Assessment of Economic structural adjustment programs (ESAPs) on Zimbabwe

The paper argues that the economic structural adjustment programs (ESAPs), introduced by the World Bank and the International Monetary Fund as major international financial institutions in economic globalization, have been an inappropriate public policy for Zimbabwe. These economic reforms inflate poverty, decrease the country’s capability to develop a strong diversified domestic economy, increase the exploitation of workers through deregulation accompanied by environmental degradation. ESAPs’ devastation of the poor translates into recurrences of socio-economic crises that threaten peace and social justice and is compounded by natural calamities and the relentlessness of the HIVIAIDS pandemic. Human helping professionals like social workers are left to scramble for diminishing resources to meet the basic needs of more clients with less. To a greater extent, the country did not benefit from ESAP.

ESAP resulted in the government cutting budgets in several ministries and instituted measures towards curtailing losses of parastatals (Makamure et al, 2001). The government reduced its intervention that had been aimed at the further development of the agricultural sector, while it pushed for export-oriented production (production of tradables) (Nyagura, 1998).

Although the government’s commitment to ESAP was beyond questioning, it soon became apparent that there were problems associated with the sequencing and phasing of measures, as well as the degree to which some measures could be thoroughly or comprehensively implemented within a short period. First, there was the inescapable political sensitivity of some measures such as price decontrols, reductions in social services, levying of cost recovery measures and retrenchments. Second, there was the constant need to balance the demands of competing economic groups, which continuously lobbied for conflicting policies (Nyagura, 1998). This was particularly the case in relation to the attempt to balance the interests of workers and businesses and those of the beneficiaries of the inward-looking import substitution regime with those of the newly emerging or expanding businesses benefitting from the new policies. Finally, implementing ESAP was de-established by the worst drought in Zimbabwe’s living memory which occurred in 1991/92 resulting in a plunge in agricultural output, and an increase in government expenditures for food imports and social expenditure with negative multiplier consequences for the economy. But the government did earnestly implement many of the ESAP measures. (Nyagura, 1998).

It is clear from the foregoing that two years after the inception of ESAP, living standards in Zimbabwe had declined and that the country was still mired in an economic quagmire from which there seemed to be little hope of revival. It was also clear that the emerging problems of unemployment and underemployment were not only frictional but structural and that the Social Dimensions Fund was not only inadequate, but ill-equipped to deal with the structural problems. Overall, there was no firm evidence of a move towards restructuring along the lines expected by ESAP, except for the few cases in horticulture, furniture and tourism whose economic consequences for the economy were marginal (Nyagura, 1998).

The combined effect of falling output and increasing money supply coupled with a late credit crunch and currency depreciation not only negatively affected most of the industries which had been protected by the import-substitution regime, and which were very import dependent, but it also gravely affected the living standards of all segments of the low income population in that prices of final goods and services rose phenomenally between 1989 and 1992 with the cost of food rising by 93 per cent, clothing by 62 per cent, of amenities by 50 per cent, of medical care by 44 per cent, of transportation by 94 per cent and of education by 92 percent (Nyagura, 1998).

The major effects of ESAP on the urban informal sector may be expected to have been transmitted through the following consequences of ESAP on the overall economy: (i) An increase in the cost of inputs (ii) A decrease in the availability of inputs

(iii) A decrease in household savings

(iv) A decrease in demand for urban informal sector products

(v) A substitution effect

(vi) An increase in urban

(viii) Relaxation of foreign exchange and trade restrictions

As mentioned above, some of the ESAP policies indirectly affected mobility patterns and, in most cases, negatively, as with insecure families due to labour displacement or relocation. Such policies were explicitly related to certain sectors including, labour, transport, foodstuff prices, and agriculture. As expressed in the Government’s policy document, Zimbabwe: Framework for Economic Reform (1991-95), domestic deregulation policies were designed to see that wage labour, basic commodity pricing (including food and transport), and agricultural pricing, were all determined by market forces, instead of the government meddling in such affairs.

The effects of deregulation varied with each sector. Chipika (1998) reported that the retrenchment of workers was severe, with 32,440 formal sector jobs lost by December 1995 compared to the original target of 20,000. Cuts in public transport subsidies and decontrolling of these prices saw fewer households in Harare being able to pay for transport to work (Kanji, 1995). Several men and women had trekked to work or had arranged lifts, which cost less than the bus service, and this basically affected the lower-paid workers.

Although there are no studies on the effects of these policies on the long- distance rural public transport sector, what happened in urban areas was precisely the case in rural areas. It was common to see on national television stranded passengers during major public holidays, particularly Christmas, because most urban migrants adjusted their rural visits to once a year. Public-transport operators continued to hike fares, citing high operation costs because of the devaluation of the Zimbabwe dollar. In the rural areas, the removal of subsidies resulted in the prices of commodities such as seeds and fertilizers rising, dramatically (Chipika, 1998).

The overall effects were massive erosion of farmers’ incomes and increasingly poorer and insecure households (separated by long distance and facing risk of break-ups), whose major income sources, farming and migration, had run dry. Households, particularly lower-income migrant ones, had to devise strategies to deal with this critical situation. Among others, strategies included, considerations for re-migration for the retrenched, having single residence (temporarily close the rural residence) for those who still worked in urban areas, or seeking transfer to smaller urban areas closer to the migrant’s rural home (Chipika, 1998).

