Economy of Zimbabwe

By | May 18, 2022

According to businesscarriers, Zimbabwe is one of the most developed in Africa, but since 1999 it has been in a state of crisis, marked by a decline in production in almost all industries. In 2000, GDP fell by 4.2%, in 2001 by another 7.3%, and in 2002 a further fall of 5-10% was expected. In 2001, GDP at consumer prices was estimated at $28 billion, i.e. $2,450 per capita. Sectoral structure of GDP (2001,%): agriculture 15.5, industry 19.3, services 65.2. Structure of GDP by employment (%): agriculture 66, services 25, industry 9.

Economically active population 5.5 million people. (2000, estimate). Unemployment reached in 1999 a dangerous level for the country’s social security – 50%. After the seizure of farms, by May 2002, 835,000 hired agricultural workers (together with family members) lost their jobs, many enterprises closed in cities, and only in the 1st half. 2000, according to official figures, 50 thousand jobs were lost.

In 2001 unemployment rose to 60% (estimate). The government set inflation at 55.9% in 2000, 71.9% in 2001. In May 2002 it reached 122.5%.

In 2000-01, there was a sharp drop in production in all industries, especially in mining and in those manufacturing branches that are directly connected with the processing of agricultural products and mineral raw materials. In 2001, the decline in the manufacturing industry amounted to 10.1% (production of tobacco products and beer fell by 32.2%, textiles and yarn – by 18.1%, sugar – by 4.8%). The manufacturing industry is represented by smelting and processing plants for the production of metals, factories of metal products (copper cables, ferrochrome parts, etc.), as well as light and food industries. Before the crisis (1995-98), the production of the most significant products in terms of value was (on average per year, thousand tons): sugar – 340, coke – 450, cement – 950, pig iron – 210, ferrochromium – 290, steel – 212, refined copper – 20 tons,

In 2000–01, dozens of companies ceased their activities in the manufacturing industry, and several thousand companies (2,820 firms in the first half of 2000 alone) turned out to be insolvent. The textile industry was particularly hard hit, unable to compete with goods from South Africa; most textile factories have closed. Nevertheless, the consequences of the crisis for the manufacturing industry turned out to be less severe than for agriculture, and in 2001 it pushed it to the 2nd place in terms of its contribution to GDP (their share in GDP became 15.7 and 15.5%, respectively).

The share of the mining industry in GDP in 2001 was 3.6%, and the decline in production was estimated at 6.8%. More than 40 different minerals are mined in Zimbabwe. In 2000, production at many mines fell sharply due to shortages of wagons, power outages and amounted to: gold – 22 thousand tons, nickel ore – 6 million tons (in 1998 – 12.9 million), chromites – 668 thousand tons, magnesite – 4 million tons, iron ore – 438 thousand tons, silver – 3 tons (in 1998 – 6.7 tons), asbestos – 152 thousand tons, coal – 4 million tons (in 1998 – 5.5 million tons). The highest income was brought by gold mining. In 2000, it gave the country 44% of all foreign exchange earnings. This is a consequence of the fall in tobacco exports, and not evidence of prosperity in the gold mining industry. In recent decades, the industry has experienced difficult times due to low world prices. In the 1990s several mines closed and some became unprofitable, but they acted because the cessation of mining would lead to their flooding. The increase in world gold prices due to the events in Iraq can improve this industry. Nickel occupies the second place in terms of production cost, the price of which rose in 1999, but nickel mines have suffered greatly due to the crisis. Asbestos mining is falling due to the discovery of its carcinogenic properties. The extraction of copper ore (3 thousand tons in terms of metal content) almost stopped due to low world prices.

In 2001, with a general decline in the extraction of mineral raw materials, the extraction of coal increased (5.2 million tons), but the extraction of asbestos (93.9 thousand tons) and chromium ore (554.7 thousand tons) decreased.

Very high hopes are associated with the exploitation of rich platinum deposits. The construction of 4 mines is underway or planned, two of which were supposed to start operating in 2001-02. The commissioning of the mine (180 thousand tons of ore per month) and the processing plant in Hartley will bring Zimbabwe to the 2nd place (after South Africa) in the world in terms of platinum production, while the Russian Federation will move to the 3rd place. However, due to the crisis of 2000–01, construction work on platinum deposits was stopped.

Zimbabwe consumes 800 thousand tons of oil products per year. Oil and oil products account for approx. 10% of all imports. Oil is supplied by pipeline from the Mozambique port of Beira and in tanks by rail from South Africa. Electricity generated by coal-fired CHP plants is not enough to power the country and Zimbabwe has to import it from Zambia (Hydro Caribbean) and Mozambique (Hydro Cabora Bossa). Of the 10.5 billion kWh of energy used in the country in 2000, 4.5 billion came from imports. In con. 1990s the construction of two hydroelectric power plants on the Zambezi River, as well as new thermal power plants, began. The largest of these will be the hydropower plant at Batoka Gorja, which was scheduled to start up in 2003, and the thermal power plant at Gokwa (1,400 MW), due to start operation in 2006. Funding was provided mainly by the World Bank. In 2000, when the government stopped paying debts to the World Bank.

Economy of Zimbabwe