Dynamic Research Journals (DRJ)

Journal of Economics and Finance (DRJ-JEF)

Volume 1 ~ Issue 1 (October, 2016) pp: 07-12
www.dynamicresearchjournals.org

An Explanatory Analysis of Components Constituting

Economic Policy Success in Zimbabwe
Wellington Garikai Bonga
Received 27 October, 2016; Accepted 30 October, 2016; Published 31 October, 2016 The author(s)
2016. Published with open access at www.dynamicresearchjournals.org

Abstract Economic policy is generally directed to achieve particular objectives which include targets for inflation,
desirable unemployment levels, economic growth pace, standard of living of citizens among others. An economic
policy is a course of action that is intended to influence or control the behaviour of the economy. The publics
expectations of future happenings in the economy are crucial in policy formulation. The likely responsiveness of the
public and business whenever a policy is announced determine policy success. Credibility of policy makers is worthy
and needs to be monitored and improved regularly, as it determines the implementation of a policy and hence its
success. The study is an explanatory analysis of various issues that constitute the success of economic policies with
special reference to Zimbabwe. Since independence in 1980, Zimbabwean government has come up with various
economic policies, but none has been praised for reaping all the expected results, leading to the crafting of new
policies to address the weakness of the former. The study recommends high levels of commitment, public policy
support, credibility of policy makers, continuous policy reviews, improved political and institutional frameworks,
policy timing, stakeholder engagement, adequate policy budget, elimination of corruption among policy makers and
minimisation of policy lags, so as to ensure policy success to transform the economy.
Keywords: - Economic Policy, Policy Support, Government Credibility, Policy Success, Goals, Objectives, Tools.
JEL Codes: E60, E61, E65, F15, F43, F51, F59, H11, H12, H77, I38, L51, L52, L53, L78.

1. INTRODUCTION
Policy formulation includes setting of policy goals, being the outcomes which the policy aims to achieve. To
attain policy goals, the government uses policy tools which are under the control. There is however, a greater need for
policy expertise when both formulating and implementing policies for the short-run and long-run. Too many policies
at one point will yield incoherence, as the tools used to attain policy goals may have undesirable impact on other goals
while they aid in attain other goals.
A well drafted economic policy, should be easily adopted, well-funded, and accurately implemented through
proper communication between sectors of the economy and economic players (Bonga, 2014). Accordingly, Wren-
Lewis (2015), indicated that a natural way to define a credible economic policy is one that accords with what most
economists think. This calls for engagement of the right profession in policy formulation.
At any point in time, the government should know whether to use discretionary policies or rule-based policies.
Also whether, a policy should be supply-side derived or demand-side derived. All such a decision should be applied
in the shortest time possible to avoid the effect of changing environment.
Government policies are divided into macroeconomic stabilisation policies, trade policies, development policies
dealing on economic growth, redistribution policies (income, property and wealth), regulatory policies, anti-trust
policies, industry policies, and technology based policies among others.
Government come up with policies due to various reasons. Some policies may come up due to donor effect,
pressure groups, political pressure, or on a continuous basis from strategic plans. International institutions like the
International Monetary Fund or World Bank may influence policy, and this has been witnessed in Africa for structural
adjustment programs in the 1990s.
Policy formulation is also highly linked to business cycles. A policy is only good if it gives solutions to the
economic problems prevailing, or when it blocks some negatives to penetrate the economic engine. Government
intervention has been labelled poor for most African nations, and Zimbabwe is not an exception. The Central Bank

