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the political violence directed against it, as Mugabe retained control of most of the levers of state power, and his dictatorial instincts were deeply ingrained. In May 2010 the High Court had dismissed charges against Bennett, but the state then appealed to the Supreme Court and Mugabe continued to refuse to swear him in as a deputy minister. (In March 2011 the Supreme Court upheld the High Courts judgment.) Although the MDC had long demanded that Gideon Gono be removed as Governor of the Reserve Bank, he remained in his post. A body for national healing, though promised, failed to materialize, and many in the rural areas remained traumatized by the violence perpetrated by ZANUPF and state agents in 2008. The likelihood of another rigged election and increased violence seemed high unless SADC could insist that its election guidelines were followed. To Mugabes chagrin, President Zuma of South Africa, the facilitator on Zimbabwe, informed a SADC summit meeting in Livingstone, Zambia, in March 2011 that a new constitution must be put in place before any election was held, and this roadmap was accepted by the SADC heads of state when they met in Sandton, South Africa, in June. Exploitation of the very rich diamond eld at Marange in the east of the country resulted in a large new source of revenue (estimated at between US $1,000m. and $2,000m.), although only a small portion of this reached state coffers. The global watchdog body, the Kimberley Process Certication Scheme, initially banned the sale of diamonds from Marange on the grounds that the military, which controlled the eld, condoned illegal activity and human rights abuses there. After Mugabe threatened to sell diamonds anyway, the Kimberley Process in mid-2010 allowed the sale of Zimbabwe diamonds under certain conditions, and in mid-2011 the Chairman of the Process unilaterally approved sales from the Marange eld. Meanwhile, the Indigenization and Economic Empowerment Act adopted in 2008 required all foreign and white-owned companies worth more than $500,000 to cede at least 51% of their holdings to black Zimbabweans within ve years. As the MDC pointed out, this not only severely discouraged any possible foreign direct investment, but led some foreign rms to sell their assets in Zimbabwe. In March 2011 the Government stated that mining rms must submit plans on how they intended to meet the terms of the legislation by the end of September, and in March 2012 the worlds second largest

Economy
platinum-mining company, Impala, agreed to cede 51% of its Zimbabwean business, Zimplats, in line with the Governments policy. The diamond sales and apparent success of the indigenization programme boosted Mugabe and brought new riches to the small elite that surrounded him. In late August 2011 there was much speculation as to whether the death in a re of Solomon Mujuru, a former leading army general and husband of Vice-President Joyce Mujuru, would weaken her in the battle between factions in ZANUPF over the succession to Mugabe, and strengthen the man seen as her main rival, the more hardline Minister of Defence Mnangagwa. Speculation increased about Mugabes health when, after turning 88, he made yet another visit to Singapore for a medical check-up. A condential diplomatic cable from 2008 released by the WikiLeaks organization in 2011 indicated that he had prostate cancer and had at most ve years to live, but Mugabe naturally denied this. When the United Kingdoms Archbishop of Canterbury led a mission to Harare in late 2011, he gave Mugabe a dossier of incidents of violence committed against Anglicans by the former Bishop of Harare who had been ex-communicated and by the police, but this had little apparent effect. The UN Commissioner for Human Rights, who visited Zimbabwe in May 2012, allowed her visit to be arranged by the Government, and her calls for adherence to the rule of law went unheeded. The Joint Monitoring and Implementation Committee, which was supposed to be implementing the GPA, achieved little substantial progress; however, in July the Constitution Select Committee of Parliament (COPAC), comprising representatives from the three coalition parties, did nally agree on a draft constitution. Nevertheless, the following month ZANU-PFs politburo stated that the party could not accept certain clauses in the draft that limited the powers of the President. In mid-August it remained to be seen whether SADC would be able to secure all-party agreement to a draft, which would then have to be submitted to the voters in a referendum. SADC continued to insist that a new constitution must be approved before an election could take place, and that such an election must be held in line with SADCs guidelines. Meanwhile, in February 2012 the EU removed some individuals and entities from its sanctions list, but other Western sanctions remained in place, pending an election, which seemed unlikely to take place before mid-2013

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slowdown have been caused by many economic difculties, ranging from problems in accessing nance for business, high interest rates, inconsistent economic policiesespecially those related to empowerment of black Zimbabweans and ensuring their economic participation and control through the indigenization of domestic businessespoor infrastructure, outdated manufacturing technology, and insufcient water and power supplies. Furthermore, although the Governments budgeting principle is a cash budget, Zimbabwe still maintained a decit of 3.2% of GDP in 2011; nevertheless, this was better than the previous years decit of 4.3% of GDP. The gures for 2012 and 2013 are roughly equivalent improvements, being forecast at 2.8% and 3%, respectively. Ination was expected to increase from the 2010 gure of 3.1% to 5.3% in 2011, and to be 6.5% in 2012 and 6.7% in 2013. Zimbabwes economic growth prospects over the next few years rely mainly on agriculture, mining, manufacturing and transport. Tobacco, maize, sugar and cotton are the main cash crops, but the late start of annual rains was widely expected to adversely affect agricultural production in 2012. Mining growth should be positive, given the anticipated return of buoyant commodity prices internationally. Manufacturing is severely hampered by the frequent breakdown of machines, old 1355

