Public Disclosure Authorized Understanding Poverty and Human Public Disclosure Authorized Resources in Zimbabwe: Changes in the 1990s and Directions for the Future Public Disclosure Authorized December 1996 Public Disclosure Authorized /\ ~U~'.IuJ~~7T~ f~j 4, i .a 7r"- IS rt7 O7I Fi< Vj;t(-;7-lt -itli-lfJ - ' |@ | I I Understanding Poverty and Human Resources in Zimbabwe: Changes in the 1990s and Directions for the Future TABLE OF CONTENTS EXECUTIVE SUMMARY ............................................................ i INTRODUCTION ............................................................. 1 Objectives ............................................................. 1 Context ............................................................. 2 Sources of information ............................................................. 2 Scope of the paper ............................................................. 3 2. INCOME AND CONSUMPTION ............................................................. 4 2.1 How Prevalent is Poverty in Zimbabwe? ............................................................. 4 Estimates of prevalence vary, but household surveys reveal patterns and characteristics of poverty ............................................................. 4 Poverty in Zimbabwe is not as high as in many other countries .......................... 6 2.2 What are the characteristics of poverty? ............................................................. 8 Poverty is predominantly rural ............................................................. 8 Poverty is most prevalent in communal and resettlement areas ........................... 8 Most of Zimbabwe 's poor live in communal areas, but only an estimated one third of the population in these areas is poor.................. 10 The prevalence ofpoverty amongfarm workers on large-scale commer- cialfarms is high even though the overall prevalence on these farms is low ............................................................ 12 In resettlement areas,poverty prevalence is high but declining............... 13 In urban areas,prevalence ofpoverty is low but probably growing......... 14 The driest provinces tend to be the poorest ......................................................... 15 Female-headed households in rural areas are no more likely to be poor than male-headed households ............................................................ 17 Heads of poor households tend to have less formal education than do heads of non-poor households ....................................................... 17 2.3 What are the Sources of Income for the Poor? .................................................... 19 Rural cash incomes are predominantly from non-crop sources .......................... 19 Agriculture is the most frequent source of cash income, but not the largest ...... 21 Non-poor households tend to derive more cash income from formal employment than do poor households ....................................................... 22 Remittance income is substantial, especially in rural areas ................................ 22 Rural households derive half of their total income from in-kind sources ........... 24 2.4 Summary ........................................................... 24 3. STATUS OF HUMAN RESOURCES ........................................................... 26 3.1 The Population is Young ........................................................... 26 3.2 What is the status of health?........................................................... 27 Zimbabwe has invested successfully in the health of its population .................. 27 Health status is good by international standards ................................................. 28 Prevalence of HIV/AIDS is among the highest in the world .............................. 28 Health outcomes are worse in rural than in urban areas ..................................... 29 Ill health is linked to low education levels .......................................................... 30 3.3 What is the status of education? ........ 31 Zimbabwe's achievements in education are impressive ........ 31 Education levels are lowest in the large-scale commercial farm sector .............. 31 Girls receive less education than boys, but the gap is closing ............................ 32 3.4 Summary ........................................................ 34 4. FACTORS ASSOCIATED WITH POVERTY ...................................... 35 4.1 Poverty and Inequality ........................................................ 35 Income is unequally distributed ........................................................ 35 Land distribution is highly skewed ........................................................ 36 The poor have little access to land ...................................................... 36 Ruralpoverty is associatedwith poor agriculturalland ........................... 38 Land marketsfunction poorly ...................................................... 39 Unequal access to water exacerbates the land problem............................. 40 Agricultural services have not focused on issues appropriateto drought-prone areas...................................................... 41 Environmental problems affect both good and poor lands ................................. 42 4.2 Why has the economy not generated employment? .............................................. 43 The formal sector historically favored capital over labour ................................. 43 Manufacturing has not generatedsufficient employment ......................................................... 43 Commercial agriculture has used neither land nor labour optimally....... 44 The informal sector is relatively small, and used to be tightly regulated ........... 44 Large numbers of school-leavers cannot find jobs ............................................. 45 4.3 Summary ......................................................... 46 5. CHANGES DURING THE 1990s ................................................. 47 5.1 What changes have affected the economy? ......................................................... 47 Structural adjustment aimed for growth and employment creation .................... 47 The reform program has only been partially implemented ................................. 50 Markets have been liberalized......................................................... 50 The government has not managed to meet its fiscal targets...................... 50 The Social Dimensions ofAdjustment Programme was poorly designed and insufficiently funded .............................................. 51 Over-regulation remains in some sectors................................................... 52 Public resources could have had greater benefits for the poor ............................ 52 Drought had devastating effects, which better preparation could have reduced ......................................................... 53 5.2 What were the effects on incomes and consumption ............................................ 54 Incomes from employment have fallen ......................................................... 55 Formalsector wages havefallen sharply.................................................. 55 The informal sector has grown, mainly in low-profit activities................. 56 Liberalization of maize markets has benefited consumers and producers .......... 58 Drought hit rural incomes and probably increased inequality ............................ 60 Effects on average incomes have been negative ................................................. 60 5.3 What were the effects on health and education 9 . ..................................... 61 The health sector is under strain because of funding cuts and AIDS .61 Health spending has declined.62 Health services have deteriorated........................................... 63 AIDS is affecting health outcomes, strainingservice levels and affecting the whole economy .64 Education funding cuts have not affected outcomes substantially .65 Education outcomes have worsened slightly .66 Future health and education outcomes are likely to deteriorate .67 5.4 Summary: What has happened to poverty in the 1990s? ................................. 67 6. TOPICS FOR FURTHER STUDY ............................................................ 69 Increasing understanding of the living conditions of the poor ............................ 69 Understanding formal and informal labour markets ........................................... 70 Deepening understanding of the dynamics of remittance income ...................... 71 Understanding the impact on poverty of changing agricultural markets ............ 72 Understanding how households cope with crises such as drought and AIDS ....72 Addressing the role of institutions ............................................................ 73 7. ACTIONS FOR THE FUTURE ............................................................ 74 Implementing a poverty reduction strategy ........................................................ 74 Creatingan environment conducive to economic growth ......................... 74 Investing directly in poverty reduction...................................................... 75 Moving forward ............................................................ 76 SUMMARY OF SEMINAR PROCEEDINGS ............................................................ 78 BIBLIOGRAPHY ............................................................ 83 PARTICIPANTS IN POVERTY WORKSHOPS .......................................................