FACULTY OF COMMERCE

DEPARTMENT OF ACCOUNTING

FIRST NAME GAMUCHIRAI

LAST NAME CHIREMBA

STUDENT REG NUMBER B231268B

LEVEL 1.2

INTAKE BLOCK

DEGREE PROGRAMME BARCHELOR OF ACCOUNTING

MODULE TITLE

LECTURER MR .T. KONDO

ASSIGNMENT DUE DATE 29 FEBRUARY 2024

Question

Zimbabwe has implemented several economic blueprints aimed at promoting sustainable economic growth,
employment and new wealth creation, national development and poverty alleviation. However, the development
results achieved have been sub-optimal and insufficient to spur the economy to expected levels of sustainable
economic development. Assess the validity of this statement.
Introduction

According to the International Monetary Fund (IMF), (2015), an economic blueprint is a

comprehensive plan or strategy that outlines the goals, policies, and actions needed to achieve
economic development and growth in a specific region, country, or organization. It serves as
a road-map for guiding economic decision-making and resource allocation to promote
sustainable development, improve living standards, create jobs, and enhance overall
economic well-being. Zimbabwe, has faced significant economic challenges since the late
1990s, including hyperinflation, high unemployment, and widespread poverty. The
government has implemented various economic blueprints aimed at addressing these issues
and promoting sustainable economic growth which includes the TSP, NDS1 and the ZIM
ASSET.

Zimbabwe Agenda for Sustainable Socio-Economic Transformation (ZIM ASSET)

(2013-2018)

Following the end of the Government of National Unity (GNU), the Government launched
the Zimbabwe Agenda for Sustainable Socio-Economic Transformation (ZIMASSET).
According to Government of Zimbabwe (2013) this economic blue print was developed
through a consultative process involving political leadership in government, private sector
and other stakeholders. The ZIMASSET blue print was crafted whilst recognizing the
continued existence of the ‘illegal’ economic sanctions, subversive activities and internal
interference from hostile countries. This therefore, called for the need to come up with
sanctions busting strategies, hence ZIMASSET’s focus being on the full exploitation and
value addition to the country’s own abundant human and natural resources (Government of
Zimbabwe, 2013). The policy was developed to guide national development for the next five
years up to 2018.

ZIMASSET was described as a Results Based Agenda built around four strategic clusters
namely, Food Security and Nutrition; Social Services and Poverty Eradication; Infrastructure
and Utilities; and Value Addition and Beneficiation. This aimed to assist the government to
prioritise its programmes for implementation with a view of realising broad results to address
the socio economic challenges. With ZIMASSET the economy was expected to grow by an
average of 7.3% and continue a trajectory growth to 9.6% by 2018. The success of
ZIMASSET depended on the stability of its assumptions which included, improved liquidity
and access to credit by key sectors of the economy such as agriculture; establishment of a
Sovereign Wealth Fund; improved revenue collection from key sectors of the economy such
as mining; increased investment in infrastructure such as energy and power development,
roads, rail, aviation, telecommunication, water and sanitation, through acceleration in the 31
implementation of Public Private Partnerships (PPPs) and other private sector driven
initiatives; increased Foreign Direct Investment (FDI) into Zimbabwe; establishment of
Special Economic Zones; continued use of the multi-currency system; effective
implementation of Value Addition policies and strategies and improved electricity and water
supply.

ZIMASSET was considered a socialist policy where everyone in the country is considered to
benefit from the policy hence its broad based. It also took into account the shrinking tax base
against recurrent expenditure, hence appropriate care was to be taken to utilize the little in the
country. Abundance of minerals in the country wee identified and the mining sector aimed to
grow and provide the much needed revenue. Other key drivers of the economy to create
employment were identified as agricultural sector; infrastructural sectors primarily focusing
on power generation; transport; tourism; ICT and enhanced support for the SMEs and
cooperative sectors.

The implementation of the policy relied on strong collaborative partnerships among

Government agencies, the private sector, citizens and other stakeholders; Total commitment
and the strong desire to meet the people’s development expectations; Undertake human
resource capacity development programmes to enhance the acquisition of requisite Skills;
Continued use of the multi-currency regime to consolidate macroeconomic stabilization;
Introduction of Special Economic Zones; Creation of special funding vehicles such as,
acceleration of the implementation of PPPs; The establishment of the Sovereign Wealth
Fund; Institutionalization of RBM across the public sector (civil service, parastatals, state
enterprises and local authorities); Value addition and beneficiation in productive sectors like
as mining, agriculture and manufacturing Rehabilitation, upgrading and development of key
infrastructure and utilities comprising power generation, roads, rail, aviation and water; and
Deliberate implementation of supportive policies in key productive economic sectors such as
agriculture, mining, manufacturing and tourism in order to quickly grow the economy.

