Higher agricultural output and mineral export revenues have brought much needed steady growthÃ‚Â whileÃ‚Â government stabilisation policies have also played a key role. The macroeconomic outlook could improve if those policies are strengthenedÃ‚Â and consolidated by focusing on infrastructure and social needs. The government will have to tackle a rigid labour market, land tenure frictions and work to improve the business climate.
Soon after taking office in February 2009 the national unity governmentÃ‚Â published aÃ‚Â Short Term Emergency Recovery Programme (STERP) which included measures to Ã¢â‚¬Å“democratiseÃ¢â‚¬Â administrative and government processes,Ã‚Â social protectionÃ‚Â focusing on food security, health and education, and major reformÃ‚Â of the agriculture sector. The programmeÃ‚Â promised to eliminateÃ‚Â multiple farm ownership, eradicate inefficiencies,Ã‚Â improveÃ‚Â gender equality andÃ‚Â free upÃ‚Â to 2 million hectares ofÃ‚Â unused or under-used land.
A follow-up programme, STERP II, published in DecemberÃ‚Â 2009Ã‚Â set out a three-year macroeconomic and budget framework forÃ‚Â 2010-12. ThisÃ‚Â was revised in the 2011 budget whenÃ‚Â growth forecasts were upgraded and the finance minister set out hisÃ‚Â Ã¢â‚¬Å“Fair EconomyÃ¢â‚¬Â vision based on theÃ‚Â need forÃ‚Â shared development and shared transformation.
Under the multi-currency regime the central bank cannotÃ‚Â monetise fiscal deficits, compelling the authorities to adopt cash budgeting. The government relies entirely onÃ‚Â tax revenues, aid inflows, foreign borrowing and any asset sales forÃ‚Â revenues. Monetary policy is largely inert becauseÃ‚Â money supply isÃ‚Â determined through the balance-of-payments, while interest rates are set by supply and demand.Ã‚Â These constraints place the burden of government actionÃ‚Â on fiscal and structural policies.
External indebtednessÃ‚Â limits access to offshore funding, especially from multilateral agencies. At the end of 2010 the external debt was estimated at 103% of GDP of which the greater part Ã¢â‚¬â€œ 78% of GDP Ã¢â‚¬â€œ represented accumulated arrears of USDÃ‚Â 4.8 billion. The government hasÃ‚Â an arrears clearance and debt strategy which will be the basis forÃ‚Â re-engaging the international donor community.
FollowingÃ‚Â years of fiscal expansion ZimbabweÃ¢â‚¬â„¢sÃ‚Â budgeting system nowÃ‚Â requires the authorities, in the words of the finance minister, to Ã¢â‚¬Å“Eat what we killÃ¢â‚¬Â. In the two years after the national unity government was set up, the finance ministryÃ‚Â struggled to meetÃ‚Â governmentÃ‚Â financing requirements.Ã‚Â In the 2011 budget, ministriesÃ¢â‚¬â„¢ bids totalled USD 11.3 billion but budget spending, excluding USD 500 million from expected aid grants, is only USD 2.7 billion Ã¢â‚¬â€œ a 76% shortfall.
The government needs to restrain expenditure, particularlyÃ‚Â wages,Ã‚Â to maintain a fiscal balance.Ã‚Â It willÃ‚Â be necessary to maintain the cash budgeting system to underpin stability. Additional donor financing will also be required given the low revenue and grant forecast (Table 4).
Zimbabwe has not been fully payingÃ‚Â offÃ‚Â external debt. InÃ‚Â 2010 only USD 31 million was allocated to debt service out of total obligations of USD 688 million. In addition, domestic arrears to service providers at the end of 2010 amounted to USD 105 million which meant that, on an accruals basis, there was a budget deficit Ã¢â‚¬â€œ excluding grants Ã¢â‚¬â€œ of some USD 700 million, or 10.4% of GDP.
