Zimbabwe’s central bank chief, John Mangudya, said he would introduce a new currency in the next two weeks to address biting liquidity shortages in the economy and regain monetary policy control after years of dollarisation.
Mangudya told journalists in the capital on Tuesday that the as-of-yet-unnamed currency will have denominations of coins and notes with a maximum value of five Zimbabwe dollars (US$0.25).
“We are going to be releasing money into circulation. To be precise, within the next two weeks, we will have the new currency,” Mangudya said.
He said the new currency would trade along with the bond notes and the coins and would have the same value as these surrogate currencies.
Mangudya defended the bank’s decision to have a note worth only five Zimbabwe dollars as the highest denomination in a hyperinflationary environment, saying he wanted uniformity with the denominations that were already in the market.
Mangudya said that in line with the law, Zimbabwe’s President Emmerson Mnangagwa must agree to the creation of a new monetary unit. After he assents, the minister of finance will then issue a decree, paving the way for the printing of the currency.
Zimbabwe ‘s inflation was last measured at 350% after Finance Minister Mthuli Ncube ordered the country’s statistical department to stop publishing annual inflation numbers until February of next year.
Back in 2009, soaring inflation prompted Zimbabwe to ditch its failing sovereign currency in favour of a basket of foreign currencies led by the United States dollar. But “dollarising” the economy hit a major bump in 2015 when greenbacks started vanishing from the formal banking system.
In a bid to end the US dollar shortage, Zimbabwe’s central bank introduced bond notes – a form of surrogate currency – that was backed by a US$200 million bond facility from the Africa Export-Import Bank. But black market speculation quickly eroded the bond note value, triggering a shortage that the central bank tried to offset by creating electronic notes.
Then this past February, bond notes – both physical and electronic – were merged into the Real Time Gross Settlement (RTGS) dollar.
In June, the government moved to defend the Zimdollar against speculators by banning all foreign currencies in local transactions. But the effort has largely failed after the Zimdollar quickly fell prey to black market speculation that sent its value plummeting.
“There is a misconception that once you introduce a currency, then inflation is going to increase. We are simply giving people a chance to choose between electronic balances and cash,” said central bank chief Mangudya.
Economists are not holding out hope for the new currency.
“The only worry about a local currency is excessive money printing by the central bank, which makes multiple currencies dearer options when forced to choose,” Victor Bhoroma, a Harare-based independent economist, told Al Jazeera.
“The solution for Zimbabwe does not lie in any new currencies [whether Zimbabwean dollars or foreign currencies].”
The solution, according to Bhoroma, is instituting key reforms in governance, reining in expenditures in government, creating supply-side interventions to boost production, engaging in confidence-building, and strengthening institutions – such as the rule of law, property rights, and policy consistency.
Gift Mugano, an economics professor at Zimbabwe Ezekiel Guti University, told Al Jazeera that the introduction of the currency will accelerate its own value decline.
The new currency will have the same value as the bond note and RTGS dollars circulating in the economy.
“This is a continuation of a process that started on 24 June when the central bank outlawed the use of the US dollar and introduced a new currency,” Mugano said.
“What is important to note is that they did this when economic fundamentals were very weak. The fundamentals have not improved as we speak.
“The central bank doesn’t have the reserves to back the value of the currency and has only a month’s import cover at best. It’s going to be difficult to maintain the value of the currency.”
Mugano said the bond note and the RTGS dollar, the Zimbabwe dollar’s predecessor, had failed to act as a store of value, forcing ordinary Zimbabweans and companies to buy US dollars to preserve value.
He sees companies using the new currency to acquire US dollars.
“What will happen is very simple: companies will get cash to buy US dollars and then the rate will go higher as more cash chases the few US dollars in the market,” Mugano said. “The pressure on the exchange rate will be higher.”
The RTGS dollar and Zimbabwe’s surrogate currency, the bond note, have both struggled to hold value against the US dollar as demand outstrips supply.
Once valued at 1:1 with the greenback, the currency is now trading at 1:20 against the US dollar on the black market.
