Spurious statistics: why figures on Zimbabwe’s ‘lost growth’ mislead

There is a lot that is written about Zimbabwe that is misleading. But sometimes a piece appears that really beats the field. This week a blog from the Centre for Global Development in Washington joins that category. This claims that ‘misrule’ has cost Zimbabwe US$96 billion.

I would normally ignore such articles, but the CGD regularly produces some quite good material, if a bit close to the Washington view of the world on occasions. I also have been sent this article several times by my regular ‘correspondents’ to show (again) how wrong I am about Zimbabwe. So I thought it deserved a bit more attention, and now a blog, as I think it illustrates rather well a wider problem of the use of statistics in misleading ways.

This is not exclusive to this piece. Far from it. For example, a few weeks back when I was in South Africa I was reading the Cape Times over breakfast and was confronted by a whole page on Zimbabwe (the hook was Mugabe’s birthday) written by Professor Robert Rotberg from the Harvard Kennedy School.  This purported to show how disastrous things were through ten points. I was so flabbergasted by the content that I totted up the ‘facts’ that were presented that could be challenged with real field data that I and others had collected. There were 12 – one for each of the ten points made and two more besides. It was quite extraordinary how an author (nay illustrious ‘expert’) and an editor (of a perfectly respectable paper) could get away with it. But sadly it happens nearly every day, and most such interventions go completely unchallenged.

Anyway, the point is that in writing this blog each week I have plenty of material to reflect on, but most is not worth the time of day. However, I thought I should offer some response to the CGD piece, given its provenance and the way it illustrates a wider problem. The blog is written by Todd Moss who is COO and Senior Fellow at CGD, and was formerly Deputy Assistant Secretary in the Bureau of African Affairs at the U.S. Department of State and previously advisor to the Chief Economist in the Africa Region at the World Bank. He certainly has impressive credentials, and has written other material on Zimbabwe, but I cannot see from the website whether he has actually done field research in the country.

So where does the $96 billion figure come from? The blog presents the sorry story of Zimbabwe’s collapse in the formal economy from the early 2000s to 2009 and its slow and weak recovery since. The indicator used is the standard GDP measure. This is compared with a ‘what if?’ argument. What if Zimbabwe instead of declining grew at the rate seen in Zambia? The difference between the two scenarios is presented as the ‘loss’ that Zimbabwe has suffered.

The main argument is encapsulated in a graph, with the large deficit highlighted. The blog urges readers to tweet the graph to the world. Here is a very explicit and in some ways quite effective attempt at creating a ‘killer fact’, one that will become a focus for media articles, and a hook in the wider discourse (a phenomenon that Duncan Green from Oxfam has written on).

So why is this ‘fact’, and its wider narrative problematic? There is no denying the catastrophic collapse of the formal economy in the 2000s, and also the weakness of the recovery since, now faltering once again. Equally, the scale of graft and unaccountability was recently illustrated in the media exposes of highly paid parastatal officials, although these have now been capped. But what else needs to be taken into account when making an assessment? Here are four points.