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 An Explanatory Analysis of Components Constituting Economic Policy Success in Zimbabwe

has been argued to create business cycles in the economy (Australian School of Economics). However, according to
Keynes, the fiscal policy is a greater tool to use to tackle depressions, recessions and slumps in any economy.
Accordingly, the goals of economic policy consist of value judgments about what economic policy should strive
to achieve and therefore fall under the heading of normative economics (Bonga, 2014).
Since the attainment of independence in 1980, Zimbabwe crafted and implemented various policies in an effort
to control the economy for growth and development among other objectives. The policies include, ESAP, ZIMPREST,
MERP, NERP, STERP 1, STERP 2, BACCOSSI, ZIMASSET and 10 Point Plan among others. On the other hand,
the Central Bank and Ministry of Finance have been responsible for monetary and fiscal policies on a yearly basis to
control the economy. The policies have failed to fully address the key objectives, and hence the policy makers have
to move from one policy to another. As noticed for South Africa (Bhorat et al. 2013), the new era of political freedom
was viewed as the foundation for economic prosperity and inclusion, however it did not work that way for the
Zimbabwean economy.
This study seeks to give a deeper synthesis on what constitutes a successful economic policy. General facts on
policy formulation, implementation, review and policy adjustments are presented in the study, and a special mention
on the Zimbabwean economy is made. The study will discuss, various components that aid in the success of economic
policies.

2. DISCUSSING ECONOMIC POLICY SUCCESS ISSUES

Economic policies are put in place so as to address certain negative issues affecting the economy, or to
generate certain positives for the economy. There is greater need to watch the economy prior to potential crisis, and
hence avoid effects through policy implementation. Policy formulation is related to economic planning. Proper
economic planning will yield good policies that have a greater probability of success.
Gross Domestic Product and profit are at the centre of economic performance discussion in every nation and
society. They determine what the people expect on the economy, they influence behaviour and outcomes of economic
activity. The level of profit and national income determine what policies are expected in the economy to influence
output. Important to note is that good policies should go beyond GDP and profit, and be crafted to accommodate every
meaningful aspect to the citizenry like social, health and environment.
Every country has its own potential as far as economic growth is concerned. Economic potential is described
by resource endowments in the country. Theoretically speaking a country with more resources should be ranked the
best among other nations. However, the ability to explore and use the resources is necessary. Economic planning is
essential in fast tracking growth and development (Ekpo, 2011). Moreover, quality and quantity of resources, regional
linkages, demand for resources among others do determine policy. The most fundamental measurement used to
evaluate success in allocating our resources is economic growth (SMOOP PREMIUM, 2016). Therefore, the major
concern for policy makers, is how to allocate scarce resources in order to realize maximum economic potential. Best
allocation will yield good results and hence involves policy success.
Economic policy success is made possible through blending a lot of components accordingly. All issues are
crucial, and no factor should be undermined on how it impact economic policy success. The important components of
economic policy success are diagrammatically shown in Figure 1 below:
Figure 1: Components of Economic Policy Success

HIGH LEVELS OF MINIMISING POLICY GOOD

CREDIBILITY LAGS INSTITUTIONAL
FRAMEWORK

ECONOMIC POLICY GOOD POLITICAL

HIGH LEVELS OF FRAMEWORK
COMMUNICATION SUCCESS

GOOD POLICY
STAKEHOLDER TIMING
GOOD POLICY BUDGET AND
ENGAGEMENT POLICY REVIEW PROCEDURES

Source: Authors Design

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 An Explanatory Analysis of Components Constituting Economic Policy Success in Zimbabwe

Credibility of Policy Makers

Government and Central banks are main policy makers in any nation, and they are encouraged to remain
credible so as to ensure successful policies. It has been observed that various governments undertake economic plans
but surprisingly, some plans are not followed or something that is not on the plan happens or there is failure to follow
the plan (Bonga, 2014). If policy makers lose credibility, there is a greater probability that any policy they put in place
will not yield expected results. The general public will not support the policy and hence implementation will be
difficult. Credibility is linked to policy history. The general public have a record of all the previous policies, and how
they were implemented, how the responsible authorities behaved towards meeting their obligations, what went wrong
among other related issues. Policy mistakes do happen, but their consistency will describe a pattern that can be
frustrating, accepted or tolerated by the public. The public will lose trust on the governments potential to correct the
economy, they will rather prefer market forces to prevail.
Rudebusch (1996), indicated that monetary policy actions are widely considered to be better implemented
and more effective when they are credible. The author further explained that, credibility refers to when the goals and
strategies of the central bank have been clearly and believably communicated to the public. To show the importance
of credibility in policy making, Rudebusch (2015) highlighted that a credible disinflation policy will translate more
quickly into lower inflation expectations and may require a smaller sacrifice of output and employment. This fact
proves that more favourable results are attained in cases where high levels of credibility are present.