INTRODUCTION After nearly a decade of complete macroeconomic collapse in 19992008, during which real gross domestic product (GDP) contracted by a cumulative 45%, economic recovery began in Zimbabwe in 2009. Both agriculture and mining exhibited two consecutive years of positive growth, although manufacturing, hindered by electricity shortages and a lack of liquidity, has experienced more sluggish growth. The most positive development for the long-suffering Zimbabwe people was that, due to favourable weather conditions, food crops more than doubled in 2009 and continued their recovery in the harvest seasons of 2010 and 2011. It appeared possible that the Zimbabwean economy had in 2008 nally reached its nadir. If the promises that the Zimbabwe authorities have made are not kept, the downward spiral could resume at any time. However, if those promises are indeed kept, there can only be an improvement. The African Economic Outlook calculated that Zimbabwes GDP grew by 6.8% in 2011, a noticeable decrease from the 9.0% growth of 2010. A further decline in growth was expected in 2012, with an anticipated rate of 4.4%, but this was projected to rise to 5.5% in 2013. Zimbabwes erratic growth and economic www.europaworld.com

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technologies, high utility costs, inconsistent water and power supplies, and the high cost of accessing an already small capital pool. As such, manufacturing capacity tends to be low, but it has picked up recently, from 43.7% in 2010 to an expected 59% in 2012. By 2008 the economy of Zimbabwe lay in ruins, with widespread hunger and malnutrition in the country that used to be known as the breadbasket of Southern Africa, a cholera epidemic that caused nearly 5,000 deaths, hyperination, a worthless currency, unemployment of 95% and business activity at a virtual standstill. Such was the level of hyperination in Zimbabwe that the Government of Robert Mugabe issued a new banknote on 19 July 2008, with a face value of Z.$100,000m.; however, its actual value was less than the paper on which it was printed. According to ofcial assessments, the rate of ination reached 165,000% in February 2008, and broad money supply grew by 51,768.8% in November 2007. With hindsight, the IMF on 11 May 2009 proclaimed that ination had peaked in September 2008 at 500,000m.%. Between 31 July 2006 and 31 July 2008 the Zimbabwe dollar had lost the remainder of its purchasing power. On 31 July 2006, the Governor of the Reserve Bank of Zimbabwe (RBZ), Gideon Gono, blamed Zimbabwes monetary woes on three zeroes and then announced that three zeroes would be removed from the currency to rectify this situation. At the same time, he announced a 60% devaluation of the currency. Gono also announced that old banknotes and bearer cheques would be demonetized on 21 August 2006, leaving anyone holding these old instruments three weeks to present them at banks for conversion to the new banknotes. This devaluation had immediate negative effects: the Zimbabwean people were bewildered and even more mistrusting of the Zimbabwean dollar, and the black market rate for the currency plunged further. One year later nearly all sectors of the economy had ceased to use the Zimbabwe dollar, and Governor Gonos three zeroes had reappeared. On 31 July 2008 the authorities again attempted to deal with hyperination by removing a further 10 zeroes from the currency denominations. However, these measures in fact exacerbated the problem hugely. The viable solution began with the following three steps. First was the signing, on 15 September 2008, of a powersharing agreement between President Robert Mugabe, of the Zimbabwe African National UnionPatriotic Front (ZANU PF), and Morgan Tsvangirai, the leader of one faction of the opposition Movement for Democratic Change (MDCT) (see Recent History). This pact led to the formation of a Government of National Unity, in which Mugabe continued as President and Tsvangirai took up the newly revived post of Prime Minister. This power-sharing agreement raised the prospect of urgently required assistance from the international community. Second was the adoption by the Zimbabwe Government in February 2009 of hard currencies for all transactions. (This process is known as dollarization, a term that is perhaps somewhat confusing in the Zimbabwean context as the currency that was being replaced was the Zimbabwe dollar.) With this dollarization, the Mugabe Governments ruination of the Zimbabwe dollar was complete (although the public had ceased to use the currency some months prior to the decision). All transactions were thenceforth to be denominated in hard currencies, with the South African rand designated on 19 March as the reference currency (although US dollars became ubiquitous almost immediately). With the announcement the Mugabe Government admitted for the rst time that the Zimbabwe dollar-denominated currency was not functional and that there was no functioning foreign exchange market for Zimbabwe dollars. The UN quantied the Zimbabwe dollars nal exchange rate as Z.$35,000,000,000,000,000 = US $1. This gure may seem merely academic, but it may well play a part in the eventual dollarization of Zimbabweans life savings and other assets. It should be noted, however, that according to one clause of the proclamation, the Zimbabwe dollar remains legal tender. This move has brought unofcial estimates of ination down from an estimated 14,900m.% in 2008 to the single-digit rates listed above. It has also removed a factor that was severely skewing all attempts at quantifying data for statistical purposes. 1356

