economy has been on a downward spiral since, registering a growth rate of 0.9% in 1998, declining to 0.5% in 1999, and negative growth rates since 2000-2001. There were no “real” economic solutions in sight at the start of 2005, despite the Governor of the Reserve Bank of Zimbabwe declaring an imminent turn-around of the economy. The recent IMF mission, under Article IV of the consultation framework, has indicated that the economy is likely to decline by a further 7% this year (2005), that inflation, currently running at about 140%, would not be arrested to any significant levels, and that foreign currency reserves were down to three days. Foreign exchange shortages have restricted essential imports needed for industrial and agricultural production, fuel, energy and basic commodities, further exacerbating the decline of the formal economy and the Government’s revenue base. The budget deficit is estimated to exceed 14% of GDP and domestic debt is estimated at USD 1 billion. Unemployment currently stands at 75% with over 70 % of the population living under the poverty line. Zimbabwe also has one of the highest divides in Africa both in terms of access to resources and in consumption with about 80% of the population sharing less than 20% of national wealth. 22 Food shortage exacerbated by drought affecting the entire sub-region has been an additional challenge faced by the country since 2001-2002, particularly in the rural areas, leading to a humanitarian crisis23 . The food deficit is estimated at 1.2 MT of maize for the 2005-6 season. 1.4.3 Rise of the Informal Economy In 1980 the informal economy was relatively small, accounting for less than 10% of the labour force. This was attributed to the various laws and bylaws that prohibited the free movement of indigenous people, especially from rural to urban areas. With deregulation after independence and economic stagnation and decline, the informal sector share of employment grew to 20% by 1986/87, 27% by 1991 and an estimated 40% by 2004. The informal economy had effectively become the mainstay for the majority of the Zimbabweans. ILO reported in June 200524 that 3 to 4 million Zimbabweans earned their living through informal sector employment, supporting another 5 million people, while the formal sector employed about 1.3 million people. Most local authorities derive substantial revenues from fees levied from informal sector activities.25 1.5 The Political Context Against this backdrop of a deeply weakened economy is a country faced with a series of challenges in the political, legal and social areas. Zimbabwe had been ruled by one political party for 20 years before a real opposition could emerge26. The country has been led by a Founding President, a towering and influential political personality, viewed with respect in Zimbabwe and in all of Africa for his historical role in the colonial liberation struggle. A combination of this reverence and the inherited colonial administrative structures contributed to a heavily centralised Government in Zimbabwe and also 22 SADC Human Development Report (1999) WFP, Hunger in Africa, A report to the Security Council in 2005 24 : cited in the Zimbabwean (24-30 June 2005, p.8) 25 For instance, Bulawayo City Council was receiving US $75,000 form vendors. (Source: submission from Zimbabwe Congress of Trade Unions, 28 June 2005) 26 More than 12 opposition parties were formed in the early 1990s but remained weak and small, poorly led and having almost no political impact. 23 17