Assessment of Smallholder Agriculture’s Contribution to the Economy of Zimbabwe: A Social Accounting Matrix Multiplier Analyses

The economy of Zimbabwe has been in shambles since 1991. Output has declined in most of the production sectors, leading to many job losses. Current debates on the problems facing the economy have focused on poor government’s incentives and excessive interventions as major constraints of economic development. The government of Zimbabwe, on the other hand has emphasized an agriculturally led economic recovery programme. Specifically, the government has undertaken land reform and investment policies aimed at promoting small-holder agriculture in Zimbabwe. Is this a justifiable action taken by the government? The answer to this question necessitated the use of the 1991 micro SAM for Zimbabwe to empirically analyze the impact of small-holder agriculture on the economy of Zimbabwe. The goal of this paper is to quantify small-holder agriculture’s true contribution to the economy in general and poverty reduction in particular. However, to make a more detailed analysis, the other sectors are also included in the analytical framework. The study uses the traditional impact analyses to measure the incidence of a sector specific policy on the economy. The results provide evidence that investment in small-holder agriculture should be seen as investment in the entire economy. The study clearly shows that small-holder agriculture promotes sustainable development and the inclusion of rural communities especially the poorest in economic activities. 1