Economy
The third step was the launch in March 2009 of the ShortTerm Economic Recovery Programme (STERP I). This 121page document, covering the period FebruaryDecember 2009, set out a detailed strategy to begin addressing the dreadful state of the Zimbabwe economy. A further programme, STERP II, was subsequently introduced for the 201012 period. The Minister of Finance Tendai Biti, a prominent MDCT member, was the STERPs most ardent proponent. Perhaps most important of all, the STERP I directed the RBZ to cease engaging in what the IMF termed quasi-scal activities, namely the uncontrolled printing of banknotes. M3 moneysupply grew rapidly during 200508, and the velocity of growth in 2008 was unprecedented, according to the IMF. These quasi-scal activities amounted to US $1,100m. in 2008 alone, equivalent to 36% of GDP. The humanitarian cost of this type of government economic activity was high. The 2008 harvest of maize, the staple food, was a record low, at scarcely 500,000 metric tons. The UN World Food Programme (WFP) estimated that as many as 5.1m. Zimbabweans would require food assistance in the rst quarter of 2009. Zimbabwes grain requirement amounts to some 2.07m. tons per year, a level which the country historically had often been able to supply. WFP attributed the crisis to bad weather, a shortage of key inputs such as fertilizers and tractors, the crumbling irrigation system and the disincentive effect of the price controls put in place by the Government. However, with no weighting attributed to these factors, the list may mask the fact that one of the four is a greater cause of the food shortages than the others. Good rainfall returned for the next growing season at a time when the monetary situation was stabilized, and the maize crop more than doubled in 2009 (see below). The number of people requiring emergency food assistance fell to 2.8m. per month in 2009 and to 1.5m. per month in the rst quarter of 2010. Zimbabwe has been in continuous arrears with the IMF since February 2001. In December 2003 the Fund took the unprecedented step of initiating compulsory withdrawal procedures against Zimbabwe. The Fund restored Zimbabwes voting rights and its eligibility to receive lending in February 2010. However, as of mid-2012, no lending had been extended, and it was clear that the IMF would require Zimbabwe to meet a number of criteria before such lending could resume. Zimbabwe at the time was not on the verge of meeting any of those criteria, whic included settling its arrears to the Fund, which in October 2010 amounted to about US $140m. Indeed, Zimbabwe would need to settle its arrears to all its ofcial creditors, of which the IMF was by no means the largest. The countrys public sector external debt arrears (excluding arrears owed by parastatals and any outstanding disbursed debt not in arrears) amounted to US $4,769m. in October, of which US $1,190m. was owed to the Paris Club of sovereign creditors, US $507m. to the World Bank and US $409m. to the African Development Bank. Foreign exchange reserves have been negligible since the beginning of the economic crisis in 1999. The 2011 budget proposed a goal of increasing foreign reserves to a level equivalent to three months worth of imports of goods and services by the end of 2012, although this was lower than the Southern African Development Community target of six months worth of imports. Reserves at the end of 2010 were sufcient to cover only 1.4 months worth of imports. Export volume contracted by 19.3% in 2003 and has been in decline ever since. Exports by value declined from an unofcially estimated US $1,396m. in 2008 to an unofcially estimated US $1,213m. in 2009. Zimbabwe had the second highest rate of HIV infection in Africa in 2005, and it has been estimated that by 2015 the labour force will be one-sixth smaller than it would have been in the absence of the HIV/AIDS pandemic. Some demographic experts predicted that Zimbabwe could soon reach zero population growth as a result of the AIDS pandemic alone; the simultaneous increase in emigration would only compound the trend. The World Health Organization estimated that in 2009 average life expectancy was just 49 years.

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LAND POLICIES AND FOOD INSECURITY Before independence, whites were allocated 78% of the countrys most productive land. The lowest-grade land accounted for 75% of the land allocated to smallholders in the pre-independence era, in what were known as the communal areas. At 1 January 2000 some 11m. black Zimbabweans were still crowded on unproductive communal lands, and 4,500 principally white commercial farmers still owned 11m. ha of prime land. After independence in 1980, the Mugabe Government reiterated its pre-election pledge to resettle landless Zimbabweans on commercial farmland acquired from willing sellers among the white commercial farmers. Under the 1980 Constitution, the Government was permitted, until 1990, to acquire land compulsorily for purposes of resettlement if it was underutilized. However, after a whole decade, fewer than 1% of those hoping for resettlement had been resettled. After 1990, expectations were directed towards an acceleration in land reform measures. In March 1992 the Land Acquisition Act was approved, which permitted the compulsory acquisition of land by the state, facilitating the purchase of 5.5m. ha of the 11m. ha of land then still held by white farmers. However, the Act stopped short of detailing the white farmers guarantee of fair compensation. This matter remained unresolved until President Mugabe, in August 2000, proclaimed that there was to be no compensation unless the United Kingdom wished to compensate these British white farmers (most of whom held Zimbabwean nationality). The British ambassador to Zimbabwe, Deborah Bronnert, stated in May 2012 that she did not think that the United Kingdom would continue paying such compensation, as it had done soon after Zimbabwean independence, when it provided 44m. She reiterated the British Governments view that the land reform was implemented unfairly and ultimately caused the closure of many commercial farms that were providing food for Zimbabwe, which led to the loss of many jobs and negatively affected the economy. Following the announcement in June 1997 that the National Land Acquisition Committee had concluded its programme of identifying land for reallocation, foreigners and companies were barred from owning land. Nevertheless, by August only 3.4m. ha of land had been acquired in the 17 years since independence, and only about 70,000 families had been resettleda gure that still constituted scarcely 1% of those hoping for resettlement. Also in August 1997 plans were announced to acquire 1,072 farms, covering 3.2m. ha, to resettle some 100,000 landless peasants; a further 700 farms, covering 1.3m. ha, were to be used for indigenous commercial farming. Controversially, Mugabe proclaimed that farmers would be compensated for the improvements they had made to their farms but not for the land itself. However, under pressure from the IMF, in March 1998 the Mugabe Government made assurances that it would offer full and fair compensation for land seized under the land resettlement programme. In November the Government announced compulsory acquisition orders for a further 841 farms covering 2.24m. ha. In May 1999 the Cabinet approved an Inception Phase Framework Plan to support the resettlement of 77,700 families on 1m. ha by 2001. Of this land, 223,112 ha was to come from 120 farms that were voluntarily offered for sale in 1998, with the balance representing uncontested acquisitions. In February 2000 war veterans began occupying whiteowned farms. By April nearly 1,000 farms had been occupied; it was alleged that only some 15% of the squatters were in fact war veterans, while the other 85% were unemployed youths paid by Mugabes ruling party. The tobacco industry was severely disrupted, and by mid-May tourist arrivals had declined to fewer than one-half of the usual levels. In the same month the World Bank halted all funding to Zimbabwe after the Mugabe Government failed to repay a governmentguaranteed loan to the electricity parastatal and exceeded the 60-day grace period. In October the World Bank placed Zimbabwe, indenitely, on non-payment status. The Confederation of Zimbabwe Industries revealed that more than 400 companies had closed in 2000, with the loss of some 10,000 jobs. Gold, tobacco, maize, wheat and horticultural production was signicantly lower. Visible exports

