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Friday, 15 February, 2002, 13:26 GMT
Zimbabwe's economic tailspin
Land seizures are just a part of Zimbabwe's economic trials
Self-sufficiency is a source of some pride in Zimbabwe.

The multinational brands common throughout the world for staple foods are much less in evidence in Harare or the second city, Bulawayo, than elsewhere in Africa.

Zimbabwean President Robert Mugabe
Mugabe faces elections amid economic collapse and food shortages
The years of sanctions following Ian Smith's Unilateral Declaration of Independence - the vain attempt to sustain rule by a tiny white minority while the rest of the continent embraced independence - were ironically responsible for substantial domestic industries.

Immediately after independence in 1980, most businesses were owned by whites, but over the years, that has changed radically.

Companies responsible for well-known Zimbabwean brand names are now mostly quoted on the Harare stock exchange, and their shares are owned either by the Zidco trading arm of the ruling party, Zanu-PF, or by insurance companies and pension funds.

But whoever holds the purse-strings, the brand-names are no longer in evidence: whether domestic or foreign, the shelves of most foodstores are worringly bare.

Prices up, supply down

Prices more than doubled in 2001 - inflation was 112% - and the price controls instituted by the government on a widening range of products have taken retail prices to below the cost of production.

Thus the shortages - and the thriving black market for everything from laundry soap to the maize-based staple, mealie meal.

Meanwhile, what produce there is continues to leak across the border.

The official exchange rate is 55 Zimbabwe dollars to one US dollar.

But traders from Zambia, Mozambique and elsewhere use the "parallel market" rate of Z$300 to the greenback to buy low in Zimbabwe and sell high at home.

A success story...

The situation is quite a turnaround.

Once the economic success story of Southern Africa, Zimbabwe was the regional breadbasket, the only southern African country to export food to Ethiopia during the drought in the 1980s.

Election posters in Harare
Both sides claim they hold the answers to rebuilding the economy

Its economy was doing well, its people were well educated and richer than many of their regional peers.

Foreign investment was by African standards plentiful.

And it was - relatively - free of the endemic and high-profile corruption which caused huge problems for many other African countries.

...Now a basket case?

But over the past five years things have got harder as urban areas ceased to create jobs and rural areas felt the pressure too.

International Monetary Fund rules meant public investment was starved - although the growing default on loans meant Zimbabwe was cut off from further funding in 2000.

Cronyism by political elites increased, and the war in the Democratic Republic of Congo and the focus on land reform has been used to try to divert attention from domestic tribulations.

Now, according to one Southern African economist, the country is "a financial basket case".

The economy contracted 4% in 2001. "The crop has been lost this year, production has been lost, earnings are gone," he said.


The desperate push by the core of the ruling Zanu-PF party to ensure victory for President Mugabe on 9-10 March has taken its toll.

Black workers packing up
Many farm workers have been left homeless

For the outside world, most of the attention has been on the seizures of white-owned farms.

The effect on export earnings has been severe. But it has also displaced thousands of black farmworkers, and what little activity continues on the farms is limited to inefficient subsistence farming.

And much of the choicest land has gone either to party supporters, or to Libyan and South African backers to pay for scarce fuel and power.

The disruptions caused by Zanu-PF's internal divisions and increasing paranoia have hit industry just as hard as agriculture.

The price controls introduced in October last year mean many factories never reopened following the long Christmas-New Year break.

Harare skyline
The factories on Harare's outskirts are having trouble surviving

That made the unemployment rate even worse. On the government's own count, about two in every three Zimbabweans is out of a job.

Closures happen for non-economic reasons too. In the past few months a number of businesses have been attacked by Zanu-PF supporters if their employees or owners are not party members.

And exacerbating the whole situation are periodic fuel shortages, which since 1998 have largely been caused by the need to supply the military's hugely unpopular involvement in the war in Congo.

Beggar your neighbour?

The side-effects are hitting its neighbours.

South African president Thabo Mbeki's reluctance to go beyond quiet diplomacy in encouraging better governance from the coterie surrounding Mr Mugabe has won him few friends.

South African President Thabo Mbeki
Zimbabwe could threaten Mbeki's 'African renaissance'

Although between them Mozambique and South Africa supply three quarters of South Africa's energy needs, neither will act to pull the plug.

Within South Africa, the rand continues to weaken, partly through fears that the troubles to the north could spill over.

Thousands of Zimbabweans try to cross the border illegally every month.

And further afield, the ambitious plans for the "New African Partnership for Development" (NEPAD), of which Mr Mbeki is the main proponent, call for massive inward investment.

But the turmoil in Zimbabwe threatens to stifle the inflows before they begin.

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