Zimbabwe

EAFIT University

School of Business Administration International Business Department

Zimbabwe General investigation

Presented to ANDRES MORA

By ISMAEL OSSA M.

October 31, 2008

Introduction

The present concrete investigation try to give a better approach of the current situation of Zimbabwe, a country that by means of violence, corruption and growing poverty of the people, could be assumed as a company rather than as country because there are unofficial evidences of the bad and unfair treatment of the political system, forgetting the national interest and focusing just in the richness of some , which would be the key to assure the welfare of not just this country but also most of the whole world that live a similar situation. Knowing the different variables of the country let the reader considers that in a globalize world still there are

nations that maintain a poor

international

behavior, in a restrictive way in damage of the population and one evidence of that is the strong conduct of the president.

Zimbabwe General facts The republic of Zimbabwe is a landlocked country with a declared independence from UK in April 18 of 1980; the capital and also largest city is Harare. The country is located in the southern of Africa. It is bordered by South Africa to the south, Botswana to the southwest Zambia to the northwest, and Mozambique to the east. For a better geographical acknowledgement, this is the map’s location:

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The official language of the country is English, nevertheless, the most of the people speak Shona being the native language of the Shona community. The country has a population of 11.732 millions2, the life expectancy stands at 34 years for women and 37 for men3; the adult literacy is 89.4% (2003 est.)4

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www.africainmusica.org/.../africa/zimbaue.jpg 2http://www.imf.org/external/pubs/ft/weo/2008/02/weodata/weorept.aspx?sy=2004&ey=2007&scsm=1&ssd=1&sort =country&ds=.&br=1&c=698&s=NGDPD%2CNGDPDPC%2CPPPGDP%2CPPPPC%2CLP&grp=0&a=&pr1.x=68 &pr1.y=13 3 http://www.medicalnewstoday.com/articles/41339.php 4 https://www.cia.gov/library/publications/the-world-factbook/geos/zi.html#Econ

A few of history Until the 13th century, a country named Great Zimbabwe existed of which today consists of mere archaeological ruins. Thereafter The Shona tribes whom have lived in that territory for more than 2000 years decided to create the Rozwi state until was invaded by the warriors of Lobengula in 1834 who immediately had to deal with Cecil Rhodes, the founder of the diamond company De Beers, and the British South Africa Company. Finally, in 1888 the BSAC acquired a concession for mineral rights from the local chiefs and for that reason this region was product of a strong Britain influence impelled by the settlement of Salisbury, today Harare, as the capital in 1890. Five years after, under control of the BSAC, the territory was named Rhodesia. At the same time, a war promoted by the Shona tribe allied with the Ndebele tribe was taking place. This war leaded to the first Chimurenga, a war for the liberation that ended with the arrest of tribe leaders. During the next 60years, conflicts between blacks and whites continued5 with preferential conditions to the white inhabitants, in fact the leaders of the two black political parties, the Zimbabwe African union party; ZANU and the Zimbabwe African peoples union; ZAPU were imprisoned. In 1964 the prime minister of Rhodesia was Ian Smith who started with the project of independence from Britain which at the same time imposed several rules before grant it like the claim for equality for blacks but finally this was not effective an the result was the resurgence of the ZANU and ZAPU guerrillas and then started the second Chimurenga along with the white emigration. With the new constitution and elections of 1979, the black people got more rights and the country was renamed Zimbabwe Rhodesia. New elections took place in 1980 because the Britain conservative party rejected the new political administration in head of a black person named Abel Muzorewa. For that reason the elections gathered tree different political movements; the British government, the Patriotic front composed by the ZANU

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http://www.bulawayo1872.com/history/zimhistory.htm

and the ZAPU and the UANC. The result was the election of the today criticized President Robert Mugabe. Since 1990, the country was renamed Zimbabwe, joined with assassinations undertaken under Mugabe´s control who was liable for corruption and social scandals specially for the management of the Land Reform which was promoted by him through the forcibly movement of the white homeowners of their lands.

Historical flags:

British South Africa Company

Rhodesian flag (1915-53)

Zimbabwe-Rhodesia flag (1979-90)

Zimbabwe flag

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ECONOMY´S BACKGROUND The current situation of the nation’s economy is difficult because it faces huge problems like an unsustainable fiscal deficit, overvalued exchange rate along with a hyperinflation that make the price of a toilet paper costs $4177 and a very poor economic freedom among others. In the stats below there is important information about economy. Among causes of this poor behavior can be establish the kind of isolation remained as a country in the whole world for political reasons and specially ensuring the endless power of the president. 6 7

www.rhodesia.com/docs/flags/flags.htm

http://www.nytimes.com/2006/05/02/world/africa/02zimbabwe.html?ex=1304222400&en=e4f95916b4e5d098