Economy
declined in terms of both volume and value, and tourism revenue dissipated overnight. The 2000 budgetary decit, which had been forecast at 3.8% of GDP, expanded to 23% of GDP. Ination continued to increase. Three-digit ination, while not unknown in some other African countries, had been unprecedented in Zimbabwe, and it went on to become eventually nine-digit ination. Hyperination created a major and lasting change in the daily lives of the Zimbabwean people. Fuel shortages and electricity cuts also plagued the nation, and the food supply would not stretch from one harvest to the next. In September 2001 the IMF declared Zimbabwe ineligible to use general Fund resources and removed it from the list of countries eligible to borrow resources under the Poverty Reduction and Growth Facility. In August 2002 the European Union (EU) allocated food aid worth about US $35m. to the Zimbabwean Government. WFP began distributing emergency food aid in Zimbabwe in July; by February 2003 it had distributed 204,000 tons to 4m. people in 49 of the countrys 57 districts. This situation was followed by six successive maize harvests of less than one-half of the national annual requirement. When poor harvests continued into 2009, food shortages worsened (see below). By mid-2012 the ZANUPF-dominated Government of President Mugabe showed no signs of relenting on the content of its land resettlement policy or in its manner of carrying it out. The ZANUPF intended to insert a clause into a draft constitution that would require 80% approval in a referendum to amend any land-related issues in the Constitution, which could be interpreted as a way of appeasing and protecting senior ZANUPF government ofcials who seized land during Mugabes land reforms of the early part of the millennium. NATIONAL INCOME In 1999 Zimbabwe entered a period of severe economic decline. Real GDP contracted by a cumulative 45% between 1999 and 2008. According to the 2011 budget statement, real GDP increased by 5.7% in 2009 and an estimated 8.1% in 2010, the rst economic growth since 1998. In 2009 agriculture was the largest contributor to GDP, at 15.5%, followed by transport and communications (15.2%), manufacturing (14.7%), and tourism (11.0%), according to government gures. Agriculture showed the strongest growth in 2009 and 2010, expanding by 14.9% and an estimated 33.9%, respectively. Manufacturing growth slowed from 10.2% in 2009 to 2.7% in 2010. Also slow to recover was the tourism industry, which suffered from capacity constraints and negative publicity in Zimbabwes main target tourism markets. The tourism sector grew by only 0.5% in 2010. Ofcial assessments indicated that tourist arrivals amounted to 1.95m. in 2008, 2.02m. in 2009 and an estimated 2.23m. in 2010, with 2.5m. projected for 2011. The sectors earnings were ofcially quantied at US $294m. in 2008, US $523m. in 2009 and US $770m. in 2010, with US $850m. forecast for 2011. The main source for these tourism arrivals was other African countries, accounting for 89.7% of the total; South Africa provided 72% and Botswana 6%. However, tourists from the most lucrative markets in Europe, North America and Asia were still staying away in 2011.

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AGRICULTURE Zimbabwe has had, and could have again, a diversied and well-developed agricultural sector, in terms of food production, cash crops and livestock, provided the land that has been redistributed to black Zimbabweans can again be used productively. Of the total land area, 8.3% is arable. The principal rainy season is from November to March, and the main harvest is in April and May. The staple food crop is maize, while the principal cash crops are tobacco, sugar and cotton. Other cereal crops grown include wheat, millet, sorghum and barley. In 2011, even though lending from the IMF and the World Bank had not resumed, both institutions expressed their approval of moves by FAO to provide assistance in the form of vital farming inputs, such as fertilizers, pesticides and especially seeds. These inputs, combined with better weather, moderated ination and the use of stable currencies, contributed to an estimated 33.9% growth rate in agriculture as a whole in 2010. 1357

