The policy packages listed below, however, will need to be supported by policies that ensure and sustain macroeconomic stability and remove distortions and misallocation of resources (the first of two pathways mentioned above).
- Policies to enhance the productivity of the informal sector and linkages with the formal sector. Such policies include: ensuring better access to finance for formal firms and seed funds and training provided to informal firms; better access to information, training, markets, public goods and services; tax mediation services and individualized training; and policies to close the digital gender divide.
- Policies to encourage the formalization of informal firms. These policies will need to be
implemented in the medium term but their impact on the formal sector will take longer to
materialize. Providing incentives for formalization will require:the simplification of business startup formalities; lower the tax burden, compliance costs, and red tape to reduce the costs of joining the formal sector; promoting digitalization to lower government administrative costs; and improving governance and the provision of public sector services.
Zimbabwe’s export performance has been declining over the past two decades. Trade is a driver of economic diversification, productivity, and economic growth. However, Zimbabwe’s exports of goods and services have been underperforming over the past two decades, falling from an average of 33 percent of GDP between 2002 and 2009 to 25 percent of GDP a decade later (2010–19).
Merchandise exports have been improving since 2017, owing to rising commodity prices, as well as changes in legislation on artisanal gold mining that have improved gold deliveries and production.
While merchandise exports have recently improved, only a handful of products, mainly primary goods, represent more than 90 percent of total exports, reflecting limited diversification in merchandise exports.
In 2020, gold, tobacco, and other metals and minerals accounted for more than 90 percent of total exports.
These exports are also increasingly concentrated in just a few destination markets. Exports
of services remain concentrated on tourism and transport. The lack of diversity of exports is primarily due to macroeconomic instability, coupled with a difficult business environment, particularly distortions that limit competitiveness.
The implementation of Zimbabwe’s National Export Strategy by the authorities, which aims to support the development and promotion of exports of goods and services, should be
strengthened and have an explicit productivity lens aligned with African Continental Free Trade Area (AfCFTA) implementation.
Broad based distortions have stifled those sectors that can catalyze Zimbabwe to become a successful exporter.
Zimbabwe is aiming to build comparative advantage in the manufacturing sector, but only
primary sectors such as metals, minerals and foodstuffs (tobacco) contributed positively to export growth between 2015 and 2020.
There is little evidence that Zimbabwe’s comparative advantage in the manufacturing sector is growing, and this may be a result of across-the-board distortions that are limiting
competitiveness in the formal sector.
These distortions, which include export retention policies, have acted as a tax on the tradeable sector.
Zimbabwe is yet to successfully integrate into GVCs, although there are significant opportunities to reboot the country’s participation.
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