• Government said the tight monetary policies will remain up until Q1FY’2023
  • Currently, repo rates are at a global record high of 200%, while quarterly RM remains tight
  • However, there is a need for including political and economic reforms to lure investments if Zimbabwe’s economic fortunes are to be realised

Harare- On the fifth of December 2022, the government, through the Reserve Bank of Zimbabwe issued a circular about the resolutions agreed upon by the Monetary Policy Committee (MPC) in the meeting held on the second of December 2022. One of the screaming resolutions was to keep the monetary policy tight, implying tight money supply through crunching liquidity and maintaining repo rates at a global record high of 200% until the first quarter of 2023 as the government grapples to fight inflation and imminent economic collapse. 

The government has been consistent in tightening money supply to turn around the fortunes of the dire economy, which is not that bad. However, the demanding question is whether that is only enough.

Since the adoption of a hawkish monetary stance by the government, particularly this year when repo rates were increased from 60% to 80% and finally 200% while quarterly reserve money was kept tight at 5%, excess liquidity was mopped in the market with speculative borrowing curtailed resulting on inflation decreasing on a monthly basis since July 2022 to November 2022. However, the general way of living for the people continues deteriorating as the parallel market remains the yardstick for determining the $US rate against the Zimbabwe dollar as well as availing the United States dollars to the general populace. Also, infrastructural development, employment rates, political and economic freedoms remain trapped. Therefore, can a hawkish monetary approach alone be liable for saving the underfired economy?, or there is a need for an inclusive approach of all economic and political fundamentals?

Zimbabwe has a busload of problems, on all fronts, from political to socio-economic ones and the major impact which is dragging the economy into the toilet is the lack of meaningful investments, particularly from the West as the Look East Policy has dismally failed to turn-around the economic growth. However, Western investments do not come on a silver platter, they demand reforms, real reforms from the political to economic fields, which the government is adamant to heed. Given that, one can conclude that the government is focusing more on scratching where it is not itching. 

Zimbabwe’s economic environment started heading southwards in 1997 when the government forced the then RBZ governor to print ZW$50 000 for war veterans. The day, nicknamed 'Black Friday' witnessed the Zimbabwe dollar plunging to record. This was a matter of government interference within RBZ’s business and up to date, the government still holds unquenching thirst about how RBZ conduct its operations despite the constitution calling for a certain degree of its independence. interfereing with RBZ's business is the greatest danger in upsetting money supply growth as political interests especially during election times will be prioritised more than national interests. 

 However, the economic situation became worse during the land appropriation programme (Land Reform Programme), undertaken by the late former President Robert Mugabe under his ambitious and infamous Land Reform Programme. This was a real turning point in the Zimbabwean economy with the land appropriation inviting a bag of sanctions. Besides an undemocratic and unproductive Land Reform Programme, there were also a couple of reported cases of human rights violations with the new opposition party of the time, Movement for Democratic Change and the only competent independent press of the time, Daily News falling prey. 

The international community reacted negatively, particularly the USA and the United Kingdom which imposed targeted economic sanctions on the country. Since then, Zimbabwe’s heavy industry and manufacturing sectors started nosediving in terms of productivity as international investors shunned the country while re-distrubuted land remained fallow.  

Therefore, besides a sustained and consistent aggressive monetary-fiscal policies stance, there is a need for a great emphasis on reforming the political and economic arena to lure meaningful investments. 

Therefore, the pride of Zimbabwe’s economy will not be restored through hawkish monetary policies alone, but requires a complementary approach of political and economic reforms as a whole. 

The biggest cancer of Zimbabwe’s economic problem is the lack of productive and meaningful investments as I said before. Since 2002, the country’s risk index has been going up and up to date, but nothing substantial has been done to annihilate that. In 2021, the UK labelled Zimbabwe as a minefield for conducting business operations due to political toxicity and lack of rule of law. Because of the mentioned above, mismanagement of funds, corruption and lack of transparency, Zimbabwe has accrued a huge external debt of up to US$17 billion dollars which private players like ZIMCODD disputes that the figures might be even above that to circa US$19 billion dollars. Failure of government to service its debts has hurdled new lines of credit from international lenders like the World Bank, International Monetary Fund and the Paris Club. Further than that, it has also red-flagged Zimbabwe as an unconducive environment for business activities. 

