This Article was written by Mohammed Nahidul Islam, Bachelor of Business Administration, Major in Finance and Banking, Session: 2010-2011, Jagannath University, Dhaka, Bangladesh

Economy – overview

Zimbabwe’s economy is growing despite continuing political uncertainty. Following a decade of contraction from 1998 to 2008, Zimbabwe’s economy recorded real growth of more than 9% per year in 2010-11, before slowing to 5% in 2012, due in part to a poor harvest and low diamond revenues. However, the government of Zimbabwe still faces a number of difficult economic problems, including infrastructure and regulatory deficiencies, ongoing indigenization pressure, policy uncertainty, a large external debt burden, and insufficient formal employment. Zimbabwe’s 1998-2002 involvement in the war in the Democratic Republic of the Congo drained hundreds of millions of dollars from the economy. The government’s subsequent land reform program, characterized by chaos and violence, badly damaged the commercial farming sector, the traditional source of exports and foreign exchange and the provider of 400,000 jobs, turning Zimbabwe into a net importer of food products. Until early 2009, the Reserve Bank of Zimbabwe routinely printed money to fund the budget deficit, causing hyperinflation. Dollarization in early 2009 which allowed currencies such as the Botswana pula, the South Africa rand, and the US dollar to be used locally – ended hyperinflation and restored price stability but exposed structural weaknesses that continue to inhibit broad-based growth.

Social and Economic Background of Zimbabwe:

According to the World Bank, Zimbabwe had an estimated population of 12,754,378 people in 2011, of whom 54% were between the ages of 15 and 64. While recent unemployment figures 10.70 percent in 2011.The UN Human Development Report indicates that the proportion of Zimbabweans living on less than US$2 a day in 2003 was 83.0%, compared to 56.1% of the population which survived on less than US$1 per day. Zimbabwe’s GINI coefficient, which measures its income distribution, was 0.568 in 2003 according to the same report. Zimbabwe’s GNI per capita $660 in 2011 world bank report.

In terms of economic performance, World Bank figures show that in 2001 Zimbabwe registered a GDP per capita adjusted for PPP of US$2,362, an 8.32% decrease from US$2,577 in 2000. In 2011 GDP is $9.656 billion. And low income population is 12.75 million. The informal sector was believed to have contributed 59.4% of Zimbabwe’s GNI in 2003. This compares to 42.3% for all of Sub-Sahara Africa. From 2003 to 2004, Zimbabwe received US$186 million in foreign aid and development assistance and US$20 million net flow in foreign direct investment according to the OECD and IMF. The World Bank estimated that in 2002, Zimbabwe’s M2/GDP ratio was 36%. There was no information available regarding remittances to Zimbabwe.

The currency of Zimbabwe is the Zimbabwe Dollar (Z$). The Z$ has experienced significant depreciation over the last few years, with the average exchange rate falling from Z$55.0: US$1 in 2002, to Z$727.9: US$1 in 2003, to Z$4,303.3: US$1 in 2004, according to the Economist Intelligence Unit (EIU).

Zimbabwe is not a participant in the Financial Sector Assessment Program (FSAP) of the World Bank and IMF.

GDP (purchasing power parity)

$6.909 billion (2012 est.)

$6.579 billion (2011 est.)

$6.015 billion (2010 est.)

Note: data are in 2012 US dollar.

GDP (official exchange rate)

$10.8 billion

Note: in 2009, the Zimbabwean dollar was taken out of circulation, making Zimbabwe’s

GDP at the official exchange rate a highly inaccurate statistic (2012 est.)

GDP – real growth rate

5% (2012 est.)

9.4% (2011 est.)

9.6% (2010 est.)

GDP – per capita (PPP)

$500 (2012 est.)

$500 (2011 est.)

$500 (2010 est.)

Note: data are in 2012 US dollars

GDP – composition by sector

Agriculture: 20.3%

Industry: 25.1%

Services: 54.6% (2012 est.)

Population below poverty line

68% (2004)

Labor force

3.909 million (2012 est.)

Labor force – by occupation

Agriculture: 66%

Industry: 10%

Services: 24% (1996)

Unemployment rate

95% (2009 est.)

80% (2005 est.)