“It is obvious the Zimbabwean dollar will not hold any value because of negative fundamentals in the economy which include key among them confidence deficit and high demand for foreign currency to import commodities [current account deficit],” Bhoroma said.
“It is also inevitable that the central bank will continue to grow money supply in the economy to fund runaway government expenditure. This will further weaken the local currency.”
This year alone, the economy in Zimbabwe is contracting by more than 6.5%.
Zimbabwe’s President Emmerson Mnangagwa on Friday described Western sanctions as a “cancer” sapping the economy, and his supporters denounced the measures during marches held around the southern African country.
Mnangagwa’s opponents stayed away from the demonstrations, saying they were a distraction from the president’s mishandling of the economy, which is grappling with 18-hour daily power cuts and shortages of foreign exchange, fuel and medicines.
Mnangagwa has so far failed to unify the country since taking over from the late Robert Mugabe, who was ousted in a coup in 2017. Hopes of a swift recovery have faded as the economy struggles to exit its deepest crisis in a decade.
Mnangagwa, like Mugabe, blames the sanctions imposed by the United States and European Union since 2001 for the economic ills and sees them as a tool to remove the ruling ZANU-PF party from power.
“Every part and sector of our economy has been affected by these sanctions like a cancer,” Mnangagwa told a few thousand supporters inside a 60,000-seater national stadium. “Enough is enough, remove them. Remove these sanctions now!”
Earlier, 7,000 government supporters led by Mnangagwa’s wife Auxillia and bussed from across Zimbabwe marched for 5 km to the national stadium in the capital Harare.
Singing and dancing, they waved placards inscribed “No sanctions, no discrimination, sanctions new version of slavery,” and “Enough is enough, remove sanctions now.”
“We have no jobs because of the sanctions. America wants to remove ZANU-PF from power through sanctions but we will defend the party and our president,” said 32-year-old Martin Mafusire.
Similar marches were held throughout Zimbabwe after Mnangagwa declared Friday a public holiday.
The EU and United States imposed financial and travel bans on ZANU-PF and top military figures for alleged human rights abuses and electoral fraud. The government says the measures are punishment for its seizures of white-owned farms.
ZANU-PF supporters condemn the sanctions while the main opposition Movement for Democratic Change says they are not the cause of the country’s economic crisis.
The regional Southern African Development Community has rallied behind Zimbabwe’s call for an end to sanctions.
While the government ran documentaries and articles in the official press criticising sanctions, the U.S. and EU embassies took to social media to rebut the official narrative.
U.S. Ambassador Brian Nichols wrote an article in a private newspaper on Thursday saying “the greatest sanctions on Zimbabwe are the limitations that the country places on itself”.
He said the United States remained the biggest donor to Zimbabwe but corruption and lack of reform had dragged down the economy.
Harare says the U.S. sanctions have been the most devastating. These bar U.S. officials at the International Monetary Fund and World Bank from voting for debt relief or fresh lending for Zimbabwe.
In March, President Donald Trump extended by one year sanctions against 141 entities and individuals in Zimbabwe, including Mnangagwa.
Zimbabwe's militant teachers' group, Progressive Teachers Union of Zimbabwe (PTUZ) says its members will from today start reporting for duty only twice a week as they could no longer afford transport fares to and from work.
This, they announced through a Friday letter they addressed to Public Service Commission chairperson, Vincent Hungwe.
PTUZ secretary general Raymond Majongwe said teachers under his 15 000-member union will also be abandoning formal dressing during their course of duty as they can no longer afford the clothing.
He said teachers' earnings have been eroded by continued price increases that have propelled the country's inflation to an alarming 591 percent, according to top world economist Steve Hanke.
"We hereby give our notice of incapacitation and with effect from Monday the 21st of October 2019 our members will be reporting for duty twice a week at most," Majongwe said.
"Mr Chairman, teachers would also like to advise and notify you that because of their plight, they will no longer be able to abide by the Strict Dress Code Rules as the little pittance they are getting is not adequate to feed them and their families, let alone buy formal clothing."