The Zimbabwean government has been and is still downplaying the role of political reforms in economic revival. Zimbabwean politics remains toxic with abuse of human rights, and rampant corruption due to the lack of rule of law. The unmerciful fist of law is not applied evenly to all citizens but, it depends on which side one is politically affiliated to. Zimbabwean laws such as but not limited to the Maintenance of Peace and Order Act, Criminal Codification Law Reform Act, Freedom of Information Act, Zimbabwe Media Commission Act and Broadcasting Services Act continues to hinder freedom of expression, freedom of information, access to information and promotion of several human rights. Separation of powers continues to hinder both political and economic progress at the international level. For example, in 2019, Tourism Minister Prisca Mupfumira who disadvantaged US$95 million from NSSA and Zimbabwe’s Health Minister, Obadiah Moyo who was fired over the DRAX scandal in June 2020 were not sentenced. Both former ministers walked away scot-free. 

 The Afrobarometer Survey of 2020 showed that corruption and lack of rule of law increased by 60% between 2018 and 2019, the years in which the second republic promised a raft of measures. Law enforcement has been on a ‘catch and release’ circus with fingered corrupt officials- with no genuine arrests and imprisonments occurring.

Despite external debts, the country has another staggering debt which cannot be addressed through tightening reserve money supply and repo rates alone. There is a need for a reform approach. The latest 2023 budget statement review that total Public and Publicly Guaranteed (PPG) debt is estimated at ZWL$2.2 trillion for domestic debt by end of September 2022.

African Forum on Debt and Development (AFRODAD) and sister company, Zimbabwe Coalition on Debt and Development) (ZIMCODD), however, are of the perspective that due to lack of a formal protocol by the government when borrowing, the external debt might be around US$19 billion while independent Economist Gerald Macheka said the local debt might be around ZW$25 billion, twice government figures due to hidden debts and lack of transparency. Government has a habit of boycotting parliament approvals when borrowing and also underestimating credit figures. 

 AFRODAD was on record saying Zimbabwe does not have a debt problem but a political attitude challenge towards how it looks at expenditure. It said Zimbabwe has a consumption problem.

Zimbabwe’s Finance Minister, Professor Mthuli Ncube in 2019 in a budget statement said the country received US$194m from bilateral donors between January and September, with the bulk of the money coming from Western countries while China only funded Zimbabwe projects worth US$3.6 million. However, The Chinese embassy in Harare said its records showed that bilateral financial support to Zimbabwe was far greater, at US$136.8 million between January and September, excluded donations to vulnerable groups. Such errors call for both reforms at an economic and political level. 

Meanwhile, on the 12th of December 2022, the US Department of the Treasury issued new sanctions on four individuals and two entities for corruption and human rights abuses. The four individuals are Obey Chimuka, CEO of Fossil, Tagwirei’s wife Sandra, and Emmerson Mnangagwa Junior, President Emmerson Mnangagwa’s son. The sanctions on individuals and on Fossil Contracting, a major player in government infrastructure projects, and Fossil Agro, a supplier of state farm programmes are based on corruption and ties to Tagwirei. This reflects a need to have economic and political reforms where the distribution of resources and application of the law is not done selectively, but based on merit and competitiveness to ensure fairness and justice.  

The announcement comes one day before US President Joe Biden welcomes African presidents to the White House for a US-Africa Leaders’ Summit.

Tagwirei was sanctioned in August 2020, accused of corruption through Command Agriculture where billions of US dollars were lost through thin air. Tagwirei, one of the closest associates of President Mnangagwa is being blamed for using a combination of opaque business dealings and his ongoing relationship with President Mnangagwa to grow his business empire dramatically and rake in millions of US dollars at the expense of Zimbabweans. 

Sanctions mean these companies, and Chimuka himself will have any assets in the USA blocked. They will not be able to transact through the US banking system, which will disrupt their operations.

