On 18 April 1980, the
Republic of Zimbabwe was born from the former British colony of Southern Rhodesia. The Rhodesian Dollar was replaced by the Zimbabwe dollar at par value. When Zimbabwe gained independence, the Zimbabwean dollar was
more valuable than the US dollar at the official exchange rates, however, this
value did not reflect reality, and its black market value was lower. In
its early years, Zimbabwe experienced strong growth and development. Wheat
production for non-drought years was proportionally higher than in the past.
The tobacco industry was thriving as well. Economic indicators for the country
were strong.
From
1991 to 1996, the Zimbabwean Zanu-PF government
of president Robert Mugabe embarked on an
Economic Structural Adjustment Programme (ESAP), designed by the IMF and the World Bank, that had serious negative effects on Zimbabwe's economy.
In
the late 1990s, the government instituted land reforms intended to evict
white landowners and place their holdings in the hands of black farmers.
However, many of these "farmers" had no experience or training in
farming.
From
1999 to 2009, the country experienced a sharp drop in food production and in
all other sectors. The banking sector also collapsed, with farmers unable to
obtain loans for capital development. Food output capacity fell 45%,
manufacturing output 29% in 2005, 26% in 2006 and 28% in 2007, and unemployment
rose to 80%. Life expectancy dropped.
https://en.wikipedia.org/wiki/Hyperinflation_in_Zimbabwe
Zimbabwe's economy depends
heavily on its mining and agriculture sectors. Following a decade of
contraction from 1998 to 2008, the economy recorded real growth of more than
10% per year in the period 2010-13, before slowing to roughly 3% in 2014 due to
poor harvests, low diamond revenues, and decreased investment.
Lower mineral prices,
infrastructure and regulatory deficiencies, a poor investment climate, a large
public and external debt burden, and extremely high government wage expenses
impede the country’s economic performance. Until early 2009, the Reserve Bank
of Zimbabwe (RBZ) routinely printed money to fund the budget deficit, causing
hyperinflation.
Dollarization in early 2009
- which allowed currencies such as the Botswana pula, the South Africa rand,
and the US dollar to be used locally - ended hyperinflation and reduced
inflation below 10% per year. The RBZ introduced bond coins denominated in 1,
5, 10, and 25 cent increments on a par with the US dollar in December 2014,
more than five years after the Zimbabwe dollar was taken out of circulation.
In January 2015, as part of
the government’s effort to boost trade and attract foreign investment, the RBZ
announced that the Chinese renmimbi, Indian rupee, Australian dollar, and
Japanese yen would be accepted as legal tender in Zimbabwe.
Zimbabwe’s government
entered a second Staff Monitored Program with the IMF in 2014 and undertook
other measures to reengage with international financial institutions. Foreign
and domestic investment continues to be hindered by the lack of clarity
regarding the government’s Indigenization and Economic Empowerment Act. In 2015
the depreciation of the South African rand against the US dollar has led to
deflation in Zimbabwe as prices for South African imports decline while the
costs of domestic production in US dollars remains stable.
http://www.theodora.com/wfbcurrent/zimbabwe/zimbabwe_economy.html
Comments
Most
former colonies have had problems adjusting to the end of “colonialism”. It
creates a void and selecting leaders is a “crap shoot”. Communists were quick
to take over African countries and were elected promising “free stuff”. This
never works out well. Muslim terror
groups have also infiltrated African countries and are struggling to exist.
The
correct answer for new African governments is to expand property rights and
economic freedom and adhere to the rule of law and not overspend their tax
dollars.
Norb
Leahy, Dunwoody GA Tea Party Leader
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