Majongwe said teachers under his organisation will only resume full time duty when government starts paying their wages based on the US dollar interbank rates, which on Friday stood at $15.8 against USD$1.
"Our humble and honest request to government is simply a radical adjustment of teachers' salaries to the last USD salary paid, at the current interbank rate, that is pegged at $15.8 today," he said.
The pending job action by the radical teachers group comes as junior doctors working in the country's public hospitals Friday went into Day 47 of their crippling strike demanding a review of their wages and allowances based on interbank rates.
The doctors insist they were prepared to report for work, but they were financially incapacitated to do so.
Government has offered the critical health staff a 60 percent wage hike which has been turned down by doctors who want their salaries pegged against the US dollar.
According to latest wage talks, government Friday revised the offer to 100 percent.
President Emmerson Mnangagwa Thursday accused the striking doctors of being used by the enemy to advance a regime change agenda against his under-fire administration.
Credit: New Zimbabwe
Striking Zimbabwean doctors defied a government ultimatum to return to work on Monday, after rejecting a 60% pay rise offer they say is not enough to keep up with soaring prices of basic goods.
The southern African nation’s economy is grappling with its worst crisis in a decade, with triple-digit inflation, rolling power cuts and shortages of U.S. dollars, medicines and fuel that have revived memories of the 2008 hyperinflation under late President Robert Mugabe.
The Zimbabwe Hospital Doctors Association (ZHDA), the union for junior and middle level doctors in the public sector, on Monday pulled out of the Health Apex Council that represents public health workers in negotiations with the government, saying it no longer served their interests.
The association said the government offer was “ridiculous” as it would take their monthly salaries to around 1,700 Zimbabwe dollars ($111), well below their demand of a 400% salary hike.
More than 100 of its members marched at the main Parirenyatwa Hospital in Harare on Monday demanding higher pay and vowing not to return to work.
The doctors have been on strike for more than a month, which has seen some patients being turned away from public hospitals already struggling with shortages of medicines.
ZHDA said in a statement that the government was not willing to address their concerns but had instead responded with “intimidation and threats of disciplinary action or dismissals.”
“The will and desire is there but the means to execute their (the doctors’) duties does not exist,” it said.
Health Minister Obadiah Moyo, who on Saturday issued the ultimatum for doctors to return to work on Monday or face disciplinary action, said he could not immediately comment.
Tapiwa Mungofa, the ZHDA treasurer, later told reporters that the World Health Organisation and other United Nations agencies should help raise funding for Zimbabwe’s health sector and broker a solution to end the strike.
The doctors want their salaries indexed to the U.S. dollar because the Zimbabwe dollar is losing value against the greenback while earnings are being eroded by inflation, which the International Monetary Fund said stood at nearly 300% in August.
The government lifted the price of diesel and petrol by up to 27% on Saturday, which was followed by increases in the prices of goods like sugar, cooking oil and milk and transport.
Last week, President Emmerson Mnangagwa pleaded for time and patience to revive the economy.
Hopes that it would quickly rebound under Mnangagwa, who took over after Mugabe was deposed in a coup in November 2017, have faded fast, as Zimbabweans grapple with inflation that has eroded earnings and savings.
Zimbabwean public sector doctors went on strike on Tuesday for the second time in less than a year to demand a further salary increase amid soaring living costs, as President Emmerson Mnangagwa’s government struggles with a deteriorating economy.
Zimbabwe is mired in its worst economic crisis in a decade, with triple-digit inflation, rolling power cuts and shortages of U.S. dollars, basic goods, medicines and fuel that have revived memories of the hyperinflation that forced it to ditch its currency in 2009.
Mnangagwa’s government has proposed big pay rises for doctors and other public sector workers in an attempt to avert crippling strikes. Police have banned a series of protests called by the opposition in major cities and have used tear gas and water cannon to disperse demonstrators.
The main unions representing doctors and teachers, who make up the bulk of public service workers, said they had rejected the government’s salary offers, which would see the lowest paid worker earning 1,023 Zimbabwe dollars ($90.45) a month.
