimbabwe marked two years of its Coalition government without an indication when the government of national unity will end.  Outstanding issues from the GPA are yet to be resolved.

Economic Overview

Zimbabwe’s economy has started to recover from a decade-long crisis that saw economic output decline every single year during the period 1999 to 2008, for a cumulative decline of more than 45 percent. In 2010, real GDP is estimated to have grown by 7.5 percent following on a 5.7 percent growth in 2009.  The agriculture and mining sectors are at the front of recovery, with manufacturing and services also registering some growth. Agricultural output grew by 15 percent in 2009 and 34 percent in 2010. Smallholder maize production jumped from 0.57 million tons in 2007-2008 to 1.35 million tons in 2009-2010. Tobacco production more than doubled in the last two years. In mining, output (value) grew by 8.5 percent in 2009 and 47 percent in 2010. Production surged in platinum (64 percent increase between 2008 and 2010) and gold (125 percent increase in two years). Levels of productions have however not yet recovered to 2000 levels. Growth in manufacturing has been sluggish. The sector is heavily undercapitalized, with an important need to refurbish equipment and restore depleted working capital, and it continues to be constrained by insufficient and unreliable electricity supply, high labor costs and rigidities, overall tax and regulatory burden.

Recovery is expected to continue in the near future and in the 2011 Budget Speech, the Minister of Finance projected a 9.3 percent growth in 2011.  Domestic prices remain stable. In December 2010 CPI was 3.2 percent higher than in December 2009 and 0.4 percent less than in November 2010 (seasonally unadjusted). The external position is precarious. The current account deficit declined substantially in 2010, as exports expanded and domestic demand was kept low. However its level remains high; Current account deficit at the end of 2010 was about 20 percent of GDP compared with 26 percent of GDP in 2009. This current account deficit is financed by increasing arrears and short-run capital inflows, and remains vulnerable to decline in commodity prices and reduction of capital flows. Gross official reserves, including SDR, were at $184.7 million in December 2010, representing 0.8 months of imports. Intermediation is returning rapidly to the banking system.  US dollar deposits with deposit-taking institutions grew from US$314 million (7.4% of GDP) at the end of 2008 to $2.6 billion at the end of December 2010. Banking system however remains vulnerable to liquidity risks in the absence of a lender of last resort.

The onset of recovery followed significant policy reforms undertaken by the unity government.  The formation of a government, in itself, was a strong positive signal to investors with long-term interest in Zimbabwe. One key aspect of the reforms was to reverse a large number of inappropriate policy actions taken during the period of crisis but reforms went well beyond that. Several important policy reforms such as authorization to use multiple convertible currencies, removal of price controls, commitment to fiscal discipline including control on quasi-fiscal activities of the
Reserve Bank of Zimbabwe (RBZ), allowing parastatals and government agencies to charge cost-reflective prices, liberalization of foreign exchange regulations, and liberalization of grain marketing ushered in a regime of stable prices and market-oriented policies.  The reforms also restored incentives for the private sector to produce and trade.

Even though the economy has begun to recover, the recovery remains precarious as a number of issues stand in the way of sustainable economic growth. These relate to (i) political uncertainty resulting in low business confidence, (ii) lack of domestic liquidity and very high real interest rates on short-term credit; (iii) high wage costs and unrealistic wage demands driven by accommodation, utilities among others; (iv) ailing infrastructure (lack of resources to rehabilitate infrastructure); (v) low domestic demand; (vi) unreliable power supply; (vii) empowerment policies and the uncertainty around their application

At the current pace, the economy could take almost a decade to achieve pre-crisis level of output.  There is a need for deeper reforms focused on economic as well as sector policies to consolidate recovery, address vulnerabilities, and put the economy on a path to higher growth and employment.  There are several scenarios for the economy ahead, but all of them are ultimately linked to Zimbabwe’s political economy and governance situation. External finance will be necessary for the recovery to take hold, but finance would not come in unless policy uncertainty is reduced.

source- World bank

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