Note: figures reflect underemployment; true unemployment is unknown and, under current economic conditions, unknowable

Unemployment, youth ages 15-24

Total: 24.9%

Male: 28.2%

Female: 21.4% (2002)

Household income or consumption by percentage share

Lowest 10%: 2%

Highest 10%: 40.4% (1995)

Distribution of family income – Gini index

50.1 (2006)

50.1 (1995)

Investment (gross fixed)

21.9% of GDP (2012 est.)

Public debt

202.7% of GDP (2012 est.)

219.7% of GDP (2011 est.)

Inflation rate (consumer prices)

8.3% (2012 est.)

5.4% (2011 est.)

Central bank discount rate

7.17% (31 December 2010 est.)

975% (31 December 2007)

Commercial bank prime lending rate

30% (31 December 2012 est.)

34% (31 December 2011 est.)

Stock of money

$NA (31 December 2008)

$14.18 trillion (31 December 2007)

Note: this number reflects the vastly overvalued official exchange rate of 30,000

Zimbabwe dollars per US dollar; at an unofficial rate of 800,000 Zimbabwe dollars per US dollar, the stock of Zimbabwe dollars would equal only about US$500 million and Zimbabwe’s velocity of money (the number of times money turns over in the course of a year) would be nine, in line with the velocity of money for other countries in the region.

Stock of narrow money

$12.28 billion (31 December 2012 est.)

$6.586 billion (31 December 2011 est.)

note: Zimbabwe’s central bank no longer publishes data on monetary aggregates, except for bank deposits, which amounted to $2.1 billion in November 2010; the Zimbabwe dollar stopped circulating in early 2009; since then, the US dollar and South African rand have been the most frequently used currencies; there are no reliable estimates of the amount of foreign currency circulating in Zimbabwe.

Stock of broad money

$11 billion (31 December 2011 est.)

$22.71 billion (31 December 2012 est.)

Stock of quasi money

$NA (31 December 2008)

$4.11 trillion (31 December 2007)

Stock of domestic credit

$9.852 billion (31 December 2012 est.)

$6.289 billion (31 December 2011 est.)

Market value of publicly traded shares

$10.9 billion (31 December 2011)

$11.48 billion (31 December 2010)

$3.83 billion (31 December 2009)

Agriculture – products

Corn, cotton, tobacco, wheat, coffee, sugarcane, peanuts; sheep, goats, pigs


Mining (coal, gold, platinum, copper, nickel, tin, diamonds, clay, numerous metallic and non-metallic ores), steel; wood products, cement, chemicals, fertilizer, clothing and footwear, foodstuffs, beverages.

Industrial production growth rate

5.7% (2011 est.)

Current Account Balance

-$521.9 million (2012 est.)

-$621.5 million (2011 est.)


$3.314 billion (2012 est.)

$2.932 billion (2011 est.)

Exports – commodities

Platinum, cotton, tobacco, gold, ferroalloys, textiles/clothing

Exports – partners

South Africa 17.3%, China 16.9%, Democratic Republic of the Congo 11.7%, Botswana

10.5%, Italy 6.1% (2011)


$4.675 billion (2012 est.)

$4.37 billion (2011 est.)

Imports – commodities

Machinery and transport equipment, other manufactures, chemicals, fuels, food products

Imports – partners

South Africa 55.4%, China 9.2% (2011) and others

Reserves of foreign exchange and gold

$422 million (31 December 2012 est.)

$461 million (31 December 2011 est.)

Debt – external

$6.975 billion (31 December 2012 est.)

$6.43 billion (31 December 2011 est.)

Exchange rates

Zimbabwean dollars (ZWD) per US dollar –

234.25 (2010)

234.25 (2009)

9,686.8 (2007)

Note: the dollar was adopted as a legal currency in 2009; since then the Zimbabwean dollar has experienced hyperinflation and is essentially worthless

Doing Business in Zimbabwe

The World Bank uses several indicators to assess the business environment of a country. According to a 2004 World Bank study, entrepreneurs in Zimbabwe are required to go through 10 steps over the course of 96 days to launch a new business. This compares to the regional average of 11 steps over a 63-day period. In addition, the costs to entrepreneurs of starting a business represent 1,442.5% of gross national income (GNI) per capita, compared to the regional average of 215.3% of GNI per capita.

