2014 Index of Economic Freedom

Zimbabwe

overall score35.5
world rank176
Rule of Law

Property Rights10.0

Freedom From Corruption19.3

Limited Government

Government Spending64.0

Fiscal Freedom63.3

Regulatory Efficiency

Business Freedom34.5

Labor Freedom22.2

Monetary Freedom73.0

Open Markets

Trade Freedom54.2

Investment Freedom5.0

Financial Freedom10.0

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Quick Facts
  • Population:
    • 13.0 million
  • GDP (PPP):
    • $7.2 billion
    • 4.4% growth
    • 2.5% 5-year compound annual growth
    • $559 per capita
  • Unemployment:
    • 95.0%
  • Inflation (CPI):
    • 3.7%
  • FDI Inflow:
    • $399.5 million
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Zimbabwe’s economic freedom score is 35.5, making its economy the 176th freest in the 2014 Index. Its score has increased by 6.9 points from last year, reflecting a particularly large score gain in monetary freedom following the end of hyperinflation. Zimbabwe is ranked last out of 46 countries in the Sub-Saharan Africa region and is the third-least free country rated in the 2014 Index.

Over the 20-year history of the Index, Zimbabwe’s economic freedom has deteriorated by 13 points, the fourth worst score drop. Significant declines in seven of the 10 economic freedoms include 40-point drops in scores for property rights and investment freedom. Regulatory efficiency has greatly diminished, as indicated by considerable score declines in business freedom and labor freedom.

Consistently rated a “repressed” economy since 1995, Zimbabwe remains characterized by economic instability and policy volatility. The impacts of years of hyperinflation have crippled entrepreneurial activity, severely undermining realization of the country’s economic potential. A corrupt and inefficient judicial system and general lack of transparency severely exacerbate business costs.

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Background

Zimbabwe gained its independence in 1965 and at that time enjoyed a diversified economy, 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 and has been in power ever since. In 2008, he claimed victory in a run-off election that was marred by political violence that forced opposition leader Morgan Tsvangirai to withdraw. Under a power-sharing agreement, Mugabe remains head of state, the cabinet, and the armed services. In March 2013, voters approved a new constitution that would roll back presidential power. Peaceful but disputed elections held in July 2013 resulted in a landslide victory for Mugabe and his ZANU-PF party. A land reform program has effectively confiscated the property of white landowners.

Rule of LawView Methodology

Property Rights 10.0 Create a Graph using this measurement

Freedom From Corruption 19.3 Create a Graph using this measurement

Corruption has become endemic, including at the highest levels of government. The IMF reports that $600 million of diamond dividends to the state was initially budgeted for 2012, but only $45 million was actually received in the treasury. Pressure from the executive branch has substantially eroded judicial independence. The government’s land reform program, characterized by chaos and violence, badly damaged commercial farming.

Limited GovernmentView Methodology

The top individual income tax rate is 46.4 percent, and the top corporate tax rate is 25 percent. Other taxes include a value-added tax (VAT) and a capital gains tax. Overall tax revenue accounts for about 30 percent of gross domestic income. Government spending is 35 percent of GDP. Public debt equals about 60 percent of gross domestic income. Mining continues to make significant contributions to the economy and public coffers.

Regulatory EfficiencyView Methodology

Incorporating a business takes nine procedures and 90 days, with no minimum capital required. However, completing licensing requirements costs over 40 times the level of average annual income. The informal sector continues to be the main source of employment. Energy subsidies exceed 4 percent of GDP, and in 2013, the government shifted from price supports to subsidies for imported agricultural inputs.

Open MarketsView Methodology

The average tariff rate is 15.4 percent. It is expensive and time-consuming to import goods. Foreign investment in several sectors of the economy is capped. Government intervention, inadequate supervision, and political instability have severely undermined the financial system. Many banks suffer from a lack of liquidity. The state has used banks to finance deficit spending and has required loans to state-owned enterprises.

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
1Mauritius76.5-0.4
2Botswana721.4
3Cape Verde66.12.4
4Rwanda64.70.6
5Ghana64.22.9
6South Africa62.50.7
7Madagascar61.7-0.3
8Swaziland61.24.0
9Zambia60.41.7
10Uganda59.9-1.2
11The Gambia59.50.7
12Namibia59.4-0.9
13Burkina Faso58.9-1.0
14Gabon57.80.0
15Tanzania57.8-0.1
16Côte d'Ivoire 57.73.6
17Kenya57.11.2
18Benin57.1-0.5
19Seychelles56.21.3
20Djibouti55.92.0
21Mali55.5-0.9
22Malawi55.40.1
23Senegal55.4-0.1
24Niger55.11.2
25Mozambique 550.0
26Nigeria54.3-0.8
27Guinea53.52.3
28Mauritania53.20.9
29Cameroon52.60.3
30Liberia52.43.1
31Burundi51.42.4
32Comoros51.43.9
33Guinea-Bissau51.30.2
34Sierra Leone50.52.2
35Ethiopia500.6
36Togo49.91.1
37Lesotho49.51.6
38São Tomé and Príncipe 48.80.8
39Angola47.70.4
40Central African Republic46.7-3.7
41Chad44.5-0.7
42Equatorial Guinea44.42.1
43Republic of Congo 43.70.2
44Democratic Republic of Congo40.61.0
45Eritrea38.52.2
46Zimbabwe35.56.9
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