Zimbabwe’s Economic and Trade Performance and implications of Regime Change

9
4,849 views
President Robert Mugabe meets with a South African delegation, the army chief and members of the Zimbabwean government.News24

By Economic.Governance

Economic growth

Without using statistics, most Zambians would not only label Zimbabwe a financial basket case but also tha it is a country whose economy and trade are more backward than Zambia‘s. Not necessarily so. Since its independece in 1980, the economy has not grown significantly less than that for Zambia. Figure 1 below shows that since then up to 2008, Zimbabwe’s growth has been at almost par with the Zambian economy. In fact, in the period 2008-2010 it grew astonishingly and inconceivably higher than the Zambian economy. If this level had been maintained, Zambia would have been left far behind and an almost economic miracle announced in Zimbabwe. All this is in the context of the fact that, unlike Zambia, Zimbabwe has, for many years been victim of international economic sanctions. Logic therefore is that if it did not suffer from this international embargo, it perhaps would have brought prosperity for its people.

Trade with the world in absolute terms

Despite international roadblocks, Zimbabwe’s trade with the world has shown resilience, at least in absolute values. Compared with its neighbor which has had sanctions, Zimbabwe’s exports of goods of $2.8 billion in 2016 is not very from Zambia’s $5.8 billion and imports of $3.7 and $7.0 billion respectively (Figure 2).

Trade with the world in goods in proportion

In proportional terms, Zimbabwe’s trade with the world shows a significant pattern of similarities with Zambia. In fact, it is Zambia which compared with Zimbabwe lost more in integrating in the world trading system. In 1970 Zambia’s share stood at almost 0.4% compared to Zimbabwe’s almost 0.2% but since 1976 the latter has had an edge over the former until the period 2006-2016 but all this is marginal (Figure 3).

Exports of goods to the former colonial power

With sanctions ringing in our ears all the time, you would expect that Zimbabwe’s exports to the UK is much lower than that for Zambia. Alas, not so true. Figure 4 shows that the difference in exports between the two former colonies is nothing to write home about since Zambia’s exports of about $200 million in 2016 is not far from Zimbabwe’s $50 million in terms of significance. Why is Zambia exporting goods worth only $200 million to the UK where it should export more than anywhere else?

Exports of manufactured goods to world

The only sector where Zambia has an upper hand is in exports of manufactured goods to the world, in which it has overtaken Zimbabwe as Figure 5 shows, and for this, we say bravo to Zambia. Between the two, Zimbabwe was a better exporter of manufactured goods than Zambia. It will be recalled that income that came from copper mining in then, Northern Rhodesia (Zambia) used to fund lucrative activities such as manufacturing in then, Southern Rhodesia (Zimbabwe) and, even after independence Zimbabweans continued to prosper in manufacturing. Certainly, global sanctions must have played a major role in Zimbabwe’s loss of share in exports of manufactured goods to its neighbor. The period 2013-2016 also shows that the two countries’ exports were hugely affected by global factors as can be seen by declines.

Zimbabwe’s Economic Fundamentals

In the growth of economic fundamentals, there are some variations between Zimbabwe and Zambia which can be explained by economic sanctions, self-inflicted governance stains and the fact that Zambia’s economy is based on copper. That may explain why Zambia’s GDP is almost twofold that of Zimbabwe; services value added of almost double; FDI stock of almost fourfold and FDI inward flows of about fourfold too (Table 1).

Table 1: Zimbabwe’s Economic Fundamentals in Economy in $ Millions

1980 2015
Zambia GDP 4,315 21,255
Manufacturing 725 1,697
Services 1,951 11,988
Flow 61.75 1,582
Stock 1,997 14,467
Zimbabwe GDP 7,148 13,893
Manufacturing 1,696 1,504
Services 3,454 6,707
Flow 2 421
Stock 186 3,966

