Zimbabwe is rich and it’s story must be that of plenty. However, the country has experienced significant economic challenges over the past two decades, characterized by hyperinflation, currency instability, and a decline in foreign investment. Against this backdrop, the primary objective of this audit is to evaluate the current state of economic freedom in Zimbabwe and its impact on the economy allowing this report to assess Zimbabwe’s progress towards achieving the National Development Strategy (NDS)1 and Vision 2030. This report therefore would be a good policy paper for the private sector, the government, industry, inform investment policy, academia as well as the public. In preparing the report, the study employed a mixed methodology approach. Approximately 80% of the analysis was derived from desktop research, utilizing secondary economic freedom data that is freely accessible from the Economic Freedom of the World database. The remaining 20% of the analysis was informed by qualitative data collected through focus group discussions with key informants. In the report, the analysis was conducted by examining Zimbabwe alongside its four neighboring countries: South Africa, Zambia, Botswana, and Mozambique. This approach, which considers countries that share a common history, similar climatic conditions, and significant trade relations with Zimbabwe, provides a broader context for understanding the economic conditions within Zimbabwe itself. Furthermore, this comparative analysis facilitates an examination of the various economic policies implemented by neighboring countries. It also allows for an assessment of how well Zimbabwe is integrating into regional markets and economies.
The
economic freedom audit report is based on five key economic freedom indicators:
size of government, legal system and property rights, sound money, freedom to
trade internationally, and regulation. The findings indicate that Zimbabwe has
low and deteriorating economic freedom performance, ranking the lowest across
all indicators when compared to its neighbors. This highlights the significant
challenges facing Zimbabwe in terms of economic freedom. The report proposes
the following policy recommendations: strengthen property rights by
establishing clear legal frameworks for property ownership that promote
confidence among stakeholders; enhance government integrity by adopting
anti-corruption measures, including transparent procurement processes,
whistleblower protections, and independent oversight bodies to improve
accountability within government institutions; reform bureaucratic procedures
by simplifying regulations that govern business operations; promote market
openness by reducing import tariffs and eliminating non-tariff barriers to
encourage competition and attract foreign direct investment (FDI); and ensure
monetary stability by implementing sound monetary policies aimed at controlling
inflation through fiscal discipline, strengthening the independence of the
central bank, and encouraging the use of a stable currency while gradually
phasing out multi-currency systems.
2: Introduction
This
audit finds out why Zimbabwe, a resource-rich country, has a contemporary history
of economic challenges. Zimbabwe has experienced significant economic
challenges over the past two decades, characterized by hyperinflation, currency
instability, and a decline in foreign investment. Amidst
these challenges, the concept of economic freedom has emerged as a crucial
framework for understanding and addressing the underlying issues in the
Zimbabwean economy. In Zimbabwe’s context, enhancing economic freedom is seen
as a pathway to revitalizing the economy, fostering entrepreneurship, and
improving living standards.
When
comparing Zimbabwe's level of economic freedom to its Southern African
neighbors, the disparities become apparent. Countries such as Botswana and
South Africa have implemented policies that promote higher levels of economic
freedom, resulting in more robust economic performance and stability. In
contrast, Zimbabwe's restrictive economic policies and regulatory frameworks
have hindered its growth potential.
Economic
freedom is a fundamental principle that resonates deeply with Zimbabwe's
constitutional framework and national development agendas. Chapter 4 of the
Zimbabwean Constitution outlines fundamental human rights and freedoms,
particularly in Section 13 (National Objectives) emphasizes that every citizen
has the right to participate in economic activities and Section 14 (Right to
Property) ensures that individuals have a right to own property, which is
crucial for business operations. Thus, the Constitution of Zimbabwe enshrines
the rights to personal liberty, property, and entrepreneurship, establishing a
legal foundation that supports individual economic agency. As Zimbabwe strives
to rebuild its economy, the alignment of economic freedom with constitutional
values becomes increasingly vital in fostering an environment conducive to
growth and stability.
The
National Development Strategy 1 (NDS1) emphasizes the importance of creating a
vibrant economy through strategic interventions aimed at enhancing economic
freedom. This initiative seeks to transform Zimbabwe into a middle-income
economy by 2030, promoting investments, innovation, and sustainable
development. By prioritizing economic freedom, NDS1 aims to empower citizens
and businesses, encouraging local and foreign investments essential for
economic recovery. The mantra "Zimbabwe is Open for Business" further
underscores the government's commitment to fostering an open and competitive
economic environment. This slogan highlights the need for deregulation,
improved infrastructure, and a more favorable business climate. By embracing
economic freedom, Zimbabwe can attract investment, stimulate job creation, and
enhance overall economic resilience.
In addition
to NDS1, various policy frameworks, such as the Zimbabwe Investment Policy and
the Industrialization Policy, emphasize the critical role of economic freedom
in achieving sustainable development. These frameworks advocate for reducing
bureaucratic red tape, enhancing property rights, and creating a transparent
regulatory environment. By aligning these policies with the principles of
economic freedom, Zimbabwe can position itself as an attractive destination for
both domestic and international investors.
Finally,
for Zimbabwe, embracing economic freedom can facilitate greater participation
in this expanded marketplace offered by the African Continental Free Trade
(AfCTA). By reducing trade barriers, enhancing regulatory frameworks, and
fostering a competitive business environment, Zimbabwe can position itself to
take full advantage of the AfCFTA. This strategic alignment not only promises
to boost exports but also encourages foreign direct investment, which is
crucial for revitalizing the economy.
In
conclusion, economic freedom for Zimbabwe is not only aligned with the
country's Constitution but also resonates with its developmental agenda and
trade and investment policies. By embracing the principles of economic freedom,
Zimbabwe positions itself to unlock considerable benefits that can address a
myriad of economic challenges. This alignment promises to foster an environment
conducive to growth, innovation, and resilience, ultimately paving the way for
sustainable development and improved living standards for all Zimbabweans. As
the nation seeks to revitalize its economy, the pursuit of economic freedom
stands as a critical strategy to navigate the complexities of both domestic and
regional economic landscapes
Objectives
of the Audit
The
primary objective of this audit is to evaluate the current state of economic
freedom in Zimbabwe and its impact on the economy.
Specifically, the audit aims to:
§ Assess
the existing policies and regulations impacting economic freedom in Zimbabwe.
§ Identify
barriers to economic freedom and opportunities for reform.
§ Benchmark
Zimbabwe's economic freedom against regional peers to highlight areas for
improvement.
§ Recommend
actionable strategies to enhance economic freedom, promote sustainable growth,
and improve the overall economic landscape.
Through
this comprehensive analysis, the consultancy aims to provide a roadmap for
policymakers and stakeholders in Zimbabwe to foster an environment conducive to
economic prosperity and stability.
by Dr E, Mavodyo, L. Kanyonganise, I. Zimunya, N.Musikambesa, P.Mutize et al 2024