Policy Communication
Policy makers are encouraged to communicate any coming policy effectively to the end users who are to
support its implementation. Communication is a key prerequisite for both government reputation and stakeholder
commitment. If a policy is not well communicated to the public, it might suffer rejection and resistance and hence it
fails. The public or the business community needs to fully understand why a certain policy is put in place, what are
all its benefits and costs, who benefits most from it, how the affected will be compensated. If all this is well explained
using proper channels, a policy is likely to be a success. Many policies in developing nations are not well
communicated and hence, policies suffer rejection and sometimes are reversed, leading to policy inconsistency and
reversals. The government may benefit from the expertise of the private sector in public-private-partnerships (PPPs).

Commitment
There is greater need for policy makers to be committed in the implementation of a policy. The government
should be more committed to accomplish set objectives and provide support to the general public and business
communities. Short-term economic plans are easier to achieve than long-term plans mainly because in the longer-
term, different implementers will be faced by plans they havent initiated and hence lack commitment. The proper
thing is to select a period long enough to include projects spanning a number of budget years but not so long as to
delay periodic assessment of the development effort stretching over a series of plans.

Policy Timing
A policy should be designed to address current issues. If a policy is lately implemented, there is risk that it
may create problems rather than solving. Policy makers are encouraged to properly come up with policies in good
times, and avoid lags in implementation. Time lags refers to a delay between an economic action and a consequence
(Pettinger, 2012). Nash (2016) defined a policy lag as the lag between the time an economic problem arises, such as
recession or inflation, and the effect of a policy intended to counteract it. Many economic problems are not permanent,
but seasonal, and if not solved they develop into other deeper problems or diverting problems. Failure to tackle in
time, will usually lead to wrong prescription given, in case the economic problem diverts. Time lags can make policy
decisions more difficult and the effect of policy may be more difficult to quantify.

Institutional and Political Frameworks

An institutional framework must be stable, transparent and based on the rule of law, respecting fundamental human
needs and ecosystems conservation, and promoting local empowerment and appropriate cost recovery approaches
(DWAF 2003). Governments must recognize the importance of the right institutional and political framework for
policymaking and work constantly toward improving it, so as to limit the scope for potentially damaging policy
mistakes (Bonga, 2014). The formulation and implementation of economic policy should be as good as it can be.
Some of the failures experienced by many African countries especially comparing the expected with the actual
outcomes can be linked to the quality of their institutional frameworks, Osabuohien, Uchenna and Adeleke (2012).
There is greater need of working together, the government and business community, in policy formulation and

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 An Explanatory Analysis of Components Constituting Economic Policy Success in Zimbabwe

implementation. Stakeholder involvement is key in any policy support. Eliminating some parties in policy formulation
usually calls for sabotage from eliminated parties. This is one of the main causes of policy failure in multi-party states,
where political parties will vote down on policies they did not participate in formulation stage. Nowadays, countries
are increasingly cooperating as equal partners, working together and learning from each other to strengthen their
economic performance. Important to note is that most of the advantages of building institutional frameworks usually
take place in the long-term, so in the short-term the process might seem to cost money and efforts for no effect.