Source: Unctadstat

Concluding remarks

If change is made in leadership and the new regime is pro-good governance, the UK is likely to rise from the shadows and show Zimbabweans that it can help them to expand the economy. If the UK fails to significantly contribute to the country’s integration into the global economy, that is likely to affect its promises to Africa of a better post Brexit UK-Africa partnership. It could be a similar story to the USA-Viet Nam post war partnership where the former has supported the latter’s foreign direct investment to make a country once devastated by war one of the main exporters of manufactured goods in the world. This is an opportunity for the UK to showcase its real love for an African country that is no longer a dictatorship. For Zimbabwe, this an opportunity to close the gap and if this is done, through governance and development-adhering policies, there is every likelihood that Zimbabwe will surpass Zambia in various economic sectors such as manufacturing and tourism. Remember from Table 1, Zimbabwe’s GDP was higher than Zambia’s in 1980, almost twice the size. It is likely that in the next 10-20 years, under credible leadership, it may bounce back to haunt Zambia.

Many useful Zimbabwean white farmers and business people who left the country for South Africa and UK may start coming back with huge investments. Zimbabwe’s trade with the world and Africa may also significantly improve in the next ten years leaving Zambia behind because instead of taking advantage of the economic mess that the outgoing leadership found itself in, Zambia preferred to be political, not economic. The snag is that the fundamentals of Brexit may limit the UK’s hand to showcase Zimbabwe. First, conservatives in the country who are trying to limit external support may resist. Second, the UK is in a situation where it wants to use Africa or Commonwealth countries as future trading and political partners but that means all of them must be supported almost equally.

On the other hand, for the type of leader he was, Zambia’s condemnation of regime change in Zimbabwe, that removes Mugabe by military means may not be as popular to the Zambian people, Zimbabweans and even the international community as some think especially if that step ushers in a credible and popular leader to replace Mugabe.

Loading...

9 COMMENTS

  1. Hello! Any learned blogger here??

    Do we only have illiterate cadres sounding as loud as empty tins on political debates?

    0

    0
    • @Nyekese,
      Leave my LT bloggers alone…
      You want them to compare Grace Mugabe’s economy to your mother of the nation?
      Just delete this graffit musataanyooko

      0

      0
  2. You make interesting argument but which proves the contrary. In 1980 Zambia’s economy was nearly half that of Zimbabwe. By 2015 Zambian economy is nearly twice bigger than Zimbabwe. Thats phenomenon growth. Sanctions were only imposed in 2002. Your own #s show Zambia starting to leave Zimbabwe in 1998. Your own #s further show Zimbabwe sprouting in 2010 despite same sanctions. Your theory therefore doesn’t hold much water. When a country is being mismanaged like ours was from 1972 to 1992 there’s bound to be negative consequences. Since 1992 we’ve managed our economy fairly well & the #s show. We can do better but we should learn to be positive about our country which is now 3rd largest economy in Southern Africa after RSA & Angola. This is what we can build on & not negativity. We…

    0

    0
  3. … This is what we can build on & not negativity. We can easily surpass these 2 giants with hard work, dedication & prayer. God Bless Zambia

    0

    0
    • Chosen One, i used to think you were one of these cadres like Nostradamus. But i can see you are different.
      Keep it up with your highly rated IQ. Just keep safe distance from some of these bandits infesting LT without brains.

      0

      0
  4. If there are people who are so unthankful and un appreciative in this world, its the majority Zambian person. They will never say thank you even when things are good. All that many Zambians know to do is complain and wait for the government to do everything. The truth is that whether we like it or not and no matter whoever comes as President we will never receive free things.
    Zimbwabweans work hard even through the bad economy they never gave up. We laugh at them when we see them here trading even in what does not seem important to us. There are Zambians who work hard but the number is few. When it comes to drinking, I am sure we can emerge as World Champions if there was a competition. Foreigners come and get land while we look on and we dont want to work the land. Go to neighboring…

    0

    0
  5. @ Nostradamus there goes the loudest tin. Good at insults_ a style used to hide your shame of illiteracy. We need brains like chosen one. Not a cadre as you with moral and illiteracy bankruptcy. Anybody who replies with insults ninshi lilomba pa LT. kikikiki

    0

    0
  6. Good effort but your peddling with the UK and Brexit only adds a naive and irritant plot. It’s rude of you to ignore China and focus on the UK whose economic ties with Africa are today a mere shadow. Any like analysis which ignores China and east Asian contribution to Africa’s recent survival plans should be utterly incomplete

    0

    0

Comments are closed.