Drought Takes Toll On Zimbabwe Reform

WRACKED by a devastating drought that has thrown economic reforms into disarray, Zimbabwe is in the middle of its worst recession since the peak of its war for independence in 1977.

Amid government requests for substantial increases in foreign aid, Western diplomats question whether this southern African country of 10 million will be able to continue its extensive economic reform plan.

Zimbabwean Finance Minister Bernard Chidzero released a new budget late last week that seeks $160 million in aid, up from $70 million last year. He estimated economic output would fall 9 to 12 percent and the deficit would climb 19 percent. Production in agriculture and mining, the two major industries, could fall 35 percent, he said.

The speed with which Zimbabwe has sunk from being one of the few relatively prosperous African countries to a "less developed country" in need of major food aid has caught the ruling Zimbabwe African National Union-Patriotic Front (ZANU-PF) party off guard.

Two years ago - despite charges of foul play and a low voter turnout - President Robert Mugabe's ZANU-PF party swept back into power a third time, winning 117 out of 120 parliamentary seats.

Feeling secure, and in response to the pro-democracy winds blowing across the continent, President Mugabe abandoned plans to institute an East European-style one-party state. He also lifted emergency regulations carried over from pre-independence days.

On the economic front, the government initiated a market-based "Economic Structural Adjustment Programme" (ESAP), recognizing that excessive controls were preventing the nation from realizing its full economic potential.

The five-year ESAP program, designed in consultation with the International Monetary Fund and World Bank, won accolades from Western donors and boosted local business confidence. Despite the negative cutbacks, Zimbabweans seemed willing to accept 40 percent unemployment in the short term to give the reforms a chance.

What the government had not banked on was a regional drought - the worst in living memory.

Once regarded as southern Africa's breadbasket, and hailed by Western donors for its progressive agricultural policies, Zimbabwe's problems actually began a few years before the drought, as food prices slid below production costs, forcing farmers into export crops.

With decent rains, the country would have harvested just enough corn, the staple food crop, to feed itself. Instead Zimbabwe found itself forced to import 2 million tons of corn - one-fifth of the total regional requirement.

Western donors and multilateral agencies, anxious that Zimbabwe not stray from ESAP, to which they have already committed $1.7 billion, provided an extra $400 million to help overcome the drought, according to World Bank resident representative Christian Poortman.

Economists, however, estimate that the costs of the drought, which include lost earnings from export corps that have also been adversely affected, as well as the ripple effects on other sectors of the economy like agricultural-based industries, may exceed $800 million.

Poor planning, slow disbursements of aid money, and transport bottlenecks led to serious shortages of basic foodstuffs early this year.

Zimbabweans simultaneously have had to face a 45 percent devaluation of the Zimbabwean dollar, the removal of price controls, and reintroduction of health and education fees. Living costs have soared, leaving the average citizen worse off than before independence, economists say.

Partly to shore its sagging popularity in the rural areas, where 80 percent of Zimbabweans live, the government earlier this year pushed through the Land Acquisition Act, designed to transfer land owned by white farmers to peasant farmers at prices determined by the government.

Critics maintain that although efforts to redress the gross imbalance in land distribution inherited from the previous Rhodesian government is understandable, the measure will reduce investment in the large-scale agricultural sector precisely at the time that the country needs to build up its food stocks.

The Act also could dampen the enthusiasm of foreign investors skeptical about ZANU-PF's sudden abandonment of its socialist policies, human rights groups warn.

Political considerations are also clouding economic judgment in the implementation of key ESAP policies, maintains Tony Hawkins, dean of the University of Zimbabwe Business facility. The government, he says, is dragging its feet on trimming civil service and privatizing state-owned firms because such actions would entail job losses.

As a result, Mr. Hawkins points out, the government is way behind its target cuts in government spending. Public borrowing from the banks is crowding out the private sector, which also faces a credit squeeze in efforts to curb inflation.

According to Hawkins, several enterprises are now closing, exacerbating rather than relieving unemployment. He therefore sees "no real recovery until 1994, even if the rains return to normal."