Structural Adjustment In Zimbabwe

In 1980s, Zimbabwe’s economic growth rate averaged about 4% a year. Its exports were increasingly manufactured goods, debts were regularly repaid, food security was attained, and education and health services were greatly expanded by major increases in government spending.https://www.imf.org/external/.../afr1003.pdf

Zimbabwe implemented structural adjustment in 1991 after a long political reform that started after it gained its independence. A land reform officially began with the signing of late 1980s, as an effort to more equitably distribute land between black subsistence farmers and white Zimbabweans of European ancestry, who had traditionally enjoyed superior political and economic status. The equitable distribution of land never occurred

The government turned to the organization in an effort to “jump start economic growth” after several years of economic stagnation. The IMF’s structural adjustment programs (SAP) for Zimbabwe required reducing trade tariffs and import duties, eliminating foreign currency controls, removing protections for the manufacturing sector, deregulating the labor market, lowering the minimum wage, ending employment security, cutting the fiscal deficit, reducing the tax rate, and deregulating financial markets. But these measures brought “massive closings of companies,” leading to increased poverty and

Twenty-five percent of public workers were laid off and unemployment reached between 35% and 50% in 1997. By 1999, 68% of the population was living on less than $2 a day and with the collapse of wages many workers lived far below the poverty line. Manufacturing production “has been the main source of revenue averaging 50% since 1960, compared to an average of 25% during 1970-1990. Manufacturing output declined more than 20% between 1991 and 2000 due to high interest rates and the cost of foreign currency. The sector has stagnated since the introduction of the SAP and the loosening of import controls, and the 1990-1997 period has been characterized by “a lack of industrial development.” Zimbabwe’s real GDP per capita fell by 5.8% during 1991-1996 and total private investment fell by 9% between 1991-1996. Employment growth in manufacturing fell from 3% during 1985 -1990 to -3% in 1999 - 2000. Real wages declined by 26% between 1991-96 to the point where even those with full-time jobs were no longer guaranteed a living wage; food prices rose faster than other consumer prices, having the greatest impact on the rural poor. Farmers have been hurt by high interest rates, the removal of subsidies on agricultural inputs and a reduction of government spending on roads and transport systems. The price of fertilizer has shoot up 300% in five years