2013 Index of Economic Freedom

Zimbabwe

overall score28.6
world rank175
Rule of Law

Property Rights10.0

Freedom From Corruption22.0

Limited Government

Government Spending66.4

Fiscal Freedom71.8

Regulatory Efficiency

Business Freedom33.4

Labor Freedom21.9

Monetary Freedom0.0

Open Markets

Trade Freedom50.4

Investment Freedom0.0

Financial Freedom10.0

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Quick Facts
  • Population:
    • 12.6 million
  • GDP (PPP):
    • $6.1 billion
    • 9.3% growth
    • -0.1% 5-year compound annual growth
    • $487 per capita
  • Unemployment:
    • 95.0%
  • Inflation (CPI):
    • 3.5%
  • FDI Inflow:
    • $387.0 million
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Zimbabwe’s economic freedom score is 28.6, making its economy the 175th freest in the 2013 Index. Its score has increased by 2.3 points from last year, reflecting particularly strong improvement in control of government spending. Zimbabwe is ranked last out of 46 countries in the Sub-Saharan Africa region and is the second-least free country ranked in the 2013 Index.

The Zimbabwean economy has begun to stabilize after years of severe monetary and fiscal problems that can be laid directly at the feet of the repressive Mugabe regime. Since the inception of the so-called Inclusive Government of Zimbabwe in 2009, the country has gained some traction in recovering from a catastrophic economic collapse. Renewed economic growth has been driven primarily by the mining industry, supported by the gradual ending of hyperinflation.

Nonetheless, instability and policy volatility remain hallmarks of excessive government interference and mismanagement of the economy. The indigenization law, which requires private businesses to surrender 51 percent of their ownership to Zimbabweans, severely undermines property rights and investor confidence.

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Background

When it became independent in 1965, Zimbabwe enjoyed a diversified economy, a well-developed infrastructure, and an advanced financial sector. It is now one of Africa’s poorest countries. Robert Mugabe became prime minister in 1980 and president in 1987. In 2008, his ZANU-PF party lost its parliamentary majority in a hotly contested election, but Mugabe won the runoff when opposition leader Morgan Tsvangirai withdrew after widespread intimidation of his supporters. Under a power-sharing agreement, Mugabe remains head of state, the cabinet, and the armed services. As a key component of reform, a new constitution was required, and the Constitution Select Committee produced a first draft in February 2012. However, ZANU-PF and its military continue to impede this effort. Elections are set for 2013, but Mugabe and his party have pushed for an early election before promulgation of the new constitution in order to prolong his rule.

Rule of LawView Methodology

Property Rights 10.0 Create a Graph using this measurement

Freedom From Corruption 22.0 Create a Graph using this measurement

The authoritarian executive branch strongly influences the judiciary and openly challenges court outcomes. Expropriation is common. The government’s land reform program, characterized by chaos and violence, has badly damaged the commercial farming sector, turning Zimbabwe into a net importer of food products. Corruption, encouraged by government officials at all levels, remains pervasive.

Limited GovernmentView Methodology

The top income tax rate is 45 percent, and the top corporate tax rate is 25 percent. Other taxes include a value-added tax (VAT) and a capital gains tax. The overall tax burden equals 12.9 percent of total domestic income. Government spending has fallen to 33.5 percent of GDP. The budget has been in deficit, and public debt amounts to about 70 percent of total domestic output.

Regulatory EfficiencyView Methodology

The overall regulatory environment is opaque. Starting a business takes nine procedures and 90 days in comparison to the world averages of seven procedures and 30 days. Completing licensing requirements costs over 40 times the level of average annual income. The formal labor market is not functioning, and the informal sector continues to be the source of employment. Monetary stability has been fragile in light of the previous hyperinflation.

Open MarketsView Methodology

The trade-weighted average tariff rate is prohibitively high at 17.3 percent, with non-tariff barriers that affect agricultural products and other sectors constraining trade freedom even further. Heavy government interference cripples investment opportunities. Extensive state involvement in financial decisions and ongoing political instability have caused Zimbabwe’s financial sector to contract significantly in recent years.

Country's Score Over Time

Bar Graph of Zimbabwe Economic Freedom Scores Over a Time Period

Country Comparisons

Bar Graphs comparing Zimbabwe to other economic country groups

Regional Ranking

rank country overall change
1Mauritius76.9-0.1
2Botswana70.61.0
3Rwanda64.1-0.8
4Cape Verde63.70.2
5Madagascar62-0.4
6South Africa61.8-0.9
7Ghana61.30.6
8Uganda61.1-0.8
9Namibia60.3-1.6
10Burkina Faso59.9-0.7
11The Gambia58.80.0
12Zambia58.70.4
13Tanzania57.90.9
14Gabon57.81.4
15Benin57.61.9
16Swaziland57.20.0
17Mali56.40.6
18Kenya55.9-1.6
19Senegal55.50.1
20Malawi55.3-1.1
21Nigeria55.1-1.2
22Mozambique 55-2.1
23Seychelles54.91.9
24Côte d'Ivoire 54.1-0.2
25Djibouti53.90.0
26Niger53.9-0.4
27Cameroon52.30.5
28Mauritania52.3-0.7
29Guinea51.20.4
30Guinea-Bissau51.11.0
31Central African Republic50.40.1
32Ethiopia49.4-2.6
33Liberia49.30.7
34Burundi490.9
35Togo48.80.5
36Sierra Leone48.3-0.8
37São Tomé and Príncipe 48-2.2
38Lesotho47.91.3
39Comoros47.51.8
40Angola47.30.6
41Chad45.20.4
42Republic of Congo 43.5-0.3
43Equatorial Guinea42.3-0.5
44Democratic Republic of Congo39.6-1.5
45Eritrea36.30.1
46Zimbabwe28.62.3
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