Challenges to ZIMASSET ZIMASSET

However, this Socio-Economic development plan did not provide references to Vision 2020
nor link its development aspirations to the country’s’ vision (Matutu, 2014). There was no
doubt that the country’s vision has been abandoned therefore, reducing the country’s
development to short term myopic plans divorced from the long term vision more so
considering that publicity has been more on the economic blue prints than its implementation.
A shared national vision could have been a powerful force and rallying point for uniting
citizens. It is the contention of the analysis that ZIMASSET's capacity to turnaround the
economy is highly impaired due to its short sightedness and unclear link to the country’s
vision. The Government since independence, reduced development to five year blocks
defined by various economic blue prints at different epochs explained above. Five years
were too short to transform even the smallest economy or community in the world.

Moreover, just like any other policy, ZIMASSET development plans was be diluted by
elections which are carried every five years, wherein political survival and electoral victory
becomes the prime goal for most politicians. (Matutu, 2014). The continuous election mood
coupled with development frameworks whose cycle is attached to the election cycle was
inimical to development in a country. ZIMASSET remained trapped in the development
planning shortcomings of the country, thus limiting its capacity to attain its defined goals.

In addition ZIMASSET landed itself in a country with serious challenges on transparency,

accountability and corruption which are one of the country’s challenges. There was a
prevalence of corruption in Zimbabwe. According to the Transparency International
Corruption Perception Index (CPI), Zimbabwe’s score declined from 3.0 out of 10 in 2000 to
2.2 in 2011 (Matutu, 2014). Over the same period, Zimbabwe’s CPI ranking has fallen from
65th out of 90 countries to 154th out of 183 countries. Similarly, the World Bank’s Control of
Corruption Index ranks Zimbabwe in the 5.2 percentile, down from 15.1 in 2000 (Matutu,
2014).

Weak public accountability systems sustaining low civic engagements added to governance
challenges facing the country. In addition, institutions for public service delivery were weak
with serious capacity challenges thus a weak engine for ZIMASSET. The government could
not deliver the public goods which were the base for total economic and social development.
The governance crisis which prevailed in the country whose redress requires a time period
which is beyond the ZIMASSET implementation time frame, the capacity of the government
to deliver the ZIMASSET goals remains blurred. A new value system was required to address
the governance crisis and this is a mammoth task which is beyond frameworks and policies.

Zimbabwe was also isolated from the international community thus denying the nation
international financial support. While the rationale of sanctions upon Zimbabwe as well as
the qualification and conceptualization of these sanctions remained a contested terrain what
cannot be contested is the fact that the country was not able to access funding from
international financial institutions due to these measures and sanctions. ZIMASSET risked
being reduced to a mere piece of paper waiting to be retired in the dust bins of history due to
challenges of funding its complete implementation. Kanyenze (2014) further argues that the
ZIMASSET blueprint would not succeed due to the fact that its position is more of a party
manifesto and not necessarily a consultative and all-inclusive framework.

From the above analysis, we can conclude that ZIMASSET was far away from being a reality
in the lived realities of Zimbabwe due to key issues noted above which are related to its
successful implementation.

Transitional Stabilization Programme (TSP) (2018-2020)

This program aimed to stabilize the economy through policies such as currency reforms,
fiscal consolidation, and improving the business environment. The Transitional Stabilization
Program (TSP) implemented in Zimbabwe from 2018 to 2020 was a comprehensive
economic reform program aimed at stabilizing the country’s economy, which was facing
severe challenges such as hyperinflation, currency instability, and low productivity. The TSP
was introduced by the government of Zimbabwe under the leadership of former President
Emmerson Mnangagwa as a precursor to the broader economic reform agenda known as the
Zimbabwe Agenda for Sustainable Socio-Economic Transformation (ZimAsset). The TSP
focused on key areas such as fiscal consolidation, monetary policy reforms, structural
reforms, and addressing governance issues. It aimed to restore macroeconomic stability,
attract foreign investment, create jobs, and improve social service delivery.