The International Monetary Fund (IMF),Ã‚Â World Bank and African Development Bank (AfDB) have advised Zimbabwe to start to tackleÃ‚Â the debt, which is unsustainable. ZimbabweÃ¢â‚¬â„¢s external debt is expected to increase toÃ‚Â USDÃ‚Â 8 billion by 2012. The government has been advisedÃ‚Â toÃ‚Â makeÃ‚Â a restructuring accordÃ‚Â withÃ‚Â creditors, starting by negotiating a programmeÃ‚Â with the IMF.Ã‚Â At present there is no international political consensus in support of Zimbabwe seeking Highly Indebted Poor Country (HIPC) status.
Fiscal space could be enlarged throughÃ‚Â public sector restructuring, includingÃ‚Â privatisations.Ã‚Â Financial reports Ã‚Â for six major state-run firms or agenciesÃ‚Â in the first half of 2010 showed that operating costs totalled 123% of revenues and staff costsÃ‚Â 22.4%.Ã‚Â In three of the concerns Ã¢â‚¬â€œÃ‚Â Agribank, the Grain Marketing Board and the National Railways of Zimbabwe Ã¢â‚¬â€œ staff costs are unsustainably high, absorbing 83% of revenue at Agribank in the first half of 2010 and 62% for the Grain Marketing Board. The figuresÃ‚Â suggest substantial staff retrenchment will be required. In January 2011,Ã‚Â the Reserve Bank of Zimbabwe shedÃ‚Â three-quarters of the institutionÃ¢â‚¬â„¢sÃ‚Â staff, about 1 600 people.Ã‚Â The government is making long-term loans to state-ownedÃ‚Â enterprises whose losses are also being funded by bank loans and through the accumulation of arrears.
Table 4: Public finances (percentage of GDP)
|Total revenue and grants
|Total expenditure and net lending (a)
|Wages and salaries
|Goods and services
a. Only major items are reported.
Source:Data from national sources; estimates (e) and projections (p) based on authorsÃ¢â‚¬â„¢ calculations.
Figures for 2010 are estimates; for 2011 and later are projections.
ZimbabweÃ¢â‚¬â„¢s monetary policy is severely limited byÃ‚Â a lack of market liquidity, low savings, volatile deposits and limited availability of credit,Ã‚Â the reduced role of the central bankÃ‚Â as a lender of last resortÃ‚Â and theÃ‚Â introduction ofÃ‚Â the multi-currency system.
The only meaningful measure of monetary aggregates is the level of bank deposits,Ã‚Â estimated at USD 2.3Ã‚Â billionÃ‚Â at the end of November 2010.Ã‚Â Interest rates are extremely highÃ‚Â and few banks are willing to lend forÃ‚Â longer than six months. In 2009, when the multi-currency regime was launched, the central bank introduced reserve requirements of 10% of liabilitiesÃ‚Â for banks and set an interest rate cap of the London Interbank Offered Rate (Libor) plus 6%. Interest rate caps were abolished at the end of 2009 and the average lending rate rose to 20%, further increasing to 31.6% by December 2010. The 10% statutory reserve ratio wasÃ‚Â abolished in 2010.
AÃ‚Â small number of blue chip corporations can borrow at nominal interest rates of between 6% and 9% a year while the vast majority of borrowers, if they can access credit at all, are forced to pay a minimum of 12-15%Ã‚Â interest, often with high fees thatÃ‚Â can push rates above 25%. The two main reasons for this situation are the imbalance between supply and demand,Ã‚Â and the interest rate mark-up reflecting perceived sovereign risk. However, one of the countryÃ¢â‚¬â„¢s largest banks is now making two-year loans at interest rates in excess of 20% a year.
The 2010 government budget made available USD 7 million for the Reserve Bank of Zimbabwe to revive its role as a lender of last resort. However, with bank deposits totalling USD 2.3 billion at the end of November 2010, the last resort pool is clearly insufficient. The bank will be restructured in 2011 with fewer employees andÃ‚Â the establishment of aÃ‚Â special purpose vehicle to take over non-core assets and liabilities. The reformed institution willÃ‚Â focus on the core business of bank supervision and regulation, acting as lender of last resort, managingÃ‚Â national paymentsÃ‚Â and providing economic research and policy advice.