  • First is the problematic statistic of GDP, particularly in African contexts. Morten Jerven has written lucidly about this issue in his fantastic book Poor Numbers; a book I highly recommend to Dr Moss, and anyone else thinking about African economies. GDP numbers are usually fabrications with little basis in reality, and they shift dramatically depending on the assumptions made and the data collection techniques used. They show something about the formal economy, at least in terms of trends (no denying that for Zimbabwe), but they need to be viewed with very large pinches of salt.
  •  Second the official statistics only pick up a fraction of the range of economic activity, especially in economies that have large informal sectors. With the restructuring of the economy since 2000, the informal sector in Zimbabwe has grown massively. Tendai Biti, the former MDC Finance Minister, argued recently that it represented most of the economy, perhaps over 80%. If so then the recent figures in the CGD graph represent only represent a small proportion of total economic activity and should be multiplied many times – in which case the disparity with Zambia would shrink dramatically. Of course this would be equally spurious, as Mr Biti’s guess is just that, and in fact we have no idea what the scale of economic activity is, as the standard statistics do not tell us, as statistical services measure only a fraction of the ‘informal sector’; a point made forcefully by Professor Jerven.
  •  Third, Zambia’s economy has certainly grown but from a low base. In the 1980s and 90s in particular the economy was in dire straits. So the growth rate that has been used in the projection is to some degree a bounce back, driven in large part by the growth of commodity prices internationally. As a resource dependent economy, the dramatic growth is highly dependent on the price of copper, for example. And this has accelerated, in turn driving growth. There are of course other vibrant sectors, including tourism, but Zambia’s economic growth, and its projection into middle income status, is based on quite fragile and narrow foundations, with question marks being raised about job creation.
  • Fourth, we have to ask how economic activity is distributed to make any useful assessment in relation to development. The benefits of growth in Zambia is massively concentrated. The bigger winners are international mining capital and South African retail and services. Of course this generates some jobs and tax revenues, but the distributive effects of such forms of growth have to be questioned. A broader based growth grounded in redistributive policies is perhaps more sustainable, and certainly more equitable in the longer term. Zimbabwe has certainly not got there yet, but the land reform for example has laid the foundations for this in the agricultural sector.

I could go on. If we probe a bit we can see that the ‘killer fact’ loses its shine quite dramatically. Its construction and deployment in an essentially political argument is clearly problematic. It would be just as problematic for example if Professor Jonathan Moyo – Zimbabwe’s Minister of Information and spin doctor extraordinaire – used the same figure to argue that this was the cost of international ‘sanctions’ on the country in the same period. Both Moss and Moyo would be using a spurious statistic to bolster a political narrative that is far too simple an explanation for a complex and evolving process.

So if you hear this figure again, or any other presented in this sort of way, think twice. More likely than not the statistics will have been conjured up to a suit a predefined narrative. Ask about its source, and whether real field research underpins it. More questioning and critique of such statistics and the narratives that they give rise to is essential to pick apart complex realities from dubious myth making.

This post was written by Ian Scoones and originally appeared on Zimbabweland

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15 Comments

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15 responses to “Spurious statistics: why figures on Zimbabwe’s ‘lost growth’ mislead

  1. am

    No doubt the loss to production is considerable but whether it is $96 billion is another matter. It is easy to paint the worst case scenario. I would agree that a part of what is lost in formal production is now in the informal sector so only lost to the formal measurable economy. But it is difficult to measure.
    A lot of it did not need to happen anyway. The Zimbabwe dollar should have been abandoned in 2003 or 2004 at the latest. The Gono economic solution of printing money and hand outs of tractors galore and other economic irresponsibility has hardly been seen in the history of economics.
    A further point is that although the country collapsed at 2000 it was already in a poor state prior to land reform. The currency from the early 90’s was on the way down and the country had already entered economic malaise. So without land reform and its consequences to the formal economy Zimbabwe was already heading for increased poverty although not on the level that now is. This inevitable decline should be factored in as a deduction from loss of production statistics.
    I do think a thing missing in your response is the growth in agricultural productivity in Zambia. This has been very large and resulted in substantial growth in the country. They are self-sufficient in the staple. This seems to have been achieved through input subsidies to what are called their viable farmers and conservation farming. It has been achieved without bumper rains. This year it is expected that their staple harvest will be an astonishing crop. There is benefit to a large number of rural areas from this increase in production in Zambia. It can be compared to the financial growth in communal areas and fast track areas that are majoring on tobacco in Zimbabwe. Agricultural growth benefits agricultural areas.
    I agree that GDP stats are misleading where there is a large informal economy. Not mentioned in the post is the still large remittances from those that have gone out to the families at home. The scale is massive and far above any statistics that are reported. I hardly know a house which does not have somebody that is out. $100 or 1000 rands every 3 months makes a difference. But there are also much larger sums being sent home.
    Also there is a breakdown in trust between the people and the government. The salary increments at places like PSMAS was the last straw and was greeted with astonishment in the nation. Capping won’t change that. Rebranding is needed but I think that it is too late. The people have abandoned the government and have learned how to survive without it. This has resulted in the keeping of their money private and out of formal circulation. The informal economy is growing by the day.
    The government cannot exist without a larger formal economy. This is reflected in recent reports which suggest that the government is so cash-strapped it is no longer remitting the deductions of government workers to the third parties such as trade unions.. The pie is now very small and getting smaller. Soon there will be nothing left. This is the real measure of loss of production. The government has insufficient revenue to function. It would seem inevitable that salaries will stop being paid altogether.
    It is a tragedy but there is a way out of it at least in the rural areas. The Zambian solution needs to be copied. Dynamic individualism equates to viable farmers. They have to be identified and supported. Time for a national indaba. But for it to succeed politics, patronage and corruption will have to be abandoned.