The doctors accepted their 60% pay increase but said it was not sufficient to avert the strike action. The teachers are not currently on strike.
The doctors are looking for another 401% pay hike that they want indexed to the U.S. dollar.
“We met with the government representatives yesterday and they promised to expedite other allowances for health personnel but so far it has just been empty promises,” the head of the Zimbabwe Hospital Doctors Association (ZHDA), Peter Magombeyi, told Reuters.
“They have taken us for granted for too long, but we are ready to go back to work as soon as they offer us something tangible, which has not been forthcoming so far.”
“ASSESSING THE SITUATION”
At the turn of the year, junior doctors held a 40-day strike for better pay and conditions that crippled public hospitals. It ended without a deal being reached and with doctors threatening further stoppages.
Most junior doctors stayed away on Tuesday at the largest two public hospitals, Parirenyatwa and Harare Central, a Reuters witness said.
A few junior doctors turned up to work, but said they would not report for work on Wednesday. Some senior doctors also said they would join the strike.
“Today we were assessing the situation but we are not coming in tomorrow(Today). The strike will be in full swing,” a junior doctor at Harare Central Hospital told Reuters.
The Health Services Board (HSB), which represents the government, said in a statement late on Monday that it was surprised the doctors were taking strike action despite accepting the earlier pay offer.
ZHDA wants wages, which were previously pegged to the U.S. dollar, to be paid at the prevailing inter-bank market rate and says its members can no longer afford to report for duty due to surging inflation and the deterioration in the economy.
Their current salaries are worth less than 10% of what they were before the peg was scrapped due to high inflation.
Zimbabwe dollar is trading at 11.31 against the U.S. dollar in the interbank market and 13.10 in the black market. Both rates are used to buy goods.
Since the November 2017 coup that toppled Robert Mugabe in Zimbabwe and the elections in 2018, the regime of President Emmerson Mnangagwa has forged two forms of rule. These have been based on coercion on the one hand, and on the other dialogue.
Following the 2018 general elections and the violence that marked its aftermath, the Mnangagwa regime once again resorted to coercion in the face of the protests in January 2019. The protests were in response to the deepening economic crisis in the country, and part of the opposition strategy to contest the legitimacy of the government.
The response of the state to the protests was swift and brutal. Seventeen people were killed and 954 jailed nationwide. In May the state turned its attention to civic leaders, arresting seven for “subverting” a constitutional government. The repressive state response was felt once again on 16 and 19 August, when the main opposition Movement for Democratic Chance (MDC) and civic activists were once again prevented from marching against the rapid deterioration of Zimbabwe’s economy.
These coercive acts represent a continuation of the violence and brutality of the Mugabe era.
At the same time Mnangagwa has pursued his objective of global re-engagement and selective national dialogue. This is in line with the narrative that has characterised the post-coup regime.
In tracking the dialogue strategy of the Mnangagwa government, it is apparent that it was no accident that key elements of it were set in motion in the same period as the agreement with the International Monetary Fund (IMF) on a new staff monitored programme.
The purported objective is to move the Zimbabwe Government towards an economic stabilisation programme. This would result in a more balanced budget, in a context in which excessive printing of money, rampant issuing of treasury bills and high inflation, were the hallmarks of Mugabe’s economic policies.
The dialogue initiatives also took place in the context of renewed discussions on re-engagement with the European Union (EU) in June this year.
But, Mnangagwa’s strategy of coercion and dialogue has hit a series of hurdles. These include the continued opposition by the MDC. Another is the on-going scepticism of the international players about the regime’s so-called reformist narrative.
Mnangagwa has launched four dialogue initiatives.
Political Actors: This involves about 17 political parties that participated in the 2018 elections. They all have negligible electoral support and are not represented in parliament. The purported intent is to build a national political consensus. The main opposition party, the MDC, boycotted the dialogue, dismissing it as a public relations exercise controlled by the ruling Zanu-PF.