Measures on credit information sharing and property rights are also available. On the Credit Information Index, Zimbabwe has a score of 0 on a scale of 0 to 6. There is neither public credit registry coverage nor private bureau coverage in Zimbabwe. There was no information about the cost to create collateral for a loan in Zimbabwe.

The country’s Disclosure Index is eight on a scale from zero to ten. It takes 4 steps and 30 days to register property in Zimbabwe, compared with the regional average of 6 steps and 117 days. In addition, the cost to register property is 22.6% of overall property value, compared to the regional 12.7% and the OECD average of 4.7%.

Regulatory and Legal Environment of Zimbabwe

According to the World Bank, Zimbabwe is ranked 69th in the world, in terms of the ease of enforcing contracts. More specifically, the Bank estimates that it takes an average of 33 procedures and 350 days to enforce contracts in Zimbabwe, which translates to enforcement costs (legal and court fees) of approximately 10.1% of the value of the overdue debt.

The process of filing for bankruptcy takes about 2.2 years and the costs associated with it in terms of estate value amounts to 22%. The average recovery rate for creditors is $0.021 per $1USD.

According to the Consultative Group to Assist the Poor (CGAP), in terms of ongoing microfinance policy in Zimbabwe, the Finance Laws Amendment Act was passed in January 2004, which requires the licensing of non-banking financial institutions. The legislation proposes that institutions not licensed by the Reserve Bank of Zimbabwe should be dissolved in accordance with the Companies Act. With respect to broader policy direction, as of January 2005, all commercial banks, building societies and finance houses in Zimbabwe were to be required to be rated by an internationally recognized rating agency.

Microfinance Institutions (MFIs) and Commercial Banks’ Involvement in Zimbabwe

The Microfinance Gateway reports that there were 16 commercial banks operating in Zimbabwe in 2004, with combined assets of USD516 million. Cooperatives and credit unions represented the largest segment of non-bank institutions, followed by building societies and finance houses.  While data is not available for the number of clients served by traditional commercial banks, the World Council of Credit Unions reports that Zimbabwe’s 64 cooperatives/credit unions currently serve some 60,488 clients.

According to CGAP, regulated microfinance institutions in Zimbabwe include Commercial Banks, Building Societies, Cooperative Societies, Credit Unions, Finance Houses, and other Non-Banking Finance Institutions (defined as institutions which distribute micro-credit and are prohibited from taking deposits). Non-regulated sources of microfinance are NGOs.

Kubatana, an NGO network alliance in Zimbabwe, reports that there is a Zimbabwe Association of Microfinance Institutions (ZAMFI), whose mission is to lobby for an enabling environment and to promote and represent MFI interest, however no details on the membership of ZAMFI were available. Zambuko Trust and Commercial Bank of Zimbabwe (CBZ) however, do stand out as key providers of micro-finance. Zambuko Trust was started in the early 1990s by a group of Zimbabwean business, community, and church leaders as a dedicated MFI, whose services include individual, group and trust-fund loans to micro-entrepreneurs. As of August 1995, the Trust had a client base of 2,197 and had disbursed 2,786 loans totaling USD$0.5 million. CBZ, the 3rd largest commercial bank in Zimbabwe, launched its ‘Credit for the Informal Sector Project’ (CRISP) in conjunction with CARE International in 1995, which aimed at increasing incomes and creating jobs by improving access to credit for informal micro- business located in the urban areas of Zimbabwe. In 2000, CBZ’s micro-finance loan portfolio totaled USD$32 million with over 3,000 active clients, and by the end of 2005 expects to have served 7,500 clients and disbursed 20,000 loans.

The UNDP website reports on its involvement in numerous community support projects in Zimbabwe, including the Assistance to Underprivileged Rural Populations (AURP) project which supports various community-based initiatives in Zimbabwe. This project, co-funded by the French Cooperation and UNDP, commenced in 2001 and was extended in 2004.

Activities of Zimbabwe’s National Committee

Zimbabwe’s National Committee is made up of members from the central bank, non-profit/microfinance networks/NGOs, and government. The Committee’s projects include holding a media campaign through radio and television discussion programs and microfinance documentaries. The Committee will also organize nationwide road shows and a nationwide Microfinance Expo (to be held in November 2005).


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