  2. Will the Doctor

    I’m curious about the fact that you use inverted commas when referring to ‘misrule’, as though there is no misrule in Zimbabwe? Perhaps you could comment on the fact the Mugabe has arguably stolen most – well OK all – elections since ~2000, and is an illegitimate ruler? Would that not fall under misrule? Why for example has the South African report on the 2002 election gone missing? Since when do official documents go missing?

    I also glanced through the Rotberg article and his points can mostly be validated with data (such as the exodus of educated persons, hyperinflation, maize imports etc). Perhaps you could address each and every one of these points, and invite Rotberg for comment?

    And why would an article critical of one of the most racist, violent and homophobic regimes in modern times leave you agog?

    • The quotes were just used to refer to the original post. No-one disagrees that misrule has occurred in Zimbabwe. Good idea re the response to the Rotberg article. All the points have been made in previous blogs, but it would be good to use this to compile them. I have got some other blogs planned in the coming weeks, but will return to this.

    • Thanks Todd. We clearly agree on the big picture, but not the statistic.

      • MrK

        When looking at the comparison between Zambia and Zimbabwe, what makes the author think that Zambia’s GDP has not been lost as well?

        What you see in Zambia is the success of the neoliberal myth that ‘just’ having an increase in GDP means economic growth.

        When you have foreign corporations making all the profits, externalising all the costs (more GDP, whether from money spent on toxic cleanups or increased hospital admissions), why would a growth in GDP be a good thing, instead of a bad thing.

        Zimbabwe’s growth is real, Zambia’s exists on paper. It is actually incorrect to call Zambia’s GDP Zambian at all.

        Here is Zambia’s Finance Minister Alexander Chikwanda, who has bent over backwards to shield the mines from the Windfall Tax, which is a very efficient way of collecting taxes from the mines:

        http://maravi.blogspot.com/2014/03/sticky-chikwanda-on-growth-poverty-by.html

        According to Fred M’Membe, editor of The Post:

        ” South Korea was developed by South Koreans.

        ” Yes, they did everything possible to attract foreign investment but they were not totally dependent on it. They were more dependent on their own initiatives, on the contributions of their own people. The South Korean people were in the driving seat of their country’s economic life. We are not. And very few in Africa are. ”

        After resisting the Windfall Tax for years, Minister Chikwanda laments:

        ” Finance minister Alexander Chikwanda says there are a lot of fraudulent practices and all kinds of tricks in the mining sector in Zambia. Chikwanda has accordingly advised the nation to accelerate diversification in agriculture.

        “If we worked to try and develop our agriculture, we could even close the mines and put an end to fraudulence and all kinds of tricks,” says Chikwanda. “

    • am

      This link does not work and on going directly to the website, cgdev, there is no comment.

      • Todd’s comment is here, alongside a bunch of other stuff that often clogs up comment threads on Zimbabwe:

        http://www.cgdev.org/blog/how-misrule-has-cost-zimbabwe-96-billion-and-counting#disqus_thread

      • Mpunity

        So Ian Smith was able to make Zimbabwe prosper under full blown United Nations sanctions with the British sending their warships to enforce the embargo in the Mozambique channel and zanu blames piddly travel sanctions on a handful of their chefs who are known human rights abusers?
        Does it not prove that zanu’s voodoo economics are a disaster? Get real.

