Zimbabwe economy bounces back
Prime Minister Robert Mugabe's current trip to the United States, where he will make a strong pitch for greater economic assistance from Washington, could not have come at a more opportune time.
Business confidence in Zimbabwe (formerly Rhodesia) has recovered strongly from initial post-election jitters in early March. At that time, the prospect of Robert Mugabe and his party coming to power was seen as a setback for this nation's Western-oriented, capitalist economy.
But now, nearly six months later, no less an indicator of business confidence than the Zimbabwe Stock Exchange index of industrial share prices has topped the 400 mark -- its highest point to date and significantly above its level when Mr. Mugabe swept to his electoral victory.
The greatest single reason for the resurgence of business confidence is Mr. Mugabe himself, now prime minister. He has reiterated his Zimbabwe African National Union- Patriotic Front party's long-term commitment to socialism but at the same time repeatedly has ruled out nationalization or expropriation of existing business ventures.
The prime minister currently is in the United States, where he addressed the United Nations General Assembly on Aug. 26, emphasizing Zimbabwe's need for major international economic aid. Mr. Mugabe also is expected to meet with President Carter in Washington later in his trip. He has made it clear he intends to ask for a significant increase in US aid for his country.
Here at home, Mr. Mugabe's philosophy has evolved toward a policy of joint ventures between the state and the private sector, though the precise manner in which this will be implemented remains to be seen. The premier says that several private business interests already have offered the government participation in their ventures, but the initial socialist thrust will be largely restricted, he says, to the agricultural sector, where collective farms, state farms, and communal agricultural programs are envisaged.
The government is expected shortly to announce plans for joint ventures in the mining industry, but the existing plan apparently is to confine such ventures to new companies investing in Zimbabwe for the first time and possibly also to new ventures by existing mining groups.
Mr. Mugabe has not gone soft on the socialist pledges and dogma outlined in the party manifesto. He has accepted two realities, however. First, the strong , vibrant private sector of the Zimbabwe economy is doing very well at the present time and any tampering with it could have adverse economic, social, and political implications.
At present, he is anxious to let well-enough alone, leaving socialist policies to be introduced in the form of minimum wages legislation and a so-called "worker's charter" specifing conditions of work for laborers. In addition, workers' councils are encouraged as a means of improving management-labor relationships.
Second, Zimbabwe has a severe balance- of-payments problem and needs foreign aid and investment from Western countries. For that reason, Mr. Mugabe is soft-pedaling the socialist option for the time being -- while denying that he has deserted the party manifesto which advocates the establishment of a socialist economy and a socialist state.
By starting late on the development trail, so to speak, Zimbabwe has learned from the mistakes of others. The government's immediate economic objective is to beef up the agricultural sector, having correctly diagnosed that the country's political and economic difficulties cannot be separated from the state of the agricultural industry.
Although agriculture is responsible for only about 15 percent of Zimbabwe's gross domestic product, as against 35 percent for mining and manufacturing, the fact is that when agriculture expands rapidly so, too, does the rest of the economy. But this does not follow for either manufacturing or mining, both of which have grown rapidly in some recent years without propelling the economy forward.
Moreover, the unhappy plight of many third-world economies can be directly linked to neglect of their farming sectors.
Much of the aid already promised Zimbabwe -- estimated around $350 million over the next three years -- has been earmarked for agriculture. Peasant farming programs that will involve land redistribution and resettlement are the government's top priority.
With an estimated 150,000 job-seekers coming onto the market each year, the government is anxious to keep people on the land rather than have them flocking to the towns to seek nonexistent jobs and thereby create shanty towns and urban unemployment.
But, Mr. Mugabe still is walking a tightrope. One indication is the need to retain white farming skills while shifting the balance in favor of the black tribal peasant producer. Last year, commercial farmers, almost all of them white, produced 88 percent of the country's agricultural output. This expertise is vital to the economy's future.
In 1980, very little growth in agriculture is expected, due to the poor rains last year and the fact that the guerrilla war did not wind down until February. But in 1981, commercial output is set to rise by at least 15 percent and peasant output by as much as 40 percent as villagers return to their traditional pursuits now that peace has been restored.
The main stimulus to the economy this year will come from mining -- with an output up more than 30 percent -- and manufacturing, where production already has risen 15 percent in the first half of the year. The economy is in the throes of a domestic consumption boom, with retail sales running more than 20 percent ahead of last year's sales, as well as an export boom. Exports have increased more than 50 percent so far this year and during 1980 as a whole are likely to show a rise of some 40 percent.
This is not to suggest that there are no economic problems. Skilled manpower is a key problem, with Zimbabwe having lost more than 7,000 whites so far this year. The signs are that the pace is accelerating and that the loss for 1980 will approximate 15,000.
Transport is another bottleneck, with imports and exports being slowed by congestion on the neighboring South African rail and road system on which Zimbabwe is almost totally reliant for its external trade. Lack of foreign exchange is a persistent complaint raised by industrialists who say they cannot get enough foreign currency to finance imports of capital equipment and materials.
Finally, business confidence, although markedly healthier than two months ago , is still very fragile. Criticism of the fairness of the independence election that brought Mr. Mugabe to power by Lt. Gen. Peter Walls, the nation's former top military commander, and the arrest of Cabinet minister Edgar Tekere on murder charges, have left their mark on business morale.