Evidence of ZANU-PF’s Lack of Understanding of the Private Sector Economy

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Zimbabwe’s economic challenges stem from a fundamental disconnect between the ruling party, ZANU-PF, and the realities of a functional private-sector economy. Despite the country’s potential, underpinned by abundant natural resources and a skilled workforce, ZANU-PF’s policies have consistently undermined formal business structures.

By Brighton Musonza

This failure is driven by a regressive nationalist ideology that prioritises informal street corner tuckshops and pavement vending over the establishment of robust commercial frameworks. The result is an economy dominated by informality, corruption, and inefficiencies that threaten Zimbabwe’s long-term economic stability.

A Flawed Conception of Entrepreneurship

ZANU-PF’s approach to entrepreneurship and small-to-medium enterprises (SMEs) reflects a profound misunderstanding of the private sector. The party has conflated informal vending with genuine entrepreneurship, promoting the proliferation of tuckshops and roadside stalls as a solution to unemployment. However, these informal enterprises are not SMEs in the traditional sense. They are merely symptoms of deeper economic issues: high unemployment, a dual currency regime, and the erosion of formal economic structures.

The two-tier currency system—characterised by the coexistence of the Zimbabwean dollar (ZiG) and the US dollar—has exacerbated this problem. Producers, seeking to maximise profits, increasingly bypass formal retailers in favour of informal markets where US dollars dominate. This dynamic reflects ZANU-PF’s inability to create policies that incentivise participation in the formal economy.

Politicians’ Role in Perpetuating Informality

The rise of informality in Zimbabwe’s economy is not accidental. Many politicians have directly contributed to this phenomenon by owning and operating tuckshops on peri-urban farms seized during the land reform programme. These farms, now converted into residential estates, house tuckshops that function as wholesale hubs. Goods are sold in bulk to downtown vendors, who retail them on city pavements.

This system has corrupted Zimbabwe’s private sector, with manufacturers and suppliers co-opted into serving these politically connected tuckshops. Formal retail outlets, which are required to transact in ZiG currency, are systematically excluded from these supply chains. This exclusion highlights the extent to which ZANU-PF’s policies have prioritised informal networks over formal economic structures, undermining the viability of local supermarkets and other legitimate businesses.

Corruption and Counterfeit Production

Corruption further underscores ZANU-PF’s failure to understand and support the private sector. Politically connected customs officials facilitate the smuggling of goods into the informal economy, bypassing formal retail channels. Simultaneously, some private sector managers have established backyard production facilities that produce counterfeit food and beverages. These counterfeit goods infiltrate informal markets, eroding trust in locally manufactured products and further destabilising the formal sector.

The Consequences of Policy Failures

ZANU-PF’s policies have systematically destroyed Zimbabwe’s retail sector. Local supermarkets, forced to trade in ZiG currency, are unable to compete with informal vendors who transact exclusively in US dollars. This dynamic perpetuates inefficiencies, reduces the contribution of formal businesses to the economy, and exacerbates revenue leakage, as informal transactions often occur outside the tax net.

Moreover, the dominance of the informal sector underscores ZANU-PF’s reliance on the US dollar. Despite public statements about eliminating the dollar, the ruling party’s dependence on informal economic networks ensures the continued dominance of the dual currency system. This approach highlights a lack of commitment to meaningful currency reform and the stabilisation of the Zimbabwean dollar.

A Path Forward for Economic Reform

1. Rebuild Formal Supply Chains: The government must incentivise producers to prioritise formal retailers over informal networks. This could involve tax incentives, subsidies, or access to foreign currency for businesses operating within the formal economy.
2. Combat Corruption: Dismantling the networks that facilitate smuggling, counterfeit production, and informal supply chains requires robust anti-corruption measures. Politically connected individuals must be held accountable to create a level playing field.
3. Foster Genuine SMEs: ZANU-PF must recognise the distinction between informal vending and true entrepreneurship. Genuine SMEs need access to finance, training, and infrastructure to thrive.
4. Commit to Currency Reforms: Stabilising the economy requires a single, reliable currency. Addressing the root causes of dollarisation, such as public mistrust of the ZiG and monetary policy inefficiencies, is essential.
5. Strengthen Retail Sector Regulation: The government must enforce regulations that prevent private sector managers from engaging in unethical practices, such as supplying informal networks or producing counterfeit goods. Clear penalties must be established to ensure compliance.

Conclusion

ZANU-PF’s lack of understanding of the private sector has fostered a chaotic informal economy that undermines formal businesses, weakens the retail sector, and perpetuates economic instability. The party’s reliance on informal networks and the dual currency system reflects a short-sighted approach that prioritises immediate gains over long-term economic development. Addressing these systemic issues requires a fundamental shift in policy, grounded in a genuine commitment to rebuilding Zimbabwe’s formal economy and fostering sustainable private sector growth.