Despite ZimbabweÃ¢â‚¬â„¢s much-publicisedÃ‚Â economic troubles,Ã‚Â theÃ‚Â countryÃ¢â‚¬â„¢sÃ‚Â economy is open withÃ‚Â merchandise trade (exports and imports) accounting for 86% of GDP in 2010.
Historically Zimbabwe has always been an import-dependent economy with eachÃ‚Â 1% increase in real GDP giving rise to a 1.5% increase in imports.
As a result of theÃ‚Â multi-currency regime and trade and exchange control liberalisation at the beginning of 2009, imports of goods and services grew dramatically from USD 2.4 billion in 2007 to USD 4.2 billion in 2010. TheÃ‚Â economyÃ‚Â absorbs disproportionately large amounts of finished products andÃ‚Â food and fuel imports areÃ‚Â high, as shown in Table 5. In contrast, exports of goods and services grew only 31% over the same period, and theÃ‚Â resource gap widened drastically from USD 440 million (7.7% of GDP) to USD 1.5 billion (23% of GDP).
Mineral exports accounted forÃ‚Â an estimated 64.7% of total merchandise exports in 2010. Platinum contributed almost half Ã¢â‚¬â€œ USD 596 million out of total mineral exports of USD 1.24 billion. Tobacco is the countryÃ¢â‚¬â„¢s second largest export with a share of 15.9%, followed by gold (14.5%) and diamonds (6%).
Manufactured goods account for 14.3% of the total, excluding cotton lint and ferro-alloys, which areÃ‚Â classified as agricultural and mineral exports.
South Africa is by far ZimbabweÃ¢â‚¬â„¢s largest trading partner accounting for almost two-thirds of total imports in 2009 and three-quarters of exports. In 2008 regional trade within the Southern African Development Community (SADC) and the Common Market for Eastern and Southern Africa (COMESA) accounted for 82% of exports and 86% of imports. South AfricaÃ‚Â accounted for 82% of ZimbabweÃ¢â‚¬â„¢s imports from SADC countries and bought 62% of ZimbabweÃ¢â‚¬â„¢s exports to the regional group.
The current account of the balance-of-payments deteriorated in 2009/10 as imports grewÃ‚Â more rapidly than exports and private transfers declined in 2010. Imports are forecast to stagnate in 2011/12.Ã‚Â Although further small declines in private transfers are anticipated, the current account situationÃ‚Â shouldÃ‚Â improve in line with increased exports, falling from a deficit of more than USD 1Ã‚Â billion dollars in 2010 to USD 730 million in 2012 (Table 7). MostÃ‚Â estimates of capital inflows appear conservative with foreign direct investment (FDI) averaging less than USD 100 million a year fromÃ‚Â 2010-12Ã‚Â and net portfolio investment inflows slightly higher.
Short-term capital accounts for 88% of private sector inflows but due to aÃ‚Â perception of Zimbabwe as a high-credit-risk country,Ã‚Â loans are costly as well as short-term. In the first nine months of 2010,Ã‚Â short-term loans totalled USD 403 million while long-term loans were only USD 55 million.
Table 8 shows that the capital account is expected to improve markedly from a net outflow ofÃ‚Â USD 557 million in 2009 to net inflows averaging USD 510 million annually overÃ‚Â 2010-12.
External payments forecasts areÃ‚Â problematic, partly reflecting global economic uncertainty. Export projections do not take into account the potentially explosive growth of diamond exports that many analysts believe will be achieved. Capital flow projections do not take into account the steep increase in planned investment primarily in mining and infrastructure, especially electricity, which will have to be funded offshore.
Table 5: Current account (percentage of GDP)
|Exports of goods (f.o.b.)
|Imports of goods (f.o.b.)
|Current account balance
Source:Data from national sources; estimates (e) and projections (p) based on authorsÃ¢â‚¬â„¢ calculations.
Figures for 2010 are estimates; for 2011 and later are projections.
Figure 2: Stock of total external debt (percentage of GDP) and debt service (percentage of exports of goods and services)
Source:IMF and local authoritiesÃ¢â‚¬â„¢ data; estimatesÃ‚Â and projectionsÃ‚Â based on authorsÃ¢â‚¬â„¢ calculations.
