Online Reporter
Zimpapers Politics Hub
ECONOMIC sanctions imposed on Zimbabwe by Western countries for nearly two and a half decades have caused massive financial losses and damaging economic challenges, frustrating the viability of local industries which struggle to secure critical capital to expand operations as they compete unfairly in the global market, experts have said.
Zimbabwe has endured sanctions for more than two decades following the implementation of the land reform programme in 2000, through which the country sought to address historical imbalances in land ownership.
This drew the ire of the United States and its allies who then imposed restrictive measures under the Zimbabwe Democracy and Economic Recovery Act (Zdera) of 2001 and other such measures.
The Government has over the years sought to have the illegal embargoes removed.
President Mnangagwa has also repeatedly called on the United Nations to raise its voice for the removal of illegal economic sanctions imposed on Zimbabwe by the West a few decades ago, saying the punitive measures had hamstrung development in the country.
In solidarity with Zimbabwe, the Southern African Development Community (SADC) has declared 25 October as Anti-Sanctions Day, with member States expected to speak against the restrictive measures on the day each year.
As Zimbabwe set to commemorate SADC Anti-Sanctions Day, captains of industry have joined the chorus of voices calling for the unconditional removal of sanctions.
Economic commentator and businessman, Mr Morris Mpala, noted that the restrictions have far-reaching consequences, particularly for the industrial sector.
“Sanctions imposed on Zimbabwe have far-reaching consequences for the country’s economy, particularly in the industrial sector,” he said.
Mr Mpala highlighted the huge financial cost incurred by the country.
“The quantified impact is significant, with Zimbabwe reportedly losing over $42 billion in revenue over the past 18 years due to these measures.
“The country’s Gross Domestic Product (GDP) reduction is estimated at $21 billion, and it has lost $12 billion in crucial loans from the IMF, the World Bank and the African Development Bank.”
He emphasised that the restrictive measures severely limit access to affordable, long-term credit.
“Sanctions severely restrict Zimbabwe’s access to affordable, long-term lines of credit from international financial institutions like the World Bank and the IMF.
“This restriction is due to the country’s high-risk profile, which makes it extremely difficult for local businesses to secure essential funding,” he added.
The sanctions have also disrupted supply chains and increased the cost of doing business, making Zimbabwean goods uncompetitive.
“Sanctions disrupt the supply chain for essential imported capital equipment, spare parts, and technology, thereby increasing costs and significantly reducing competitiveness for Zimbabwean manufactured goods,” Mr Mpala stated.
He further explained that the difficulty in accessing foreign currency leads to higher production costs.
“Local industries consistently struggle to access foreign currency, which creates difficulties in importing raw materials, machinery and other essential inputs.
This predicament results in increased costs for imported goods and services due to scarcity and reliance on informal exchange rates.
“Consequently, Zimbabwean goods become less competitive in the global market because of high production costs and severely limited access to modern technology. Crucially, the restrictive measures impose a “risk premium” on the country.
“The imposition of sanctions creates a pervasive ‘risk premium’ that inflates transaction costs, making it prohibitively expensive for businesses to operate in Zimbabwe.
“This perceived risk has several damaging effects: it de-risks Foreign Direct Investment (FDI), as investors are hesitant to commit capital to a country with such a high-risk profile; it limits access to markets, meaning even non-sanctioned sectors face significant challenges accessing international trade due to the country’s tainted reputation and finally, it increases borrowing costs for local businesses, which face higher interest rates from any financial source willing to assume the perceived regulatory and political risk,” Mr Mpala said.
Economic analyst Mr George Nhepera affirmed the multifaceted negative impact of sanctions, including reduced access to international markets and a resultant shrinkage of the GDP.
“The sanctions imposed on Zimbabwe represent a complex and multifaceted issue with various negative impacts on the country’s economy, politics and society.
“In general, significant negative effects have been recorded, including reduced access to international markets, increased costs of borrowing, and a resultant shrinkage of our GDP,” said Mr Nhepera.
He noted that the sanctions have hindered industrialisation and crippled formal job creation. “The country has significantly lagged behind in its efforts to industrialise its economy primarily due to the lack of imported technology and equipment needed by domestic industries.
“The rise of large informal sectors could be a direct result of sanctions, which have crippled our efforts to create formal jobs for the skilled workforce in our country,” he said.
Mr Nhepera cited the diversification of trading partners as the most successful domestic mitigation strategy pursued by the country, pivoting towards countries in the East, such as the United Arab Emirates, China and India, as well as others in Eastern Europe.
He advised Zimbabwe to strategically improve relations with wealthy nations as a counter-sanctions measure.
“It is not a coincidence that the USA, in its efforts to boost economic growth, has been deepening its trading and investment relationships with the EU and Gulf States like Saudi Arabia, the United Arab Emirates and Qatar.
“These regions possess rich concentrations of wealth and prosperity globally. Hence, we, too, as a country, should strategically improve our relations with such nations as a viable domestic mitigation strategy against sanctions.”
Mr Nhepera further stated that the nation must continue to seek a diplomatic end to the embargoes.
“Nevertheless, moving forward, we should continue to seek a ‘diplomatic’ solution to an end of all forms of sanctions with the USA, guided by our foreign policy philosophy that we ‘seek friendship with all and desire to be not an enemy to none.’
“We are open for business to all nations of the West and East, including the rich Gulf States, which in recent months have pivoted in support of our country by announcing private sector investment in key sectors like agriculture, manufacturing, mining, and tourism,” he said.
Executive Director of Citizens Against Economic Sanctions (CAES), Mr Martin Zharare, disputed claims that the measures are targeted, insisting they affect the entire nation by crippling its financial access.
Mr Zharare affirmed that the core legal barrier remains in place.
“Zimbabwe is under sanctions, under the Zdera Act of 2000, imposed by the American Congress, and that Act, the Zdera Act, is still in force. It has never been removed. It is still there.”
He further accused the US of spreading false information, adding that, “time has passed, we have had even the Americans themselves peddling misinformation to the world and the people of Zimbabwe in particular, to say there are no sanctions in Zimbabwe.”
Emphasising the broad impact, Mr Zharare stressed that ordinary citizens bear the brunt of the measures.
“The people of Zimbabwe are the ones who are suffering… Sanctions on Zimbabwe are there and not targeted, as they have always been saying,” he said.
He clarified the legislative constraints by explaining that the Zdera Act restricts national-level access to global financial institutions.
“When you look at the Zdera Act, it is an Act that limits and forbids Zimbabwe, not the targeted individuals, per se, as they have been saying. Zimbabwe does not have access to financial help, access to the World Bank, the IMF and all the Bretton Woods institutions,” he explained.
Analysts believe the unconditional removal of sanctions will also significantly smoothen Zimbabwe’s journey towards achieving an upper middle-income economy by Vision 2030.