A second reason could be the war in the Democratic Republic of the Congo in 1998-2000 in

which Zimbabwe decided to be involved spending big amounts

of money. The end of the iceberg is the government’s land reform of 1980 that past from a voluntary buy-sell of the farms to an expropriation politic launched in 2002 phase that, thought necessary due to the possession of the 30% of the land in white hands, did lack economic compensation to them. This result induced to violence affecting the agricultural commercial sector, the exports sector, creating a shortage of goods in the domestic markets and it´s laboral sector. These consequences have made that Zimbabwe looks for foreign help with other countries of the continent despite the sanctions imposed by the EU and USA to more than 90 members of the government to enter into the countries. Finally the main effect of al this has been that Zimbabwe has been turning its economy into a importer’s one. The most important person after Mugabe, is the governor of the central bank, Reserve bank of Zimbabwe, Gideon Gono who along the years has known gain the confidence of Mugabe becoming a potential successor of the president. It is necessary to talk in detail

of the current situation

of some

macroeconomics variables: A Negative economic Grow: To 2006 the grow of the economy remained negative, -4.4% due to the political situation preventing an improvement of the economic tendencies. B Hyperinflation: Finishing 2006 the inflation grow up to 1281% and in the first semester was of 4530%. The monthly rate of price increase is more than 100% despite the freezing prices politic implemented in January of 2007, which created a contrary effect with distortions. The present year, at June of 2008 the inflation was unofficially about 2.5 million percent a year and the Zimbabwe dollar has lost more than 99.9 percent of its value against the U.S. dollar during the past year. C unemployment: although there are not official register of this variable, the estimative is more than 80% of active people currently.

D Public deficit: An approximation of this variable lets know that in 2006 the deficit surpassed the 5% of the GDP. For that reason and because the country can not claim for foreign help, it had to reduce the spend in health and education along with the public expenditure.

A special case is the energy company that has to import the energy for the whole country and for that reason the government has to spend a lot of money in this one with the aftermath of a higher deficit which could be around of 11% officially.

General sectors analysis Talking about the agriculture it is necessary to say that the main exportation product along years was the tobacco which were reduced from 202millions of kg in 2001 to just 60 millions of kg in 2004 along with the emigration of the white farmers to neighbor countries. The main products the country used to export were meat, cotton, sugar and corn with self-sufficiency but since 2002 the country depends of the worldwide UNITED NATIONS FOOD PROGRAM. The mining sector suffered a little recover in 2004 with its main product, gold, growing the production up to 21.3 tons but far of the objective of 30 tons to 2008. To compensate the situation of the poor production of gold, the country has been focused in nickel, platinum thanks to the South African investment. After eliminating the industrial protection, the country suffered a fall in the manufactures sector and in 2006 represented just a 15% of the GDP.

Main trade partners It is necessary to say that the commerce balance has a negative record fluctuating about 300 million dollars. The main trade partner is South Africa to which exported the 40% of the total in 2005 and from which imported the 53% the same year. In second place is UK and Germany. The potential of the country in the tourism sector has been high although the political situation and the current foreign exchange situation has made the country suffer a deep fall in this sector The foreign investment passed from 444 million USD in 1998 to just 4 million USD in 2004 that came from South African companies of communications and mining.

Some important stats: GDP - real growth rate: -5.7% (2007 est.) GDP - per capita (PPP): $500 (2007 est.) GDP - composition by sector: agriculture: 16.7% industry: 21.6% services: 61.6% (2007 est.) Population below poverty line: 68% (2004) Distribution of Family Income - Gini index: 56.8 (2003) Public debt: 189.9% of GDP (2007 est.) Agriculture - products: corn, cotton, tobacco, wheat, coffee, sugarcane, peanuts; sheep, goats, pigs Electricity - exports: 0 Kwh. (2005) Oil - exports: 0 bbl/day (2004 est.) Exports - commodities: platinum, cotton, tobacco, gold, ferroalloys, textiles/clothing Exports: $1.76 billion f.o.b. (2007 est.) Imports: $2.183 billion f.o.b. (2007 est.) Imports - partners: South Africa 40.8%, Zambia 29.6%, US 4.9% (2006) Exchange rates: Zimbabwean dollars per US dollar - 17,562.5 (2007), 162.07 (2006), 77.965 (2005), 5.729 (2004), 0.824 (2003) note: these are official exchange rates; non-official rates vary significantly 8 8

http://www.theodora.com/wfbcurrent/zimbabwe/zimbabwe_economy.html

Conclusions - For some people, the country could represent the model of a perfect errant country in the way that is managed but it is necessary to remember cases as North Korea in which the big difference is the lack of health problems like the AIDS as Zimbabwe suffers and which increases the critical situation. - The help that gives the food program of UN has to be held being the most important mechanism to reduce a few the humanitarian situation and it is necessary to claim for most help to non governmental organizations. - Having in account the current critic financial crisis that hit

almost all the

countries in the world, take relevance the topic of Zimbabwe to compare the economic results of others and keeping aware that with uncontrolled decisions the countries could become seemed as Zimbabwe.

Bibliography: - http://www.comercio.es/tmpDocsCanalPais/4BFE01493FBA1301874A36D8B36E1582.pdf

- Nueva enciclopedia temática Planeta,, GEOGRAFIA, editorial Planeta, pag 153 - The CIA World Fact Book