Regional/International Engagements
Countries, have become members of many regional and international formations, leading to the adoption of
many policies that touches the involved nations. The act has also been termed, regional integration, and refers to
various types of political and economic agreements that form closer ties between sovereign countries. As supported
by Wandrei (2016), such policies vary from trade agreements to more extensive treaties in which individual member
countries sacrifice part of their national sovereignty to a higher entity. While this is seen as a good move, some nations
benefit a little or are forced out of budget because of the need to be participate on such policies. The government is
encouraged to undertake proper synthesis on group policies before adopting for use in their countries. What can work
in one country can be otherwise in another nation, hence there is a greater need for evaluation. Developing nations are
usually classified in one group, but the reality is there are small significant differences among those nations. Regional
integration can lead to the loss of unique minority cultures within a region, limited fiscal capabilities among others
and hence have to be handled with care (Wandrei, 2016). Government, should make use of memorandum of
understanding (MOUs) rather than formal agreements when they have not yet researched enough on regional grouping
policies. An MOU is a nonbinding agreement between two or more parties outlining the terms and details of an
understanding, including each parties' requirements and responsibilities.

Corrupt/Biased Policies
Good economic policies should benefit the majority, and hence socialistic policies are better supported. Some
policies may be biased towards a group of people, say capitalist, and hence do not address major problems. The
challenge of corruption remains one of the most debilitating issues facing African countries. There is greater need to
avoid corrupt policies that eliminate certain groups of people. Once, the aim of the policies is detected, credibility will
become a challenge in future policies.
Some countries through cabinet have a tendency of voting for policy approval. While the majority rule is
used and commonly deemed the fair and accurate method, it can be abused by corrupt officials. Some corrupt officials
engage in vote buying, so that a certain policy can be approved in the cabinet, and such policies are biased towards
the benefit of usually few individuals.
Corruption blocks and frustrates genuine efforts at development (Ayawei, Abila and Kalama, 2015).
Countries should fight government corruption. The fight against corruption needs to be conducted on a broad front
and to draw on support from a wide variety of actors, especially the business community (OECD, 2003).
The fundamentals of economic policy building presented above, if followed correctly will result in success
of policies crafted and hence economic development and stability in the economy.

3. ZIMBABWE ECONOMIC POLICY FAILURE/SUCCESS DISCUSSION

In line with the above general concepts, the study will briefly discuss what has been causing Zimbabwean
policies not to register a success. Policy makers should be well versed on the above mentioned facts so as to ensure
every crafted policy is implemented well and hence yield greater results.
Crisis identification has always been a challenge in the policy crafting. Policy makers should make use of
development indicators trends to predict a crisis. Development indicators include trade statistics, inflation rates, GDP
growth rates, population growth rate, human development index, among others. The indices over a period shows where
the economy is heading, and appropriate policies should be put in place in the reasonable time to minimise the
damages. Policy lags have been greatly noticed in the country, leading to short term measures implemented to fight
economic problems.
Poor policy engagement has caused policy failure in Zimbabwe. There is no direct connection between policy
framing and public engagement, leading to policies not being supported. The best way to ensure success of a policy
is to include the general public and business community in the formulation process. Zimbabwe has been known for
crafting good policies, however they have been termed blue prints because the policies have never reaped stipulated
potential. One of the reason being that the policies are not well communicated to the general populace.

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 An Explanatory Analysis of Components Constituting Economic Policy Success in Zimbabwe