      • Real data, based on solid analysis is what I am interested in. And not unsupported suppostion, ideological positioning and misleading information. Getting real about Zimbabwe would be good for everyone. Expose the faults and abuses and acclaim the successes and potentials, and then, finally, we can have a balanced conversation about the future.

  3. MrK

    http://www.cgdev.org/blog/how-misrule-has-cost-zimbabwe-96-billion-and-counting#disqus_thread

    If you look closely at this chart, you will see that Zimbabwe’s GDP didn’t start to dive until 2002, which is also the year the Zimbabwe Democracy and Economic Recovery Act of 2001 came into effect, Jan. 1st 2002.

    The chart shouldn’t be called ‘The Cost of Economic Misrule’, it should be called ‘The Cost of Economic Sanctions’.

    And I’m not prof. Jonathan Moyo, or a ‘spinmeiser extraorinaire’.

    If people will want to pin the ‘economic misrule’ of handing out war pensions to war veterans in 1997 as US ambassador Bruce Wharton claims, nor is it farm invasions in 1999 or 2000.

    Why did Zimbabwe’s GDP dive in 2002, when ZDERA 2001 came into effect? Could it be the severing of lines of credit at international financial institutions, as stipulated in ZDERA 2001 Section 4 C?

    I would say yes.

    Here is another chart, from the anti-Mugabe Economist Intelligence Unit, showing the same effect in the year 2002.

    You can tell a real liberation movement like the MDC from a neoliberal outfit like the MDC, by the fact that the ANC never needed to hide the fact that there were economic sanctions, from the people of South Africa. The cowardly MDC to this day is pretending there are no economic sanctions, even though they drew them up, even though they wanted to see the economy ‘crash and burn’, so they could ‘pick up the pieces’.

    • Terry

      Oh give me a break! Check the list to see on whom and what companies sanctions were effected. A huge number of businesses and services were connected to agriculture and that’s why things started to unravel after the farm invasions, but the government’s finances were in trouble long before that due to mismanagement, corruption, the veterans’ pay outs and the war in the congo. Go to Harare and see how Zanu PF live in mansions and have weddings that cost millions of taxpayer dollars etc while the majority eke out a living by having relatives working in SA for low wages.

      • MrK

        ” Oh give me a break! Check the list to see on whom and what companies sanctions were effected. ”

        ‘The list’? Which list? Instead, read Section 4C of the Zimbabwe Democracy and Economic Recovery Act of 2001, and notice it mentions The Government of Zimbabwe twice. Also read Section 3, which lists the banks at which the lines of credit of the Zimbabwean Government were to be suspended.

        https://www.govtrack.us/congress/bills/107/s494/text

        ” A huge number of businesses and services were connected to agriculture and that’s why things started to unravel after the farm invasions, ”

        After the farm invasions of 2002?

        ” but the government’s finances were in trouble long before that due to mismanagement, corruption, the veterans’ pay outs and the war in the congo. ”

        You forget 5 years of the IMF’ structural adjustment program, a program very similar to the approach the neoliberal MDC has.

        http://antoniajuhasz.net/article.php?id=125

        Of course, you can’t sell the idea of a return to ESAP, which is what the MDC’s program is – firing government workers, privatizing the diamond fields to they can have a ZIMDEB/DEBZIM with De Beers, like DEBSWANA and NAMDEB.

  4. MrK

    Correction, I mean nationalizing the diamond mines, while privatising everything else.

    ” We will nationalise diamonds and ensure that government goes into partnership with genuine investors. ”

    MDC’s plan for the mining sector
    Saturday, 13 July 2013
    http://www.swradioafrica.com/mdcs-plan-for-the-mining-sector/

  5. am

    http://marcfbellemare.com/wordpress/2014/03/the-fall-and-rise-of-african-crop-yields-since-1960/

    Above link may be of interest to some of the readers.
    It is from a blog written by Assistant Professor at Minnesota, Marc F. Bellemare – who blogs on Food, Economics and Development although the source document is from Oxford.
    I did not know where to post it on the site so I have just put it here for ease of posting.

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