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Driving this high rate of expansion were tobacco, exhibiting 110% growth, sugar (35%), maize (34%) and cotton (23%). A record tobacco crop of 260m. kg was harvested in 1998. Prior to the troubles of 2000, Zimbabwe had enjoyed a favourable yield, and the area planted under tobacco had set a record in 1998, at 99,293 ha; by 2006 less than 50% of that area, at an FAO-assessed 38,865 ha, was under tobacco. Yield per ha also peaked in 1998, at 2,626.26 kg per ha, but by 2006 tobacco yields were just 1,144 kg per ha. Production of unmanufactured tobacco declined from a peak of 260,000 metric tons in 1998 to just 44,451 tons in 2006. Government data indicated that the tobacco harvest amounted to 59,000 tons in 2009, and 123,500 tons were sold at auction in 2010 at an average price of US $2.88 per kg. In the 2009/10 season about 65,000 ha were planted with tobacco, of which 30,000 ha were under contract farming, 20,000 ha were self-nanced using the previous years tobacco proceeds and 15,000 ha were planted by communal farmers. The tobacco industry continued to recover strongly in 2010, with the sector expanding by 110%. The forecast for 2011 was for the area under tobacco to increase to 90,000 ha and for the tobacco crop to rise to 150,000 tons. However, the tobacco sector is unlikely to reach the peaks it once enjoyed, since global demand for tobacco is on the wane as tobacco consumers in principal markets come under increased pressure to give up smoking. In the cotton sector, small-scale communal producers account for just over one-half of total production. Cotton production rose from 211,000 metric tons in 2009 to an estimated 260,000 tons in 2010, according to the 2011 budget statement. By mid-November 2010 maize growers had delivered to the Grain Marketing Board 220,910 metric tons of maize in that year, valued at US $60.8m. About 1.8m. ha were planted with maize, compared with 1.5m. ha in 2009. Total sugar output rose from 259,000 metric tons in 2009 to an estimated 350,000 tons in 2010, according to the 2011 budget statement. The sector was boosted by the EUs Programme of Accompanying Measures for Sugar Protocol Countries for 2010, which extended 13.7m. in support of vulnerable small-scale sugar producers in Zimbabwe. Zimbabwes coffee growers produce mild Arabicas. According to the International Coffee Organization, Zimbabwes output of coffee beans grew from 23,000 60-kg bags in 2009/10 (the coffee year runs from April to March) to 35,000 bags in 2010/11. Exports, though, declined from 16,186 bags in 2009/10 to 10,236 bags in 2010/11. According to ofcial assessments, the livestock herd in 2011 was estimated at 5.2m. head of cattle (including 40,000 head of dairy cattle), 3.3m. goats, 391,000 sheep, 202,300 pigs and 22.5m. chickens. In forestry, Zimbabwes total roundwood removals amount to some 9.1m. cu m annually, about 90% of which goes towards fuelwood. According to FAO, Zimbabwe exported 4,548 cu m of wood in 2008, valued at US $441,000, a small percentage of the pre-2000 annual export volume and value. Land-locked Zimbabwe has few sizeable natural lakes, and most of its shing potential is in the countrys man-made reservoirs, especially Lake Kariba on the Zambezi River. The countrys total sh catch is estimated by FAO at some 13,000 metric tons per year. The predominant sh caught are dagaas, which migrate between saltwater and freshwater; dagaas accounted for close to 60% of the total catch in 2009. Only six species, three of them breams, make up 95% of the total sh catch in Zimbabwe.