The Presidential Advisory Council: This was established in January to provide ideas and suggestions on key reforms and measures needed to improve the investment and business climate for economic recovery. This body is largely composed of Mnangagwa allies.
The Matabeleland collective: This is aimed at building consensus and an effective social movement in Matabeleland to influence national and regional policy in support of healing, peace and reconciliation in this region. But it has come in for some criticisms. One is that it has been drawn into Mnangagwa’s attempt to control the narrative around the Gukurahundi massacres. These claimed an estimated 20 000 victims in the Matabeleland and Midlands regions in the early 1980’s. Another criticism is that it has exacerbated the divisions within an already weakened civic movement by regionalising what should be viewed as the national issue of the Gukurahundi state violence.
The Tripartite National Forum. This was launched in June, 20 years after it was first suggested by the Zimbabwe Congress of Trade Unions. The functions of this body set out in an Act of Parliament, include the requirement to consult and negotiate over social and economic issues and submit recommendations to Cabinet; negotiate a social contract; and generate and promote a shared national socio-economic vision.
The establishment of the forum could provide a good platform for debate and consensus. But there are dangers. The Zimbabwe Congress of Trade Unions warned of the long history of the lack of “broad based consultation on past development programmes”. It insists that
reforms must never be deemed as tantamount to erosion of workers’ rights.
In assessing the central objectives of the various strands of Mnangagwa’s dialogue strategy, three factors stand out.
The first is that the Political Actors Dialogue, the Presidential Advisory Council and the Matabeleland Collective were developed to control the pace and narrative around the process of partnership with those players considered “reliable”. Major opposition and civic forces that continued to question the legitimacy of the Mnangagwa boycotted these processes.
Secondly, the formal establishment of the long awaited Tripartite National Forum may serve the purpose of locking the MDC’s major political ally, the Zimbabwe Council of Trade Unions, into a legally constructed economic consensus. The major parameters of this will likely be determined by the macro-economic stabalisation framework of the IMF programme.
When brought together, all these processes place increased pressure on the political opposition to move towards an acceptance of the legitimacy of the Mnangagwa regime, and into a new political consensus dominated by the ruling Zanu-PF’s political and military forces, thus earning them the seal of approval by major international forces.
The MDC has responded with a combined strategy of denying Mnangagwa legitimacy, protests as well as calls for continued global and regional pressure. The MDC believes that the continued decline of the economy will eventually end the dominance of the Mnangagwa regime.
As part of its 2018 election campaign, the MDC made it clear it would accept no other result than a victory for itself and Chamisa. That message has persisted and is a central part of the de-legitimation discourse of the opposition and many civic organisations. The MDC has regularly threatened protests since 2018.
The MDCs strategies have not resulted in any significant progress. The hope that the economic crisis and attempts at mass protests to force Zanu-PF into a dialogue are, for the moment, likely to be met with growing repression. Moreover, the deepening economic crisis is likely to further thwart attempts to mobilise on a mass basis.
The EU, for its part, is still keen on finding a more substantive basis for increased re-engagement with Mnangagwa and will keep the door open. Regarding the US, given the toxic politics of the Trump administration at a global level, and the ongoing strictures of the US on the Zimbabwe government, there has been a closing of ranks around a fellow liberation movement in the Southern African Development Community (SADC) region.
Mnangagwa’s recent appointment as Chair of the SADC Troika on Politics, Peace and Security in Tanzania will only further cement this solidarity.
There is clearly a strong need for a national dialogue between the major political players in Zimbabwean politics. But there is little sign that this will proceed. Moreover, the current position of regional players means that there is unlikely to be any sustained regional pressure for such talks in the near future.
Zimbabwe’s passport-issuing service has ground to a halt, officials said Monday, leaving many citizens trapped in the country as its economic crisis worsens.
Applicants for new or renewed passports face an indefinite wait as the government does not have the foreign currency to pay for special imported paper, ink and other raw materials. Officials at the Registrar General Office said that even if citizens want to pay for an urgent application for a passport, they face a minimum wait of 18 months before they can even submit their papers.