However, some of these strategies posed serious dilemmas for the families involved simply because they were also less workable because of structural constraints. For example, for those who wished to re-migrate or move to nearby smaller towns, they were faced with an economy infested with problems like increased unemployment and intensified de-industrialization (Tevera 1998). This was also a period when most foreign investors would prefer to start their businesses in the capital city, where infrastructure already existed.

The Government’s reversal of regulations that were initially aimed at ensuring job security obviously resulted in job losses. Government had estimated that the number of job losses in relation to the private sector was going to be around 20 000 (Government of Zimbabwe, 1991). But, Chipika (1998) reported that the retrenchment of workers was severe, with 32,440 formal sector jobs lost by December 1995 compared to the original target of 20,000. Furthermore, several researchers (e.g. Kadenge et al., 1992; Chakaodza, 1993 and Tevera, 1998) all argue that, already there was a high level of unemployment in Zimbabwe before ESAP, but the Government’s and the private sector’s retrenchments increased the unemployment rate to unprecedented proportions.

By the end of 1995, the government had removed all price controls except on a few basic foodstuffs. The implications of the removal of government price controls for the people of Zimbabwe, particularly low-income households, were several. Prices naturally rose and inflation. For instance, in May 1991, the Consumer Council of Zimbabwe reported that the average price increase stood at 47% (Sunday Mail, May 12, 1991) and between 1992-3, Chakaodza (1993:65) reported that inflation was close to 50%. According to Kadenge et al. (1992), the increase in prices implied the erosion of real incomes, given that there was no equal increase in nominal wages and/or incomes. Chakaodza (1993:65) argued that the removal of price controls increased costs on the working people. This, in turn, led to social problems like unprecedented levels of crime, begging by `street kids’, prostitution, the AIDS epidemic and drug abuse, as well as the impoverishment of significant strata of the urban and rural populations.

Tevera (1995) argued that after the removal of price controls, food prices and transport fares rose rapidly, and vulnerable groups in both urban and rural areas could not meet basic needs such as food, shelter, education and health. Kanji (1995:39) argues that the ‘increased prices of basic foods in this period directly resulted from the lifting of food subsidies and not the importation of food because of drought. Cuts in public transport subsidies and decontrolling of these prices saw fewer households in Harare being able to pay for transport to work. In rural areas, most peasant households blamed the soaring bus fares during the economic reforms for their sons’, daughters’ or spouses’ failure to pay them visits and hence, their lack of financial support, which is associated with visits by the migrants. Usually when they visit home, migrants bring remittances with them, which are mainly as groceries and cash.

Deregulation saw the removal of agricultural produce price controls, marketing monopolies by parastatals, and lifting of subsidies on crop inputs. Before the introduction of ESAP in 1991, agricultural marketing parastatals [e.g. Grain Marketing Board (GMB) and Cotton Marketing Board (CMB)] were the sole marketing channels through which producers were obliged by law to deliver their agricultural products. The implication of agricultural price decontrol was quite clear: agricultural incomes improved. But this improvement was not sustained in the long term because the removal of subsidies resulted in the prices of commodities such as seeds and fertilizers rising dramatically. Literature on the effects of individual characteristics on long-distance migration suggests that a larger proportion of men than women usually migrate for longer distances to urban centres as well as internationally to work for wages. This shows the less influence exerted by distance on males than on females (Chipika, 1998).

The economic structural adjustment reforms had been designed on the assumption that they would lead to resources shifting from non-tradable and protected import- competing to tradable and unprotected import-competing sectors (World Bank 1999). The contraction of the former would be more than compensated by an expansion of the latter. This was supposed to stimulate growth. That this did not occur to any significant degree was a clear paradox that can be easily explained by the failure of the government to adhere to the internal logic of the reforms (Bautista and Thomas, 1998). For example, fiscal stabilisation, which was required up-front, was never seriously attempted because the government found it politically difficult to reduce its expenditure levels. Exogenous factors, in particular the worst drought in living memory, which devastated the country very early in the reform process, served merely to aggravate the situation (Mumbengegwi and Mabugu, 2002). The incompatibilities in implementing the various elements of the programme undermined the credibility of the reforms and rendered them prone to policy reversals, as had occurred frequently (Dashwood, 2000). The vigorous pursuit of trade liberalisation while failing to reform the public sector and to reduce the budget deficit was an important source of the many difficulties that confronted the economy during ESAP (Nyagura, 1998). Thus, if promoting growth was the main purpose of ESAP, then it was a dismal failure.

In conclusion, this study shows that ESAP has further marginalized the Zimbabwean people more than they were ever before, by creating an environment that threatens peace and social justice. While the structural adjustment program, that was suggested by the WB and IMF and adopted by the Zimbabwean government might be good for western industrialized nations, it has created a devastating impact on HIV/AIDS and various natural calamities. Additionally some parallels have been drawn between the impact of economic policies on social welfare of the poor in Zimbabwe and the US. In both cases, there is a need to integrate social and economic development by addressing issues of human capital development and budget austerity versus consumption. There is a possibility of serious instability and unrest in Zimbabwe as a wave of political turmoil sweeps the country (Schillinger, 1998). The general impression held about Africa is filled with mythology, but realistically, there are smart African leaders, women, men, and children as anywhere in the world and the existence of very real problems with people still surviving in sub-Saharan Africa is not deniable (Toler, 1998). Progressive human service professionals are challenged to contribute to effective public policy formulation, implementation and evaluation in pursuit of economic, social and human rights.

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