Economy
Zimbabwe has the second largest reserves of platinum in the world, after South Africa. Platinum accounted for an estimated 36% of Zimbabwes total mineral production in 2010, according to the 2011 budget statement. Production in the rst 10 months of 2010 amounted to 5,077 kg and was expected to reach 8,500 kg by the end of that year, a 24% increase compared with the 6,848 kg produced in 2009. The projection for 2011 was 12,000 kg, with investment expansion, mostly at the Unki and Mimosa mines, accounting for the increase. South Africa-based Anglo Platinums US $600m. Unki mine, near Shurugwe, opened in April 2011. At full production, it was expected to produce 150,000 oz of platinum per annum. Development began in 2003, but was delayed by Zimbabwes economic collapse. The Mimosa mine, on the Great Dyke mineral belt east of Bulawayo, is owned by Mimosa Investments Ltd of Mauritius (a 50:50 joint venture between Impala Platinum Holdings Ltd of South Africa and Aquarius Platinum Ltd of Australia). The shallow Mimosa mine produced 101,200 oz of platinum in concentrates in 2010. Gold was the second largest source of revenue in the mining sector in 2010, after platinum. Production in JanuarySeptember 2010 amounted to 6,284 kg; total output of 8,000 kg was forecast for 2010, rising to 13,000 kg in 2011. Mwana Africa, a pan-African resources company listed on the London Stock Exchange in the United Kingdom, began an 18-month programme to rehabilitate the Freda Rebecca gold mine in 2009. Average monthly production in MarchMay 2011 was 3,363 oz. Mwana Africa also owned 52.9% of Bindura Nickel Corpn, which was placed under care and maintenance status in November 2008. In July 2011 Mwana Africa was seeking nance with a view to restarting Bindura Nickels operations in phases, beginning with the Trojan nickel mine. Nickel production was estimated at 9,500 metric tons of contained nickel in 2009. Output of chromium increased from 201,000 tons in 2009 to an estimated 500,000 tons in 2010, according to the 2011 budget statement. Zimbabwe has signicant diamond resources. Output was forecast to increase from an estimated 2.7m. carats in 2010 to a projected 4m. carats in 2011, according to government gures. Diamond elds at Chiadzwa entered production in 2010 and accounted for most of the national output in that year. The River Ranch and Murowa diamond mines together produced about 300,000 carats in 2010. A number of obstacles still confronted the diamond sector, including the legal process of awarding concessions, beneciation, policing and anti-smuggling standards, environmental concerns, and the compensation and relocation of displaced mining communities. However, obtaining certication under the Kimberley Process Certication Scheme was the main obstacle; negotiations were ongoing in mid-2012. Output of coal, which had amounted to some 6m. tons per annum in the 1990s, increased from 1.6m. metric tons in 2009 to an estimated 2m. tons in 2010, with 3m. tons projected for 2011, according to the 2011 budget statement. Zimbabwes total coal reserves were estimated at 28,000m. tons. Mining is critical to Zimbabwes economy, but the industry is under threat from the ruling ZANUPFs indigenization policy, through which it aims to make indigenous black Zimbabweans at least 51% shareholders of any business in the country. Particularly concerning has been the announcement by the Minister of Youth Development, Indigenization and Empowerment in mid-2012 to transfer complete ownership of all mineral resources to Zimbabweans, which could effectively cripple the industry, given that citizens do not have the funds to purchase such companies, and the vast majority of nance, technical expertise and equipment has been provided by foreign companies. Companies have been threatened that, if they wish to avoid expropriation without compensation, they must comply with the law. MANUFACTURING Zimbabwe traditionally produced a wide variety of manufactured products, both for the local market and for export. However, the manufacturing sector came under intense pressure during the economic crisis of 1999 and the subsequent troubles. A severe shortage of fuel in the country from 2005 hindered the movement of manufactured goods, mining www.europaworld.com

MINING Zimbabwes principal mining commodities are platinum, gold, chrome, nickel, coal and diamonds. Other minerals present include asbestos, copper, iron ore, tin, silver, emeralds, graphite, lithium, granite, cobalt, tungsten, quartz, silica sands, kyanite, vermiculite, corundum, magnesite, kaolin and mica. Mining grew in value terms by 33.3% in 2009 and by an estimated 47% in 2010, according to the 2011 budget statement. The improved economic stabilization from 2009 boosted mining activity signicantly. Some mining operations that had closed down in 2008 or had been discontinued began to produce again, while many of the larger mines were conducting feasibility studies with a view to resuming operations. 1358

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equipment and the entire transport sector in general, increasing the cost of conducting business in Zimbabwe signicantly, while hyperination placed an unsustainable burden on manufacturers. The manufacturing sector accounted for 11.8% of GDP in 2010, a decline from the 30% annually achieved in 199293. Manufacturing output contracted by 3% in 2005 and by an estimated 7% in 2006. A sluggish recovery commenced in 2009, but the sector was hindered by an unreliable electricity supply and a severe lack of medium- and long-term capital with which to source raw materials and replace derelict and obsolete machinery and equipment. The manufacturing sector as a whole grew only by an estimated 2.7% in 2010. The foodstuffs sub-sector grew by just 0.5%, textiles and ginning by 0.4%, chemical and petroleum products by 0.3%, and paper, printing and publishing by 0.2%, according to the 2011 budget statement. The transport equipment, metal and metal products, and clothing and footwear sub-sectors were still experiencing negative growth rates in 2010. Capacity utilization remained at a very low level in 200911. The highest level of capacity utilization was in the wood and furniture sub-sector, at an estimated 83% in 2010, followed by tobacco and beverages (59%), clothing and footwear (55%), paper, printing and publishing (43%), and foodstuffs (42%). The lowest level of capacity utilization, at 21%, was in the non-metallic mineral products sub-sector and in the textiles and ginning sub-sector. Ofcial forecasts projected that the manufacturing sector would grow by 5.7% in 2011, despite recurring problems with machines breaking down, out-of-date technology, high utility costs, inconsistent water and power supply, and the high cost of accessing an already small capital pool. ENERGY Zimbabwe has a theoretical installed capacity of 1,960 MW; therefore, even if full capacity could be achieved, less than 90% of Zimbabwes electricity requirements would be met. In reality, capacity utilization levels are extremely low, leading to large-scale load-shedding. Ofcial assessments indicated that in 2010 total generating levels amounted to 1,237 MW, or only 56% of the nations electricity requirements. In 2010 the Hwange power station generated 547 MW but had a capacity of 920 MW, while the 750-MW Kariba South power station only produced 650 MW. These two power stations are supplemented by the Munyati power station, which generated 40 MW in 2010 out of an installed capacity of 100 MW. The 100-MW Harare and the 90-MW Bulawayo power stations generated no electricity in 2010. The 2010 budget allocated US $20m. to the rehabilitation of Hwange and US $5m. to Kariba South. However, much greater expenditure would be needed to meet the nations power requirements and to enable the manufacturing sector to recover. In June 2012 Zimbabwe Electricity Supply Authority (ZESA)ZESA signed a US $230m. memorandum of understanding with WAPCO, an Indian power company, to overhaul the three thermal power stations at Bulawayo, Hwange and Munyati. This will be the rst signicant energy investment in the country since 1982.

