Economic Crisis In The Zimbabwean Crisis

CHAPTER ONE

INTRODUCTION

This dissertation analyzes the nature of the Zimbabwean crisis from independence in 1980 to 2009 when dollarization took place in the country. This study assess the numerous reasons for the collapse in the country’s economy. The newly independent country of Zimbabwe was heavily funded by international donor aid in the first decade. In that first decade of independence international donors played a major role in determining the course of development, by funding a variety of development projects in areas such as health care, education, infrastructure and agriculture.

In the second decade of independence, these donor agencies were responsible in forcing the implementation of the structural adjustment programme. The purpose of the economic restructuring was solely meant to recover the money lent to Zimbabwe by these international financial institutions after independence. Some of the money owed by the country in fact dated back to the days before independence. This restructuring was the beginning of the economic collapse in Zimbabwe which was latter known as the Zimbabwean crisis.

The Zimbabwean crisis was not caused by any single event, but instead by a series of events which left the country on the brink of disaster. Zimbabwe was to suffer from hyperinflation, which was the highest in the world between 2007 and 2008, a failed economy in which the productive sectors of agriculture and mining were shrinking and the local population was left with less spending money. Although this crisis was mainly caused by the economic structuring, other factors such as the economic policies introduced by President Mugabe, economic mismanagement and the political problems with the opposition parties all contributed to m...

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...group which includes the commanders of the army, air force, police, prisons services and the infamous Central Intelligence Organization (CIO) have continued to benefit from the chaotic situation in Zimbabwe.

At the beginning of 2009 the main opposition leader Morgan Tsvangirai agreed to join a government of national unity, but it remains to be seen what tangible impact this will have on an economy that has been in nose-dive for more than a decade. There are still issues that have to be urgently confronted, including the need for real economic and democratic transformation and above all rooting out the corruption and economic mismanagement that have become endemic to the country. For example, economic mismanagement, especially meddling by the Reserve Bank of Zimbabwe fuelled the collapse of the local currency, which had become virtually useless by the end of 2008.