Even if all goes well, it could take more than 12 years for Zimbabwe’s economy to recover peak levels of per capita income reached in 1991, according to a UN Development Programme (UNDP) report published yesterday.

The report, Comprehensive Economic Recovery in Zimbabwe , was researched and written by five Zimbabwean economists. It is the first economic assessment to be published in the wake of this week’s power-sharing agreement between Zimbabwean president Robert Mugabe and opposition rival Morgan Tsvangirai, now prime minister-designate.

Over 239 pages the report charts the radical and, in many cases, painful policy measures necessary to revive the country’s fortunes following a decade of crisis.

A minimum of €3.5 billion in foreign aid, including debt relief, will be needed over the next five years if the government is to plug financing gaps, revive infrastructure and stave off hunger among the five million Zimbabweans threatened by starvation.

This would make it one of the largest recipients of aid in Africa.

Those figures would be significantly higher if pensioners were reimbursed for savings eviscerated by the collapse of the currency, and thousands of white farmers driven from their land by Mr Mugabe’s resettlement programme compensated.

“Without substantial foreign assistance sustainable economic recovery will be impossible,” the report says, adding that the manner in which Zimbabwe tackles structural problems at the outset could determine whether it becomes aid-dependent or able, in the long term, to sustain its own development.

Farm production has more than halved in a decade, starving the manufacturing sector, once among the most developed on the continent, of raw materials and creating conditions for mass starvation. Tourism has petered out, while the HIV-Aids pandemic has contributed to reducing life expectancy from 57 to 37 years.

At least two million of the 12 million population have emigrated to South Africa, the UK, Botswana and other countries, many of them skilled workers and professionals. Eighty per cent of medical personnel trained since 1980 have left the country.

A prerequisite for recovery will be plugging vast budget deficits financed in recent years by money-printing and credit creation. This has driven inflation to a world record of about 40 million per cent and created a nation of pauperised trillionaires.

The mechanisms used to tackle hyperinflation could make the difference between a short-term bust followed by recovery and a near-term consumption boom followed by recession.

In a “lost” decade Zimbabwe’s economy has contracted 37 per cent, while the rest of sub-Saharan Africa made average gains of 40 per cent. It would take uninterrupted growth of 5 per cent annually until 2020 to recover peak per capita income levels. A more likely average is less than 4 per cent, the report’s authors suggest.

Bilateral donors could step in quickly, one senior western official said, if they are convinced the new government is able to carry out reforms. However, this will be dependent on clear signs that Mr Mugabe, in power since 1980, and whom they blame for the crisis, has been sidelined.

Longer-term budgetary support - of the type the UNDP suggests will be vital to stabilise the economy - will be dependent on Zimbabwe agreeing a programme with the International Monetary Fund.

Donors have yet to allocate specific funds for Zimbabwe, and recovery plans, of the Multi-Donor Trust Fund (MDTF) administered by the World Bank, are still at draft stage.

(Source)