The TSP aimed to achieve macroeconomic stability by controlling inflation, reducing fiscal
deficits, rebuilding international reserves, and maintaining exchange rate stability. The
program focused on implementing fiscal consolidation measures to reduce the budget deficit
from 11.1% of Gross Domestic Product (GDP) in 2017 to 4% of GDP in 2020. The
Zimbabwean government implemented various measures to achieve this objective, including
increasing tax revenue, reducing public expenditure, and managing the domestic and external
debt. Consequently, the budget deficit decreased from 11.1% of GDP in 2017 to 7.4% of
GDP in 2019, indicating progress towards achieving the target set in the TSP.

Additionally, the TSP aimed to reduce inflation from 348.6% in 2017 to below 10% by 2020.
However, the implementation of monetary policies aimed at curbing inflation resulted in a
shortage of cash in the economy, leading to the introduction of a local currency in June 2019.
The local currency’s introduction led to an increase in inflation, which peaked at 837.5% in
July 2020 before declining to 58.4% in December 2020.

The TSP aimed to rebuild international reserves to cover at least three months of imports by
2020. The Reserve Bank of Zimbabwe implemented measures aimed at promoting foreign
exchange inflows and reducing foreign exchange outflows. As a result, international reserves
increased from $397 million in 2017 to $1.1 billion in December 2020, equivalent to two
months of imports. Lastly, the TSP aimed to maintain exchange rate stability by adopting a
market-based exchange rate system. The adoption of a market-based exchange rate system
resulted in significant volatility in the exchange rate during the TSP period. However, the
exchange rate stabilized towards the end of the program, with the Zimbabwean dollar trading
at around ZWL$85 per US dollar in December 2020.

The TSP aimed to promote economic growth and development by implementing policies
aimed at improving the business environment, promoting private sector-led growth,
enhancing social protection programs, and improving infrastructure development. The
government implemented various measures aimed at improving the business environment,
including reducing red tape, simplifying investment procedures, and promoting investment
incentives. As a result, Zimbabwe’s ranking in the World Bank’s Ease of Doing Business
report improved from 159th out of 190 economies in 2018 to 140th out of 190 economies in
2020.

The TSP also aimed to promote private sector-led growth by implementing policies aimed at
enhancing competition, promoting access to finance, and improving infrastructure
development. The government implemented various measures aimed at promoting access to
finance by increasing financial inclusion and enhancing financial sector stability. However,
access to finance remains a challenge due to high interest rates and limited credit availability.
In terms of infrastructure development, the TSP aimed to increase investment in critical
infrastructure projects, including energy generation and transmission, water supply and
sanitation, transport infrastructure, and information communication technology (ICT). The
government implemented various measures aimed at enhancing investment in infrastructure
development by mobilizing domestic and external resources and promoting public-private
partnerships (PPPs). However, infrastructure development remains a challenge due to limited
resources and policy inconsistencies. Lastly, the TSP aimed to enhance social protection
programs by increasing investment in education, health care, and social safety nets. The
government implemented various measures aimed at promoting access to education and
health care services by increasing investment in these sectors. However, challenges remain
due to limited resources and competing priorities.

Challenges

One of the major weaknesses of the TSP was the inconsistency in policy implementation. The
program lacked a coherent and consistent policy framework, leading to confusion among
stakeholders and investors. This inconsistency eroded trust in the government’s ability to
effectively manage the economy, undermining the program’s objectives. The TSP also failed
to address deep-rooted macroeconomic imbalances in Zimbabwe. Issues such as high
inflation, currency volatility, and unsustainable debt levels persisted during the
implementation of the program. These imbalances created uncertainty in the economy and
limited the impact of the stabilization measures proposed under the TSP.

Another weakness of the TSP was its limited focus on structural reforms. The program
primarily relied on short-term stabilization measures without addressing fundamental
structural issues in key sectors such as agriculture, mining, and manufacturing. Without
comprehensive structural reforms, the sustainability of economic stability achieved through
the TSP remained questionable.

The TSP had adverse social impacts on vulnerable populations in Zimbabwe. The austerity
measures implemented as part of the program, such as cutting public spending and reducing
subsidies, disproportionately affected low-income households and exacerbated poverty levels.
The lack of adequate social safety nets further intensified the negative consequences of the
program on marginalized groups. Moreover, external factors, such as global economic trends
and geopolitical developments, also posed challenges to the successful implementation of the
TSP. Factors like fluctuating commodity prices, trade tensions, and limited access to
international financing constrained Zimbabwe’s ability to fully realize the objectives of the
program.