Donor funded policies have been experienced in Zimbabwe.1 One policy is ESAP, from World Bank and
IMF. Such policies emanate from donors, and will pose a challenge in the implementation stage, because the
implementers are now different from the crafters of the policy. The government on the other hand have not really
synthesize the full potential of the policy and are hesitant to apply a lot of effort. However, there is a greater need for
the government, once have accepted to implement the policy, to act with greater effort in the implementation to ensure
policy support. Structural programmes have sought to leave accumulation and growth to free market forces without
paying adequate attention to shortcomings of domestic markets and enterprises, physical and human infrastructure,
and institutions (UNCTAD, 2001).
Adequate policy budget has been a challenge as well in ensuring policy success. Zimbabwe is a developing
country, characterised by low national income, hence cannot sponsor high quality policies. Once the economy adopts
a policy that is beyond its financial capacity, the policy will likely to fail, and in many case reversed. Peace meal
approaches have been applied to smoothen budget pressures, yet still, finance remains a challenge. There is greater
need of crafting policies that match the financial capacity of the country.
Credibility is worth discussing. Levels of credibility of Zimbabwean policy makers is very low. There is little
trust from the public, that any policy crafted will bring in positives. This has led to many good policies not reaping
desired results. When a policy lacks support, it will fail automatically. Credibility is derived from policy history, where
the public liken current policy crafting to previous policy implementation journey. For any future economic policy,
policy makers should restore their credibility. This may be done through increased commitment levels, public
engagement, increased communication, consultation among others.
Institutional and political framework. Over the years Zimbabwe has not been politically stable. This has
caused many good policies to fail. There has been political sabotage to policies, leading to poor implementation of
policies. A greater call is made to the nation to support policy in absolute terms for the benefit of the economy at large,
than to critique a policy from a political perspective. Policy makers should be autonomous tics. Central Bank autonomy
is the most important for monetary policy and effective banking sector regulation and control.
Policy review, follow-ups and commitment. Zimbabwean policies have been previously reviewed with
delays, leading to them being abolished, rather than being adjusted. When a policy is reviewed in time, there is a
chance of it being adjusted and be able to reap some of its benefits. Policy reversals are not easily funded in many
developing countries; hence they tend to craft new policies in an effort to correct the negatives.
Consultations. Zimbabwe as a low income country is not able to fund policy reversals in case a policy has to
be reversed. Hence there is greater need for effective consultations to be made before a policy is adopted. Failure to
effectively consult will drain funds and hence worsening the economic problems bedevilling the economy.
Research institutes. Independent research institutes are not many in Zimbabwe. Many successful nations
make use of independent think tanks like universities and research institutes to obtain guide on policies to intervene
in the economy. Research institutes, not only help government policy making but also organisations in the country.
Research institutes, in particular, are seen as crucial for assisting local firms in their innovation activities (Diez, 2010).
As supported by Arnold (2009), the core of institutes business is the development and transfer of knowledge. It has
been argued that the global challenges facing the world today require more contact between science and society than
ever (Gulbrandsen, 2011), and this is made possible by development and use of viable research institutes.

4. CONCLUSION
Africa has experienced a very low level of economic development since the 1970s, and analyses of the
African economic crisis have stressed the factor of policy choice, among other issues (Aworawo, 2012). Economic
policies run the economy in the desired direction. Successful policies emanate from effective planning. Failure of a
policy causes many damages to the economy and its populace, and hence should be avoided. Zimbabwe, just like
many other nations, have since been crafting and implementing policies to correct the economy. The economy did not
register credible policies credited for reaping greater economic benefits. The study discussed various components that
constitutes economic policy success, that can be borrowed by policy makers to improve on the handling of policies.
The study recommended that the Zimbabwean policy makers should aim to restore credibility, increase
commitment in implementation, minimise policy lags, design policy review systems, implement policies within their
budget, ensure stakeholder engagement, correctly communicate policies to the populace, engaging right profession in
policy analysis, improving institutional and political frameworks, avoid corrupt policies and relate to regional policies
with greater scrutiny.
A bold vision is now needed in policy design and implementation, drawing on the experience of both post-
colonial and adjustment periods as well as on lessons from successful industrialization and development in East Asia

1
See Gulhati (1990)

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 An Explanatory Analysis of Components Constituting Economic Policy Success in Zimbabwe

and elsewhere. Monetary and fiscal discipline, macroeconomic stability, private initiative, good governance and
effective institutions is highly encouraged.

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