Economy
potential. Of total mineral exports, platinum contributed the largest share, at 45%, followed by gold at 22%, ferrochrome at 18% and diamonds at 11%. Imports, also on an f.o.b. basis, increased from US $3,213.1m. in 2009 to US $3,552.0m. in 2010 and US $6,280m. in 2011. This reected the countrys greater reliance on imported products for domestic consumption, because of the sharp decline in domestic production that has resulted from very poor economic management policies. Major imports included nished manufacturesitems that Zimbabwes manufacturers had provided quite adequately prior to 1999and oil. The trade balance improved from a decit of US $1,621.8m. in 2009 to an estimated US $1,462.2m. shortfall in 2010. Visible exports covered just 58.8% of visible imports in 2010. The current account of the balance of payments, excluding ofcial transfers, deteriorated from a decit of US $927.8m. in 2009 to an estimated shortfall of US $1,041.1m. in 2010. The capital account recovered from a decit of US $70m. in 2009 to an estimated surplus of US $578.5m. in 2010, boosted by a reversal of the ow of net short-term capital from an outow of US $925m. in 2009 to an estimated inow of US $200.9m. in 2010. The overall balance of payments improved from a shortfall of US $1,908m. in 2009 to an estimated decit of US $462.6m. in 2010. Gross ofcial foreign reserves increased from US $366m. at 31 December 2009, providing import cover of 1.2 months, to an estimated US $420.8m. at 31 December 2010, equivalent to 1.4 months of imports. Zimbabwes membership of the Common Market for Eastern and Southern Africa (COMESA), formerly the Preferential Trade Area for Eastern and Southern Africa, has, in theory, provided access to new directions in regional trade. In practice, however, Zimbabwean exporters have not been in a position to benet from the opportunities of COMESA membership. Zimbabwe had high levels of debt even before the economic collapse of 19992008. Ofcial assessments indicated that Zimbabwes disbursed debt outstanding at 31 October 2010 totalled US $6,929m., of which US $4,769m., more than two-thirds, was in arrears. Of total disbursed outstanding debt, US $1,070m., or 15%, was owed by parastatals, including ZESA supplier credits, National Oil Company of Zimbabwe supplier credits and US $70m. owed by the defunct Air Zimbabwe. Zimbabwe has signed up for COMESAs Simplied Trade Regime, which allows cross-border traders to transport goods of up to US $1,000 in value without paying import duties or facing import quotas. Cross-border trade has become a major source of employment for many Zimbabweans.

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INTERNATIONAL TRADE AND BALANCE OF PAYMENTS Zimbabwes trade, current and overall balance of payments accounts were all in decit in 2009 and 2010, as they had been throughout the 19992008 economic collapse, and no surpluses were forecast for the near future. RBZ statistics indicated that Zimbabwes total exports on a free-on-board (f.o.b.) basis increased from US $1,591.3m. in 2009 to an estimated US $2,089.8m. in 2010; they increased even further in 2011, to US $3,670m. Mining exports contributed 65% of the total, followed by tobacco exports (17%), other agricultural exports (9%) and manufacturing exports (8%). Horticultural exports accounted for just 1% of the total; this sector required a functioning support mechanismin the form of adequate cold storage powered by a reliable electricity gridin order to achieve the quality demanded in export markets. Until then, the horticultural sector will not reach its considerable earning www.europaworld.com

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LABOUR, WAGES AND INFLATION Prior to 2000, with the exception of 1988, ination affected lower-income urban families more than it did higher-income urban families in every year since independence in 1980. By the time high ination became hyperination, everyone was affected at a fundamental level. As the post-2000 crisis deepened and government funds dwindled, the Government resorted to huge increases in the money supply in order to pay its own obligations. This action was the largest single contributory factor to the hyperination that ensued. It was reported that the printing of money was accelerated in the rst half of 2000 in order to meet the pay increases of civil servants in the months preceding the June election. This sudden, literal increase in the money supply placed great upward pressure on an already excessive ination rate. This practice continued, and the broad money supply grew by 165% in 2002 and by 207% in the year to 31 March 2003, even according to ofcial assessments. Growth of broad money supply accelerated from 1,638.4% in January 2007 to 51,768.8% in November. Demonetizing the Zimbabwe dollar in February 2009 in favour of hard currencies heralded a swift end to hyperination. Consumer price ination was assessed by the IMF at 6.5% in 2009 and 5.0% in 2010. Unemployment was estimated by the IMF at 95% in June 2010. Salaries had risen hugely in nominal terms during the 19992008 economic collapse, but these increases had been denominated in worthless Zimbabwe dollars. During the 200912 recovery period wages were paid in hard currency and therefore had spending power, although the Government found it difcult to fund the public sector payroll. 1359