“Last month, the urgent applicants were being told to come back at the end of 2020,” said one official who spoke on condition of anonymity.
She added that non-urgent applicants were told that no date was available for when they can apply. Millions of Zimbabweans have fled abroad in the last 20 years seeking work as hyperinflation wiped out savings and the formal employment sector collapsed.
Many others are now seeking to leave as conditions worsen under President Emmerson Mnangagwa, who had promised an economic revival after he succeeding long-ruling Robert Mugabe in 2017.
Official inflation is at nearly 100 percent — the highest since hyperinflation forced the government to abandon the Zimbabwe dollar in 2009 — while supplies of essentials such as bread, medicine and petrol regularly run short.
Power cuts often last 19 hours a day.
Isheanesu Mpofu, a 23-year-old unemployed university graduate, applied for a passport last November but is still waiting.
“I went back early June to check on it, and was told to check again in August,” Mpofu said, adding he wanted to visit his family abroad.
“Besides, it is my right to have a passport so I can travel whenever I want to,” he said.
Mnangagwa addressed the problem last month, saying a dispute with the printers over unpaid bills meant that a state-owned company would take over the job.
“They said they will not print any more passports because of legacy debts,” he said, claiming the money had now been paid.
A passport office official said that only ten passports were being printed each day despite a reported backlog of 280,000.
“We have the capacity to clear the backlog in a very short time but all the machinery is lying idle right now,” she said.
Registrar General Clement Masango said that he had no comment to add to the president’s remarks
Zimbabwe and the European Union began political talks aimed at turning the page on hostile relations during Robert Mugabe’s rule, a step that could enable a resumption of direct financial aid for the ailing economy.
During Mugabe’s four-decade rule until 2017, he would routinely blame European “colonialists” for Zimbabwe’s problems and snarled at EU and US sanctions for rights and vote abuses.
The EU has only kept sanctions on Mugabe, his wife and the state arms manufacturer, but is yet to resume direct funding to the new government of President Emmerson Mnangagwa, preferring to channel money through local charities and UN agencies.
With the economy afflicted by dollar shortages, fuel queues, power-cuts, and soaring prices, Mnangagwa has said restoring ties with the West and multilateral lenders like International Monetary Fund is one of his major priorities.
At the start of the open-ended talks between diplomats and officials in Harare, EU Zimbabwe delegation head Timo Olkkonen said they would discuss issues including economic development, trade, investment, rights, rule of law and good governance.
The government has already signed up to an IMF monitoring programme where it has committed to political and economic reforms in a bid to set a track record of fiscal discipline that could earn it debt forgiveness and future financing.
At a separate event in a Harare hotel, Mnangagwa signed a new bill creating a tripartite negotiating forum intended to bring labour, business and government together to shape policy.
The 76-year-old leader is under pressure to deliver on pre-election promises and wants to avert a repeat of violent protests over a steep fuel price hike in January.
Later on Wednesday, the government is expected to start wage negotiations with public sector unions, who say a pay rise of up to 29% they received in April had already been eroded by inflation, now at a 10-year high of 75.86 %.
Mnangagwa has promised to break with his predecessor and says his “open for business” mantra will woo foreign investors. But critics say under his rule the economy shows no signs of improvement while security forces have continued to crush dissent.
As Zimbabwe’s economy struggles and the country faces scarce fuel supplies, some businesses are refusing to accept the ever-weakening local currency, insisting on doing business in U.S. dollars.
One reason is that the local currency, known as bond notes, are not accepted outside the southern African country, making them useless for any companies that need to import goods.
This spare vehicle parts seller, Tongai Madamombe, says he wants President Emmerson Mnangagwa’s government to switch to the U.S. dollar as pricing in bond-notes has become difficult.
“For those that do not import, charging in bond-notes is not as difficult, as it is for us who import,” Madamombe said. “If you do not calculate well, you will fail to restock. We are really in difficult times. So we are now pricing in U.S. dollars, those who do not have it we use parallel market rates, as we will go there to get foreign currency to import our stock.”