National Development Strategy 1 (NDS1) (2021-2025)

The national development strategy 1 (NDS1) for Zimbabwe spans the period from 2021 to
2025 and is a successor to the Transitional Stabilization Program (TSP). The NDS1 aims to
transform Zimbabwe into an upper-middle-income economy by 2030, with a Gross Domestic
Product (GDP) per capita of USD $3,500. The strategy outlines several priority areas,
including economic growth, social development, and good governance. It aims to achieve
sustainable economic growth through five key pillars: governance, macroeconomic stability,
infrastructure development, value addition and beneficiation, and social development.

The NDS1 prioritizes economic growth through promoting private sector-led investments,
enhancing productivity, and increasing exports. The strategy also focuses on modernizing and
developing key sectors such as agriculture, manufacturing, mining, and tourism. However,
the success of this strategy depends on several factors, including the availability of financing
for infrastructure development, the ease of doing business, and the stability of the
macroeconomic environment.

The NDS1 also recognizes the importance of social development in achieving sustainable
growth. The strategy prioritizes education, health, and social protection programs. However,
the successful implementation of these programs depends on adequate funding and efficient
service delivery. Additionally, the strategy aims to address gender inequality and promote
inclusive growth by empowering marginalized groups. Moreover, the NDS1 emphasizes the
need for good governance to attract foreign investment and ensure sustainable development.
The strategy prioritizes anti-corruption measures, strengthening public institutions, and
promoting transparency and accountability.

The successful implementation of the NDS1 has the potential to transform Zimbabwe’s
economy significantly. The strategy’s focus on economic growth through private sector-led
investments and increased productivity has the potential to create jobs and reduce poverty
levels. Additionally, the emphasis on social development has the potential to improve access
to quality education and health care services. Finally, promoting good governance can
enhance transparency and accountability in public institutions, attract foreign investment, and
promote inclusive growth.

Challenges

One of the critical weaknesses of NDS1 is the lack of a clear and detailed implementation
framework. Without a well-defined road-map outlining how the strategies and policies will
be executed, monitored, and evaluated, there is a risk of inefficiency, duplication of efforts,
and lack of accountability. Moreover, the successful implementation of any national
development strategy requires adequate financial resources. In the case of Zimbabwe, limited
fiscal space, high debt levels, and an unstable macroeconomic environment pose significant
challenges to funding the initiatives outlined in NDS1. This could lead to delays or even
failure in achieving the set targets.

Weak institutional capacity within government ministries and agencies can impede the
effective implementation of development programs. In Zimbabwe, issues such as corruption,
bureaucratic inefficiencies, and lack of technical expertise may undermine the execution of
NDS1 projects and policies. Zimbabwe has also experienced political instability in recent
years, which can create uncertainties and hinder long-term planning and policy continuity.
Political interference in developmental projects and programs could derail the progress
envisioned under NDS1.

Meaningful stakeholder engagement is crucial for the success of any development strategy.
However, NDS1 may suffer from limited consultation with key stakeholders such as civil
society organizations, private sector actors, and local communities. This lack of inclusivity
could result in policies that do not fully address the needs and priorities of all segments of
society. The sustainability of development initiatives is increasingly important globally.
NDS1 may not adequately address environmental sustainability concerns such as climate
change mitigation, natural resource management, and conservation efforts. Neglecting these
aspects could have long-term negative impacts on Zimbabwe’s development trajectory.

Conclusion

Based on the above analysis, the statement that “the development results achieved have been
sub-optimal and insufficient to spur the economy to expected levels of sustainable economic
development” is valid. Despite the implementation of various economic blueprints aimed at
promoting sustainable economic growth, employment creation, national development, and
poverty alleviation, Zimbabwe’s economy has remained fragile with high unemployment
rates and widespread poverty. While some progress has been made in certain areas such as
infrastructure development and social protection programs, challenges remain in areas such
as low productivity in agriculture and manufacturing, corruption, political instability, and
macroeconomic instability. Therefore, there is a need for sustained efforts to address these
challenges effectively to promote sustainable economic growth in Zimbabwe.
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