SAP will hit the poor hardest

Independence in 1980 marked the birth of a youthful, promising Zimbabwe emerging from a state with a shattered, war-torn and sanctioned economy enmeshed in all sorts of disparities -economic, social and political- which needed redress.

As a first step to redress the situation, the government adopted a policy of growth with equity in 1981 and then the transitional national development plan from 1982 to 1985 and the first five-year national development plan from 1986 to 1990.

Both plans set targets for growth with emphasis on development and moulding of a socialist, democratic egalitarian society but both plans failed to attract much needed investment because people were reluctant to invest under the socialist rhetoric. As a result it was only non-productive sectors -education, health and other social services- which recorded growths.

It was therefore in view of these experiences that Zimbabwe decided to adopt a more pragmatic approach through both the adoption of trade liberalisation and the economic structural adjustment programme.

ESAP is aimed at creating a viable economy and fostering self-regulated growth, more open market structures, and competition. It is anticipated that shortages will be overcome and unemployment wiped out as an atmosphere that will attract investors is built up. The programme is meant to rescind the demise and crumbling stature of the present economy and also to raise the living standards of the masses.

The programme centres on trade and price liberalisation, reduction of subsidies to parastatals, retrenchment of part of the civil service, and reduction of the budget deficit to 5 per cent of the Gross Domestic Product by 1995.

Chidzero, the architect of the programme, vows to cut down on unnecessary expenditure. This will result in the introduction of manageable school fees at primary level and hospital fees unless one can prove earnings of less than $150.

Exports are also to grow markedly during the time of the adjustment.

However, despite these positive features, there are also some shortcomings. Retrenchment of the civil service will have a severe impact on the welfare of thousands. The same situation will apply in the private sector and will result in the enslaving of the masses, further widening the gap between the rich and the poor.

Unemployment will hit its peak during this era and some private producers, mainly the small and emergent inefficient ones, will gradually be phased out under the scourge of competition. With increased competition producers will seek cost saving techniques that will lead to increased production at the least possible cost.

These techniques will obviously involve less use of labour. The worker’s position in society will therefore be further jeopardised. Economically vulnerable groups will be kept in abject poverty. Groups having fixed incomes and little, if any, bargaining powers will become the main victims of the scourge of price hikes.

Although the programme aims to redress social and economic inequalities it will achieve the opposite through soaring inflation, shortages and price hikes which will worsen the economic conditions of the poor.

With exorbitant price increases, one would expect a corresponding rise in nominal wages to counter-balance the fall in real wages but this will be accorded little, if any, attention at all.

Currency devaluations, inflation and reduction in government expenditure will be the main platform for the reform programme. The establishment of cost recovery measures in health and education, by asking people to pay fees for services that were previously provided “free”, will impinge on the unemployed and vulnerable masses as it will bar their access to these basic services necessary for a thriving nation.

The reduction in government expenditure will pose a major blow and threat on the quality and provision of social services in the wake of rising cost of living. Living standards may therefore fall drastically in the short term as consumers battle with the tide of inflation.

With the scrapping of subsidies from parastatals providing the basic necessities, especially foodstuffs, this will push up prices out of reach of the majority. Small-scale agricultural producers may also be adversely affected by high input costs.

The emergency of a decadent informal sector will be inevitable as the informal sector will be seen as the only way out and the blackmarket will thrive as people take advantage of food shortages and price increases.

Despite the vulnerability of the poor, most industrialists have appraised the reforms, because of their optimistic provisions. Hopes for the availability of foreign currency have been raised ensuring easy and sustained access to imports of machinery, spare parts and production implements to ensure the viability of the industrial sector.

As the Zimbabwean market is opened to more imports, this will adversely affect producers who have hitherto operated under strict state protection since UDI. With the exposure to international competition this will spell doom for these producers unless contingencies have been drafted to cater for these uncalled for distortions.

Liberalisation will encourage the emergence of new industries but taking into account that some industries already control significant markets it might be difficult for the new ones to crack the market.

The impact of these irregularities will not be discernible in the short run thus obscuring the impact of their presence in the overall bid to strengthen and develop the economy. This could therefore lead to monopolistic competition in place of perfect competition as the few economically powerful will spearhead the chase for higher standing in the opened economy.

Moreover, although the black majority have made tremendous intellectual strides since independence they do not command a strategic role in industry and commerce and therefore will remain vulnerable to policies imposed on them since they involve foreign international capital.

In funding the programme mainly from foreign aid donors, one has to put the debt crisis into consideration and see whether we are moving towards economic independence or economic dependence.

Many reform programmes have been or rather constitute an important component of aid conditionality. One would still want to pose a question: “Have the reforms marked a digression from a socialist status towards a market economy? Is what is happening dependent on the shortcomings of socialism in the eastern parts of Europe, thus driving us towards market economic structures in the guise of structural reform programmes?”

By Rongai Chizema – UZ Student

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