Figures for 2010 are estimates; for 2011 and later are projections.
Private Sector Development
Ten years ofÃ‚Â chronic inflation, hyperinflation and underinvestment has leftÃ‚Â Zimbabwe with an uncompetitive economy. The country was ranked fourth from the bottom out ofÃ‚Â 139 countries in the World Economic ForumÃ¢â‚¬â„¢s 2010-11 Global Competitiveness Index. For this reason, a weak US dollarÃ‚Â has its allure since the dollar price of ZimbabweÃ¢â‚¬â„¢s commodity exports would rise while manufactured products would become more attractive regionally and domestically. The downside would be increased prices for key imports, especially fuel and food, which are mainly paid forÃ‚Â in South African rand.
With imported goodsÃ‚Â readily available, Zimbabwean industrialists cannotÃ‚Â pass on cost increases toÃ‚Â customers as they could in the past. Similarly, exporters cannotÃ‚Â rely on a weak exchange rate to ensureÃ‚Â competitiveness abroad. As Zimbabwe is not in a position to adjust its exchange rate, restoring and enhancing competitiveness will depend onÃ‚Â price restraint,Ã‚Â productivity gains,Ã‚Â investment in infrastructure and micro-level business reforms designed to reduce businessÃ‚Â costs.
Reforms are urgent. In the World BankÃ¢â‚¬â„¢s 2011Ã‚Â Doing BusinessÃ‚Â report, Zimbabwe was ranked 157th out ofÃ‚Â 183 countries. Among regional competitors, onlyÃ‚Â Angola (163rd) andÃ‚Â Democratic Republic of Congo (175th) fared worse.
In 2010, Zimbabwe implemented two importantÃ‚Â business reforms. First, to ease theÃ‚Â opening of businesses, itÃ‚Â reduced registration fees and speeded up the name search process, and company and tax registration. Second, the corporate income tax rate was lowered to 25% from 30%.Ã‚Â However, there is scope for more change,Ã‚Â especiallyÃ‚Â regulations on cross-border trade,Ã‚Â construction permits and starting and closing a business. These are all areas where Zimbabwe had a low ranking in theÃ‚Â Doing BusinessÃ‚Â report.
The Zimbabwe Investment Authority (ZIA) was relaunchedÃ‚Â in December 2010 as a One Stop Shop with the aim of streamlining and harmonising the handling of investment proposals. Before,Ã‚Â the processing of an investment licence could take up toÃ‚Â 49 days.
The ZIA approved 124 projects in the first nine months of 2010, up fromÃ‚Â 73 in the same period ofÃ‚Â 2009.Ã‚Â Approvals for the nine months of 2010 were valued at USD 387 million, with USD 258 million going to the construction industry, followed by USD 83 million for mining.
A number of major mining development or expansion projects were also announced in 2010:
Ã¢â‚¬Â¢Ã‚Â Rio Tinto Zimbabwe said it would increase annual gold production nine-fold to 112 000 ouncesÃ‚Â by opening an open-cast mine at the Cam & Motor Mine in Eiffel Flats in the Mashonaland West province of the country.Ã‚Â It has a resource of 10 million tonnes of ore which should yield 320 000 ounces of gold. The company estimatesÃ‚Â there are at leastÃ‚Â 16 million tonnes more of gold-bearing ore which would yield 500 000 ounces. The plan is to produce 70 000 ounces of goldÃ‚Â annually for 12 years. It also plans to expand production at the Renco gold mine to produce 42 000 ounces a year.
Ã¢â‚¬Â¢Ã‚Â South African-owned Metallon Gold Ã¢â‚¬â€œ ZimbabweÃ¢â‚¬â„¢sÃ‚Â largest gold producer Ã¢â‚¬â€œ plans to expandÃ‚Â annual production to around 1 million ouncesÃ‚Â by 2015.