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ZIMBABWE
Job creation occurred only in the public and nancial sectors, but estimates are that between 1998 and 2010, 180,000 jobs were lost in sectors other than agriculture, while 1m. people entered the work-force. This is an indication that recent estimates regarding the scale of unemployment are credible. The Economist Intelligence Unit reported that ination from January to April 2012 was 5.7%, and was caused chiey by a 13.1% increase in housing and utility costs, and a 12.3% price rise of communications. An indicator that ofcial ination gures may not be accurate is that wages in the tobacco industry, for example, rose by 50% over the last three years. Wage ination normally causes consumer price ination, but the ofcially reported gures do not correspond with wage hikes, which probably means that the Government is under-reporting ination rates. FUTURE PROSPECTS Much progress has been made towards recovering from the complete economic collapse of 19992008. The most important steps (see above) culminated in the dollarization of the economy, replacing the worthless Zimbabwe dollar with hard currencies. Until that point, any other remedial actions had been rendered ineffectual, and the country had been operating virtually without a currency. After dollarization, ination was brought under control, and day-to-day life resumed some of its normality. The agricultural sector, a leading force in the economic recovery, received signicant and timely assistance from FAO in the form of inputs such as seeds and fertilizers, enabling it to take advantage of the good weather of 200911. Following the improvement in the economic climate, there was also renewed investment in the mining sector, further driving the countrys recovery. However, the manufacturing industry struggled to reach its potential, due to erratic power supplies, sub-standard equipment and a dearth of working capital. Much more capital investment would be needed to overcome these obstacles. The 2011 budget statement indicated that US $360m. in support from development partners had been received by October 2010. Minister of Finance Biti estimated that available revenue totalled US $2,700m., whereas the total expenditure required was US $11,300m. However, given the absence to recourse of

Statistical Survey
borrowing, proposed spending was subsequently reduced dramatically, to just US $2,700m., equivalent to projected revenues. Biti declared that formulating the budget had been an excruciating journey of balancing the unbalanceable. The economic crisis that Robert Mugabe presided over during 19992008 left the country confronting numerous deep-rooted problems. The unity Government remained fragile, and potential donors and lenders were aware that it could fall at any moment. The Zimbabwe dollar, at least nominally, remained legal tender. So much is tentative in Zimbabwes nascent recovery, and, until investor and lender condence returns, the countrys budgetary requirements will remain unbalanceable. Economic growth in the coming years will depend largely on the holding of peaceful, free and fair elections. However, Zimbabwes continued economic recovery also depends on the demand and prices for metal, and the level of winter wheat production. Underpinning all this, the country will need stable economic management and business reforms. Were ZANUPF to win the next elections, Zimbabwe would likely increasingly seek aid and trade from Asian countries, in line with their increasingly strident anti-Western rhetoric. Continued progress with Mugabes indigenization policy, which Tsvangirai supportsparticularly the ever-present threat of expropriation without compensation in the mining, nancial and other important sectorswill surely dampen enthusiasm for investing in Zimbabwe, especially in the more capital-intensive industries such as mining. Given the importance of mining to Zimbabwe and the relative lack of local capacity and nancing, this situation would be even more disastrous for the economy. However, if the MDCT were to win, the country would probably try to strengthen its economic relationships with states from the Organisation for Economic Co-operation and Development. This scenario would be expected given the likelihood of renewed economic support by European nations and their allies for the MDCT under Tsvangirai, who is far more amenable than Mugabe to working with Zimbabwes traditional trade and donor partners. Condence would thus be renewed in investors, which would help Zimbabwes short- to medium-term economic growth and development prospects.

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Source (unless otherwise stated): Central Statistical Ofce, Ministry of Finance, Blocks B, E and G, Composite Bldg, cnr Samora Machel Ave and Fourth St, Private Bag 7705, Causeway, Harare; tel. (4) 706681; fax (4) 728529; internet www.mofed.gov.zw.

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Area and Population

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 390,757* 11,789,274 5,634,180 5,997,477 11,631,657 12,571,454 12,754,376 13,013,679 33.3

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Statistical Survey
POPULATION BY AGE AND SEX (UN estimates at mid-2012) Males 014 . . 1564 . . 65 and over Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,464,195 3,724,642 238,229 6,427,066 Females 2,450,311 3,827,166 309,136 6,586,613 Total 4,914,506 7,551,808 547,365 13,013,679

AREA, POPULATION AND DENSITY Area (sq km) . . . . . . . . Population (census results) 18 August 1997 . . . . . . 17 August 2002y Males . . . . . . . . . Females . . . . . . . . Total . . . . . . . . . Population (UN estimates at mid-year)z 2010 . . . . . . . . . . 2011 . . . . . . . . . . 2012 . . . . . . . . . . Density (per sq km) at mid-2012 . .

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Harare (capital) . Bulawayo . . . Chitungwiza . . Mutare (Umtali) . Gweru (Gwelo) . . Kwekwe (Que Que) . Kadoma (Gatooma) . Masvingo . . .

Source: UN, World Population Prospects: The 2010 Revision. PRINCIPAL TOWNS (population at census of August 1992) 1,189,103 621,742 274,912 131,367 128,037 75,425 67,750 51,743 Chinhoyi (Sinoia) Hwange (Wankie) Marondera (Marandellas) Zvishavane (Shabani) . . Redcliff . . . . . . . . 43,054 42,581 39,384 32,984 29,959

* 150,872 sq miles. y Source: UN, Population and Vital Statistics Report. z Source: UN, World Population Prospects: The 2010 Revision.

Mid-2011 (000, incl. suburbs, UN estimate): Harare 1,541,570 (Source: UN, World Urbanization Prospects: The 2011 Revision).

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