'Zimbabwe is one of the least free economies'

A LEADING American think-tank has ranked Zimbabwe as one of the least "free economies" in the world due to the perceived political instability and policy volatility that has marked the lifespan of the inclusive government.

The country's score increased by 2,3 points from last year attributed to an improvement in the control of government spending.  Zimbabwe was, however, ranked last out of 46 countries in the Sub-Saharan African region.

According to Heritage Foundation's index of Economic Freedom, the country scored 28,6 points with its economy ranked 175 in the 2013 Index. The foundation considers 10 freedoms including property rights, labour, government spending and monetary freedom, among others. The 10 components of economic freedom are weighted equally in determining country scores.

"The Zimbabwean economy has begun to stabilise after years of severe monetary and fiscal problems that can be laid directly at the feet of the repressive (President Robert) Mugabe regime," reads part of the report.

"Since the inception of the so-called inclusive government of Zimbabwe in 2009, the country has gained some traction in recovering from a catastrophic economic collapse.

"Renewed economic growth has been driven primarily by the mining industry, supported by the gradual ending of hyperinflation."

Nonetheless, instability and policy volatility remain hallmarks of excessive government interference and mismanagement of the economy.

Heritage Foundation said the Indigenisation and Economic Empowerment Act that requires foreign-owned companies  to surrender 51% to locals severely undermined property rights and investor confidence.

In his Medium Term Plan implementation progress report late last year, Economic Planning and Investment Promotion minister Tapiwa Mashakada said efforts to mobilise foreign direct investment that is critical for closing the funding gap had been undermined by policy inconsistencies in government and perceived political risk.

"It is important for government to avoid policy contradictions and inconsistencies and reduce the cost of doing business in the country, in order to attract both domestic and foreign direct investment which is critical to fund the MTP," said Mashakada then.

The MTP, a comprehensive economic blueprint that was launched in July 2010, outlines economic policies, projects and programmes that set national priorities for the period 2011-2015. At least $9,2 billion is required to ensure full implementation.

Hong Kong was ranked as the freest economy in the world followed by Singapore, Australia, New Zealand and Switzerland.

The United States, which has the world's largest economy, was ranked 10th while mainland China - the world's second largest economy - was ranked 136th out of 177 economies. "Almost all of the most advanced countries lost ground this year," Terry Miller, a director at the Heritage Foundation, wrote in the Wall Street Journal.

"Even top-ranked Hong Kong saw its score decline due to increased government spending and higher inflation.

"The US, ranked only 10th most free in the world this year, joins Ireland as the only advanced economies to have lost economic freedom five years in a row."