Ã¢â‚¬Â¢Ã‚Â Rio TintoÃ‚Â Zimbabwe is undertaking a feasibility study with South African investors for a USD 3 billion thermal power station in central Zimbabwe that will draw on its 1.3 billion tonnes of coal reserves at Rio ZimbabweÃ¢â‚¬â„¢s Gokwe coalfield. TheÃ‚Â power station would produce 1Ã‚Â 400 mega watts (MW) of electricity starting in 2014.
Ã¢â‚¬Â¢ Murowa Diamonds, owned by Rio Tinto plc, is working on a USD 300 million expansionÃ‚Â to increase output six-fold to 1.8 million carats of gem-quality diamonds annually. The company produced 124 000 carats in 2010 down from 263 000 carats in 2008.
Ã¢â‚¬Â¢ Zimplats Holdings, a subsidiary of South AfricaÃ¢â‚¬â„¢s Impala Platinum, is considering building a metals refineryÃ‚Â at a cost of some USD 2 billion. Zimbabwe has the worldÃ¢â‚¬â„¢s second-largest known reserves of platinum after South Africa andÃ‚Â Zimplats had previously announced plans for a USD 500 million expansion of its Ngezi mine near Chegutu in central Zimbabwe. This increased annual platinum output to 270 000 ounces from 180 000 ounces, taking its total investment in Zimbabwe to over USD 1 billion.
Ã¢â‚¬Â¢ In November 2010, Anglo Platinum opened its Unki platinum mine which will have annual output from 2011 of 60 000 ounces.
Other Recent Developments
There areÃ‚Â 25 banking institutions, 16 asset management companies and 107 microfinance and moneylending institutions operating underÃ‚Â central bank supervision. By September 2010, 15 of theÃ‚Â banks were fully compliant withÃ‚Â minimum paid-up equity capital requirements (USD 12.5 million for commercial banks) that took effect 31Ã‚Â MarchÃ‚Â 2010. The compliance deadlineÃ‚Â was subsequently extended to 31Ã‚Â DecemberÃ‚Â 2010 and a further extension is likely. TheÃ‚Â non-compliantÃ‚Â institutions areÃ‚Â smaller, fringe players and the central bank is confident that the system is Ã¢â‚¬Å“soundÃ¢â‚¬Â withÃ‚Â no systemic threats to financial sector stability. Bank lending is constrained by the absence of a lender of last resort and theÃ‚Â lack of an active interbank market where banks canÃ‚Â coverÃ‚Â liquid shortfalls, because there are no acceptable collateral instruments.Ã‚Â There is neither an active money market nor a gilts market (i.e.Ã‚Â government or public sector bonds) though there has been some revival in newÃ‚Â corporate bonds.
During 2010, loans and advances increased 122% to USD 1.53 billion and the advance-deposit ratio increased from 50% at the start of the year to 66%, compared with regional norms of 70%-90%. The ratio of non-performing loans increased in the first half of 2010 from 1.8% to 3.2%.
The financial sector, especially banking, faces two main challenges. First, although mostÃ‚Â banks have metÃ‚Â minimum capital requirements, bank capital in Zimbabwe is largely held in real estate. It is not easily accessibleÃ‚Â andÃ‚Â atÃ‚Â risk fromÃ‚Â property market value fluctuations. InÃ‚Â 2010 this forced some banks to write down their capital.Ã‚Â The second challenge relates to the absence of a credit bureau. Household debt in theÃ‚Â form of credit provided by retailers and distributors to buyÃ‚Â consumer durables and motor vehicles has mushroomed.Ã‚Â ThisÃ‚Â could pose a threat to market stability unless carefully monitored. Discussions are in progress to establish a credit bureau.
The Zimbabwe Stock Exchange (ZSE), once one of the largest in sub-Saharan Africa after South Africa and Nigeria, closedÃ‚Â at the height of the hyperinflation crisis in November 2008. It resumed operations in February 2009 with prices listed in US dollars for the first time and new stock market indices (February 2009 = 100). At present, 78Ã‚Â companies are listed, though three are suspended. Of the actively quoted companies, 72 are industrial shares and three mining counters. The ZSE index of industrial share prices peaked at 155 in October 2009. As a result of low domestic savings, most of which were wiped out by hyperinflation, trading activity is low. However, since the exchange reopened, foreign investors have become active. Initial uncertainty overÃ‚Â indigenisation regulations introduced in February 2010 led to a selloff of Zimbabwe equities and aÃ‚Â steep fall of the industrials index. ItÃ‚Â recovered to end 2010 at aboutÃ‚Â 150, virtually unchanged on the year.
