Twelve months later, the economy’s seemingly endless atrophy has halted. Abandoning the local currency, left worthless after years of hyperinflation, has brought a semblance of normality to once-bare store shelves, easing chronic food shortages.
But ongoing political feuding over key government posts has exposed the deal’s fragility, raising fears over whether the unity government is a solution or just a lull to the nation’s problems.
Both men freely express their reservations about their awkward coalition.
"This is the situation we should and could have avoided," Mugabe told his party’s youth wing on Friday, calling for "careful, measured steps as we nurse this new pattern of government".
"And, as we co-exist in this arrangement, we should not underestimate the need to re-examine ourselves both as a party and leadership," he added.
Tsvangirai says he only agreed to the unity pact to halt the crushing hardships that Zimbabweans faced last year, as food supplies disappeared and broken sewers sparked a cholera epidemic that killed 4 200 people in just 12 months.
"We believed if this government can work, it can bring better lives and you can begin to rebuild your life," he told his supporters at a rally on Sunday.
"That [government] is not real change. It is a temporary, transitional process toward real change."
After the deal was signed on September 15 2008, it took another five months to install the unity government, after a bitter brawl over who would control the most powerful posts.
Tsvangirai’s Movement for Democratic Change (MDC) won control of the Finance Ministry, but Mugabe’s Zanu-PF still has a firm grip on the security forces, state media and the Justice Ministry.
"It’s a flawed arrangement, a dysfunctional arrangement, where it’s Zanu-PF trying to maintain its stranglehold on power," said Sydney Masamvu, researcher with the International Crisis Group.
"This arrangement is not one where we are going to be delivering everything. It’s an ad-hoc arrangement," he said.
The rivals have yet to agree on key appointments like the central bank governor and the attorney general, prompting Tsvangirai to ask regional leaders to again intervene to mediate a solution.
Key provisions of the power-sharing deal, like creating a new security council to control the armed forces, have hardly been implemented.
And efforts to draft a new constitution, required by the accord to pave the way to fresh elections, have become bogged down in disputes over money and political jeering.
"Power is not shared, but divided," said political analyst Eldred Masunungure. "Moreover, the distribution of power is unequal, with the balance tilted in favour of the previous regime."
Despite its many problems, Masunungure said, the unity government has brought desperately needed relief to a nation of 94% unemployment and chronic national food shortages.
"The biggest achievement of the transition so far is that people hope that it can deliver a better and brighter future," Masunungure said.
The International Monetary Fund estimates that Zimbabwe’s gross domestic product shrank by 54% between 2000 and 2008. The World Bank now predicts growth of 3,7% this year, just shy of government’s 4% percent forecast.
Dollarising the economy has allowed people to begin saving and investing money, and opened the door for businesses to resume operations.
But if the unity government fails to bring tangible benefits to the weary population, the public’s goodwill could run out, Masunungure added.
"If these expectations are not met, the public reaction is unknown." — Sapa-AFP