This dampens Zimbabwe’s efforts of re-engagement and calls for both political and economic reforms. 

Furthermore, currently, Zimbabwe is battling with an energy crisis which has the potential to downgrade the country’s 2023 projected economic growth of 4.6% as major industries and the mining sector which uses up to 40% of electricity is being affected. The underlying factor in Zimbabwe’s energy crisis is the lack of investments in the energy sector due to retrogressive economic and political policies. Kariba Power Station and Hwange Power Station are still using old dilapidated infrastructure which is incapable of improving efficiency. Zimbabwe has not well on dwelled on the impact of solar, and wind and even exhausted its coal reserves to boost energy availability. 

The agricultural, transport sector and social sectors are all malfunctioning due to a lack of investments. The health sector, transport sector and agricultural sectors are in dire condition and these require massive investments in infrastructure. However, Zimbabwe has to first address issues to do with corruption, debt arrears etcetera. 

Therefore, the government of Zimbabwe should also tilt efforts on political reforms that uphold rule of law, separation of powers and equality before the law while also considering reforms in the economic sector. For instance, the government should not dictate terms to RBZ and Finance Ministry. These two sectors should be independent of government interference so that they don’t operate to hype political agendas. 

Since the birth of the Second Republic, its efforts on image building had been waning, worse regarding engagement and re-engagement ones as measured by the removal of sanctions, Global Risk Index, World Happiness Index, ease of doing business and Corruption Index statistics.

The graph below shows the government’s latest key priority areas on engagement, re-engagement and image-building highlights 


In 2021, the government targeted to improve the image of the country, re-engage and engage the global community by improving the Good Country Index (GCI), Country Brand Ranking and improve Global Travel and Tourism, Competitiveness Ranking and Global Happiness Index. 

 The GCI which was at number 100 in 2019 out of 153 targeted number 98 in 2021. The Good Country Index measures how much countries contribute to the planet, and to the human race, through employed policies and behaviours. Second Republic’s efforts fell short as the country get the worst performance by ranking, missing the 98th targeted position to score 111 in 2021, worse than the 2019 performance. 

On the Competitiveness ranking, the country also registered a failure by ranking 127 out of 140 instead of the targeted 114. The Global Competitiveness Index assesses the microeconomic and macroeconomic foundations of national competitiveness, which is defined as the set of institutions, policies, and factors that determine the level of productivity of a country.

The GHI for Zimbabwe was also off-route in 2021. The Happiness Index measures life satisfaction, the feeling of happiness in domains such as psychological well-being, health, time balance, community, social support, education, and arts. and culture, environment, governance, material well-being, and work and these are answered by the public. The GHI set at 136 in 2021 out of 191 also fell short to hit number 148. 

The government failed to improve international engagement and re-engagement in 2021 dismally. The Country Risk Index which targeted to attain a grade CC in 2021, which was a medium risk flopped, only to score Grade E which is the highest risk political and economic situation. The baseline target was grade CCC which is a high risk while the target was CC which is a medium risk. 

The CRI quantifies the risk of a shock, such as an economic crisis or a sudden change in the political environment that would affect those conducting business within a country, territory, or special administrative region.


Besides a huge stance on monetary and aggressive fiscal policies, the government need to demonstrate adulthood in doing political reforms so that the law is not applied selectively, and that the human rights and freedoms are respected. Besides that, economic reforms are also a necessity to curb corruption. Government contracts and tenders should be awarded on merit not on affiliations. This is the only way to liberate the political and economic arena in Zimbabwe which is essential in luring lucrative investors. Energy crisis, economic crisis, employment crisis, production crisis reducing Zimbabwe to a net importer of almost all products and a donation state can be overcome when massive investments are done in key industries and when the debt is cleared. These, I repeat, requires political and economic reforms. Therefore, there is an inclusive approach of both aggressive fiscal policies and politio-economic reforms. These, begins with equal coverage of both political parties on ZBC in the upcoming 2023 harmonised elections, retaining of RBZ independence in printing money and a non-violent election.

Zimbabwe should draw more lessons from Hakainde Hichilema’s Zambia.

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