Financing problems lie at the heart of ZimbabweÃ¢â‚¬â„¢s infrastructure deficit inÃ‚Â transport, power, water and telecommunications. More than 80% of the 88 100 kilometers of roadsÃ‚Â are in need of rehabilitation. The railway network of Zimbabwe has also seen a dramatic decline. The amount of freight carried dropped from more than 14 million tons in 1990 to 9.4 million tons in 2000 andÃ‚Â 3.8 million tons in 2008.
Water and sanitation equipmentÃ‚Â across the country is badly dilapidated.
Infrastructure rehabilitation is therefore a government priorityÃ‚Â and forms one of the pillars of the 2011 budget. Major renovation ofÃ‚Â roads, bridges, rail and airportsÃ‚Â is planned. Donors haveÃ‚Â pledged additional support for selectedÃ‚Â rehabilitation projects in the water, sanitation and energy sectors.
During the economic crisis there wasÃ‚Â minimal investment inÃ‚Â utilitiesÃ‚Â and inÃ‚Â 2010, Zimbabwe, with a population of 12 million people, had less generating capacityÃ‚Â than it did when it became independent inÃ‚Â 1980 when there were only 7 million people.
At the end of 2010, domestic power generation was 1 200 MWÃ‚Â againstÃ‚Â demand of 2 200 MW andÃ‚Â installed capacity of 1 950 MW. The Kariba South power station on the Zambezi River was generating 650 MW againstÃ‚Â installed capacity of 750 MW, while the Hwange thermal power station was providing 550 MW, well below its capacity of 920 MW. In 2011, generation is expected to increase to 1 650 MW. This will be achieved through an expansion of power generation at Hwange to 780 MW, restoring electricity production at Kariba to full capacity (750 MW) and another 120 MW from the three small thermal stations.
NewÃ‚Â power projects include the Lupane gas-fired plant withÃ‚Â capacity of 250 MW, expansion of Hwange to generate an additional 600 MW, a 300 MW expansion at KaribaÃ‚Â and the Gokwe North thermal station which would produce 1Ã‚Â 400 MW. Implementation ofÃ‚Â these projects would double installed capacity to 3 950 MW at an estimated cost of USD 2.4 billion.
Electricity is sold at a loss. Generation/distribution costs are 9.5 US cents per kilowatt hour (kwh) and the national average tariff is 7.53 cents perÃ‚Â kwh. The regional averageÃ‚Â tariff was 8.8 cents a unit in 2009. However, the loss is understated asÃ‚Â various maintenance activities are not being undertaken. Zimbabwe Electricity Supply Authority (ZESA) owes some USD 300 million to suppliers at home and in neighbouring countries, but isÃ‚Â owedÃ‚Â about USD 360 million by household and industrial/commercial consumers,Ã‚Â including mining companies. It believes it can collect the bulk of the arrears.
Total sales in 2009 came to 7 050 gigawatts Ã¢â‚¬â€œ about a third below the peak of 2005. Consumption is forecast to grow by an average ofÃ‚Â more than 8% a yearÃ‚Â up toÃ‚Â 2020. ThereafterÃ‚Â growth is expected to decline to just over 3% annually until 2030 whenÃ‚Â consumption is forecast to have trebled from current levelsÃ‚Â Ã¢â‚¬â€œ though be just over double the 2005Ã‚Â peak.
Bringing down theÃ‚Â infrastructure barriersÃ‚Â is a priority for sustainable rapid economic recovery and growth.
South Africa, one of the worldÃ¢â‚¬â„¢s key emerging powers, is by far ZimbabweÃ¢â‚¬â„¢s largestÃ‚Â trade partner,Ã‚Â dominatingÃ‚Â imports and exportsÃ‚Â andÃ‚Â traditionally beingÃ‚Â the largest foreign investor. It is particularly visible in gold and platinum mining.
