Economy of Zimbabwe - Current Economic Conditions

Current Economic Conditions

Since 2000 the Zimbabwean government has taken most of the farmland previously used by commercial farmers (mostly white) and reallocated it. Due to bad publicity claiming that most of this land reform happened in a corrupt way and land went to politicians from ZANU-PF, military leaders or leaders in the police forces who account to less than 1,000 individuals, actually more than 100,000 blacks were resettled on land which was previously owned by few whites. These new farmers were usually inexperienced or uninterested in farming, and could not maintain the intensive, industrialized farming of the previous owners. Short term gains were often made by selling the farms equipment. The loss of agricultural expertise also triggered a loss of agricultural financing and market confidence which made recovery almost impossible. A considerable amount of this land has however gone to local people who use it mainly for subsistence farming. Therefore production of staple food, such as maize has not suffered as much as typical export crops, such as tobacco or coffee. The previously large exports of tobacco, cotton, soya and horticultural produce have consequently reduced dramatically and the income derived from them lost to the national economy.

Government spending is 97.8% of GDP. It has partly been financed by printing money, which has led to hyperinflation. State enterprises are strongly subsidized, taxes and tariffs are high. State regulation is costly to companies, starting or closing a business is slow and costly. Labor market is highly regulated, hiring a worker is cumbersome, firing a worker is difficult and unemployment has risen to 94% (at the end of 2008; the figure was 80% in 2005).

(See Heritage: Zimbabwe.)