Zimbabwe’s economic challenges have reached a tipping point.
Financial mismanagement and institutional failures have left the country in dire need of innovative solutions. Over the years, attempts to stabilise the economy have faltered, leading to growing public mistrust in authorities.
However, the potential for a multi-stakeholder approach, which involves collaboration between the government, private sector, civil society, and international organisations, offers a glimmer of hope.
This strategy could rescue the economy and create much-needed jobs by focusing on key pillars that drive economic growth.
When Zimbabwe introduced Zimbabwe Gold (ZiG) in April, it was touted as a gold-backed solution pegged to international gold prices.
At the time, this move was seen as a stabilising force for the fragile economy, offering a potential pathway to rebuilding public confidence in its financial system. However, the recent devaluation of the currency, despite stable gold prices, has led to widespread scepticism. If the currency is indeed backed by gold, why has it depreciated?
This misstep has raised serious doubts about the competence of Zimbabwe’s authorities and whether they can be trusted to manage the economy.
This failure is not isolated but part of a longer history of financial mismanagement.
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Zimbabwe has experienced hyperinflation, currency collapses, and an erosion of public trust in its leadership.
Optimists believed with the introduction of a gold-backed currency, there would be a chance for authorities to finally get it right.
Sadly, devaluation has dashed those hopes.
The situation highlights the need for a new approach that brings in other stakeholders to address the nation’s pressing economic issues.
Given the depth and complexity of Zimbabwe's economic problems, no single entity can tackle them alone.
A multi-stakeholder approach that draws on the strengths of different sectors is essential.
The Global Competitiveness Index (GCI), which evaluates an economy’s performance across multiple pillars, can offer a useful framework for guiding Zimbabwe’s recovery.
The GCI assesses factors like infrastructure, labour market efficiency, innovation, and macroeconomic stability among others.
By adopting these pillars as a framework, Zimbabwe can start to create conditions necessary for sustainable economic growth.
One of the core issues that Zimbabwe must address is its institutional weaknesses.
Institutional failures have been at the heart of many of the challenges facing businesses and investors in the country.
Corruption, poor governance, and lack of transparency have undermined confidence in Zimbabwe's institutions, making it difficult to attract foreign direct investment or foster local entrepreneurship.
Strengthening institutions should be a priority, as it would create a stable environment in which businesses can operate and thrive.
Improving infrastructure is another critical step. Zimbabwe’s infrastructure has suffered from years of neglect, making it difficult for businesses to operate efficiently.
Roads are crumbling, telecommunication systems are outdated, and energy supplies are unreliable.
Investing in infrastructure not only creates jobs but also facilitates trade and boosts productivity.
A partnership between the government and mainly private sector, supported by international funding, could go a long way in revitalising Zimbabwe's infrastructure, thereby creating a foundation for broader economic growth.
Another area that requires attention is labour market efficiency.
Zimbabwe has a highly educated workforce, yet unemployment remains high due to a mismatch between available skills and job opportunities.
Addressing this issue requires collaboration between the private sector, educational institutions, and the government to create retraining programmes that equip workers with the skills needed in the modern economy.
By doing so, Zimbabwe can improve labour market efficiency and productivity, while reducing unemployment and poverty.
Innovation is also critical to driving long-term economic growth.
The private sector, particularly small and medium enterprises (SMEs), has the potential to lead the way in developing new products and services.
However, these businesses need support from both the government and international organisations.
By fostering a culture of innovation and providing funding for start-ups, Zimbabwe can begin to diversify its economy and reduce its reliance on primary industries.
This would not only create jobs but also make the economy more resilient to external shocks.
While national level reforms are essential, Zimbabwe could also benefit from developing local precinct economies. These are regional economies that focus on addressing the specific needs of their communities.
For instance, regions rich in agriculture or minerals could focus on maximising the value of these industries, while also diversifying into other sectors to create resilience.
Local governments, businesses, and community organisations can collaborate to create solutions that address the unique challenges faced by their regions.
A bottom-up approach, driven by regional collaboration, can empower communities to take control of their own development.
As local economies begin to thrive, their success could inspire broader national reforms.
The focus could shift from isolated regional successes to a national strategy that builds on the momentum generated at local level.
For example, if a regional agricultural hub succeeds in increasing productivity and creating jobs, it could serve as a model for similar initiatives across the country.
Institutional support is crucial for this bottom-up approach to succeed. While many of the challenges Zimbabwe face stem from institutional failures at national level, local economies can work together to mitigate the impact of these failures. By improving governance at local level, Zimbabwe can create more responsive institutions that better serve the needs of their communities.
Over time, this could push national institutions to become more transparent and accountable.
Zimbabwe is at a critical juncture.
The recent currency debacle has eroded what little confidence remained in the country's authorities, and the economy continues to face significant challenges.
However, a multi-stakeholder approach offers a potential way forward.
By focusing on institutional reform, infrastructure development, labour market efficiency, and innovation, Zimbabwe can begin to address the deep-rooted problems in its economy.
The coming together of stakeholders across different sectors may be the key to driving this process. While the challenges are significant, they are not insurmountable.
By focusing on practical, localised solutions, Zimbabwe can start to rebuild its economy. As local precinct economies begin to flourish, they could provide the foundation for broader national growth.
With the right institutional support and collective will, Zimbabwe can return to the path of sustainable economic development.
- Chivige is an economist. These weekly New Horizon articles, published in the Zimbabwe Independent, are coordinated by Lovemore Kadenge, an independent consultant, managing consultant of Zawale Consultants (Pvt) Ltd, past president of the Zimbabwe Economics Society and past president of the Chartered Governance & Accountancy Institute in Zimbabwe. — [email protected] or +263 772 382 852.