Metallon Gold of South Africa is the countryÃ¢â‚¬â„¢s largest gold producer and all threeÃ‚Â platinum producers and exporters are South African-controlled.Ã‚Â TheÃ‚Â neighbouring nationÃ‚Â isÃ‚Â becoming increasingly prominent in the retail sector,Ã‚Â the Pick Ã¢â‚¬ËœN Pay group having recently increased its stake in TM Supermarkets, one of ZimbabweÃ¢â‚¬â„¢sÃ‚Â two main supermarket chains,Ã‚Â to 49%.Ã‚Â Leading South African retailersÃ‚Â Edgars, Truworths, Woolworths and Shoprite are also prominent. Some haveÃ‚Â recently announced expansion plans.
China has become a more important trade partner but its market share is still modest, with 4% of imports and 3.4% of exports.Ã‚Â India accounts forÃ‚Â 0.85% of imports andÃ‚Â 1.4% of exports while the United Arab Emirates provide 0.6% of imports and buy 1.2% of ZimbabweÃ¢â‚¬â„¢s exports.
China hasÃ‚Â provided substantial financial support includingÃ‚Â USD 200 million in credit from China Export-Import Bank to finance agro-inputs and USD 60 million for a local company, Farmers World, in 2007.Ã‚Â State-owned industries are increasingly reliant on Chinese funding with loans and credits worth more than USD 330 million between 2002 and 2007. ChinaÃ¢â‚¬â„¢s largest direct investment was the takeover of theÃ‚Â main ferrochrome exporter Zimasco by Sinosteel, while there are a large number of small- and medium-sized Chinese-owned businessesÃ‚Â in mining, retail, and cotton and tobacco trading.
India isÃ‚Â a relatively minor player but along with Russia has plans to expand in the diamond sector. Essar African Holdings,Ã‚Â Indian owned but registered in Mauritius,Ã‚Â bought a controlling stake in the state-owned Zimbabwe Iron and Steel Company (Zisco) at the end of 2010.
The 2010 UN Development Programme (UNDP) Human Development ReportÃ‚Â ranked ZimbabweÃ‚Â last out of 169 countries, though it did notÃ‚Â haveÃ‚Â accurate data for mostÃ‚Â social indicators. Zimbabwe,Ã‚Â Democratic Republic of Congo and Zambia were the threeÃ‚Â nations where the Human Development IndexÃ‚Â is lower now than in 1970.Ã‚Â ZimbabweÃ¢â‚¬â„¢sÃ‚Â score peaked in 1990 but now it isÃ‚Â little more than a third of the average for sub-Saharan Africa.
Zimbabwe has a very high Gini inequality coefficient of 50.1 andÃ‚Â poverty levels areÃ‚Â high. According to the UNDP report,Ã‚Â not only is Zimbabwe one of the worldÃ¢â‚¬â„¢s poorest countries,Ã‚Â it is 25% poorer than it was in 1970.
According to the Zimbabwe Status Report on the Millennium Development Goals (MDGs) 2010 produced by the UNDP, 72% of the population was living below the poverty line in 2003 and the proportion is estimated to have since increased to above 80%. There are no accurate employment figures but theÃ‚Â status report estimatesÃ‚Â 80% of the population are unemployed.
Not all social indicators deteriorated during theÃ‚Â downturn. Primary school attendance was estimated atÃ‚Â 91%. And while this isÃ‚Â well below the 2002 peak of 98.5%,Ã‚Â it is still a very high figure for a low income country. There has been a gradual decline in HIV and AIDS. TheÃ‚Â estimatedÃ‚Â prevalence among thoseÃ‚Â aged above 15Ã‚Â fell fromÃ‚Â 23.7%Ã‚Â in 2001 to 13.7% by 2009.
Nonetheless, in addition to economic stabilisation, significant efforts are required to ensure progressÃ‚Â towards meeting the MDGs by the target date of 2015.