What happened to Zimbabwe: A Trade Perspective

By Charles Kamunjoma

Economic interdependence is now a global reality, each and every country’s economic growth depends on its relations with other states. These relations are built through conventions; that is, multilateral or bilateral agreements. These agreements cover issues on the promotion and maintenance of peace, security, human rights policy, environmental sustainability and most importantly; economic co-operation. Of the important areas of economic co-operation include international trade.

International trade refers to the exchange of goods and services across boarders or territories (Investopedia). Co-operation in the area of international trade is expressed in the multilateral trading system under the World Trade Organisation. In this agreement member states agree to trade liberalisation, that is, the lifting of barriers to trade. It is widely accepted that countries that embrace trade liberalisation reduce poverty at a far greater rate than those countries that maintain trade protectionism.

Take China, for instance. After liberalising its trade regime through the adoption of an export-oriented trade policy, the country showed a dramatic change in its economic growth. In the years between 1990 and 2004 the country’s Growth Domestic Product per capita (GDP per capita) increased from $314, 43 to $1490, 38 US dollars (World Bank).  In this view, trade liberalisation is the key to economic growth. However, trade liberalisation without international economic relations is meaningless. This could be explained in view of Zimbabwe.

Zimbabwe is a landlocked country; theoretically speaking, international trade could be more costly than beneficial for the country. However, embracing and understanding the importance of interstate commerce as a means to development, the country actively participates in international trade. With a comparative advantage in natural resources; gold and tobacco for instance, the country has always been focusing on the development of the agricultural and mining sector.

According to Stoneman “local capital in the 1920s and 1930s was predominantly agricultural”, trade in this sector “was successful enough to make substantial and varied demands on industry for inputs.”  It is at this point that the importance of international trade to pre-industrial Zimbabwe becomes apparent. It was one of the major causes and drivers of industrialisation in the country

Industrialisation in Zimbabwe was so rapid that by 1963 GDP in the manufacturing industry had increased from 10 percent to 20 percent, whilst in the mining and agricultural industry GDP had dropped to 7 and 15 percent, respectively (Stoneman). Although such transformation was positive; prior to 1990, Zimbabwe maintained a trade protectionist regime and this was contrary to the provisions of the General Agreement on Tariffs and Trade (GATT 1947) [Zimbabwe is an original member of the GATT]. In this regard the country’s performance on the international market was poor and there was consequently an overproduction of goods in a very small market (Stoneman). The situation was made worse when the country, under the leadership of Ian Smith, made a Unilateral Declaration of Independence in 1965. It went under economic sanctions and this was a shattering blow to the little that it had to trade on the international market.

In 1980 Zimbabwe got its independence; Robert Mugabe had to assume office when Rhodesia was still cowering under the Western sanctions. In the same month, immediately after the country had attained its independence, Mugabe signed the Lusaka Declaration establishing the Southern Africa Development Co-ordination Conference (SADCC). Even though SADCC was not an economic community, boosting international trade was its utmost priority.

This was what Zimbabwe needed. As aforementioned; there was an over-production of goods small domestic market, by signing the Lusaka Declaration Zimbabwe could get an opportunity to expand its international markets.

However; this sought of arrangement was not in the best interests of South Africa. If SADCC projects were to succeed ( The Zamtan road/highway project; Malawi-Beira route project, Malawi-Nacala route project and the Zimbabwe-Maputo project) ; South Africa could loose its economic  stranglehold on the region. New trade routes could be created and the SADCC countries’ dependence on South Africa could sharply decline. Therefore ,South Africa destabilised SADCC countries and SADCC was a huge failure.

Given the above state of affairs, Zimbabwe had to look for other alternatives to expand its markets. Having been pre-occupied with peace keeping operations in Angola and Mozambique, Mugabe did not put much focus on it. It was only after the country went bankrupt that Mugabe turned back to international trade.

The country had borrowed money from the International Monetary Fund (IMF); when it failed to pay back the Economic Structural Adjustment Program (ESAP) was imposed on it as part of the IMF debt restructuring policy. ESAP advocated for trade liberalisation; given the longstanding need to expand its markets, ESAP was a good program for the country. But it was not economically feasible. Even though “the main purpose of the program was to extend the growth opportunity provided by international markets from the enclave of agriculture and mining during the 1980’s to other activities in which Zimbabwe might have a comparative advantage” (Hurungo), ESAP “dealt a shattering blow to an infant economy by opening up economic activity to well established global capital hence stifled the development and growth of infant indigenous industries.” (Thulani Mswelanto).

Furthermore, as a landlocked country Zimbabwe had (still has) to trade along the South African routes and this is more costly than beneficial. However; even in face of massive trade imbalances Zimbabwe had finally expanded its markets, at least.

Suffice it to say ; it was only a matter of time before Zimbabwe adopted the land redistribution program,a policy that did not only lead to a significant collapse of the agricultural sector but also fatally severed its international relations. At this point the country lost the last remnants of its economy- trade liberalisation without international economic relations is meaningless.

To conclude, Zimbabwe has always welcomed the need to engage in international trade. Although this can be evidenced by the numerous trade agreements that it entered into; take the Common Market for Eastern and Southern Africa (COMESA) and the Southern Africa Development Community (SADC), for instance; ESAP remains the only important trade policy that affirms the importance of international trade to Zimbabwe. According to Hurungo, “to redress the challenges the country is facing, there is need for the country to rebuild its relations with the international community through implementation of sound policies and to reach amicable solutions with external creditors to settle arrear and restructure debt”.

  • Charles Kamunjoma is pursuing a Masters of Law degree at the University of Fort Hare.