Zimbabwe abandoned its dollar more than a decade ago, when hyperinflation made it worthless. Now the bond notes, introduced two years ago, are also depreciating in value.
The South African rand and British pounds are acceptable in many places, but very hard to find.
Even some Zimbabwe government departments and companies such as the National Railways have started asking for payment in U.S. dollars, partly to protect themselves against the depreciating bond notes.
Fuel is another scarce product in Zimbabwe, and the government continues to control its price. Some companies have resorted to selling it in U.S. dollars only.
Eddington Mazambani, the head of the Zimbabwe Energy Regulatory Authority, says it is only allowing fuel companies that have directly imported fuel on their own to trade in U.S. dollars, as the Reserve Bank of Zimbabwe pays foreign currency for most fuel imports in the country.
“We require documentation, if you have procured through Reserve Bank [and] you then fail to produce documentation to us, we will then take the necessary measures. You would be breaking the law, so we will take measures according to the laws in the petroleum sector,” Mazambani said.
The government says gas stations trading in U.S. dollars when they are supposed to take local currency are being stripped of their licenses. But so far that policy has not made fuel more available or stopped the practice.
When Emmerson Mnangagwa took over the leadership of Zimbabwe from Robert Mugabe in November 2017, he promised to revive the moribund economy and adopted a mantra he’s repeated regularly ever since - “Zimbabwe is open for business.”
Mnangagwa, always wearing a scarf in the colours of the Zimbabwean flag, quickly set about traversing the globe to woo investment needed to revive the heavily indebted economy. By March, he’d been on at least 30 foreign visits, including trips to the US, Russia, China, the Middle East and the World Economic Forum in Davos.
Together with the enthusiastic support of state media, Mnangagwa and his officials have announced more than $27bn of planned investment ranging from new platinum mines to steel mills and hydropower dams.
Eighteen months into his rule, he has little to show for it.
The economy is in its most dire state since 2008, when inflation surged to an estimated 500 billion percent.
Medicines, fuel and foreign currency are in short supply, prices of basic goods such as bread are surging and the International Monetary Fund has forecast the first economic contraction in 11 years. And many of the investment projects announced by the government haven’t progressed beyond the memorandum of understanding or feasibility stage.
“We are still very confident that the bulk of the investments and expressions of interest will materialize,” said Nick Mangwana, the government spokesperson. “Of course there will be those that fail to get finances to invest in Zimbabwe because of the blight of sanctions, and there will be those who also delay whilst they monitor the success of our current reforms, but in the whole we are very optimistic.”
Zimbabwe has plenty to offer, with a cornucopia of minerals including the world’s third-biggest platinum-group-metal reserves, and some of the best transport infrastructure in the region. Local ownership rules have been relaxed, as has a currency regime that hindered access to dollars.
The RTGS, a quasi-currency that isn’t used outside Zimbabwe, fell 30% on the three-month-old interbank market today to 4.55 per dollar, bringing it closer to the black market rate of 6.10. On May 18, the government said it had secured a $500m loan that it would use to boost liquidity in the interbank market.
Still, a disputed 2018 election, in which Mnangagwa retained power, and the violent suppression of protests earlier this year have underscored the country’s instability.
Few companies with a “rational level of risk appetite” will invest in the country in its current state, said Jee-A van der Linde, an economist at NKC African Economics.
The African Development Bank estimated foreign direct investment last year at $470m, about a third of the $1.1bn attracted by northern neighbour Zambia and a fraction of the $2.3bn that flowed into Mozambique, which lies to the east.
For some Zimbabweans, the investment pledges evoke memories of Mugabe, who was prone to announcing mega-deals that didn’t materialise. For example, in September 2017 Mugabe announced plans to revive Zimbabwe Iron & Steel Works, once the second-largest steelmaker in sub-Saharan Africa. The project never got off the ground.
“Mega-deals may be mega-deals, they may be mega-nonsense,” said Joe Chabikwa, who sells potted plants to passing motorists in the capital, Harare. “These days you believe what you see with your own eyes.”