The shortage of U.S. dollars in the country has plunged the financial system into disarray and forced businesses to close.

Zimbabwe will introduce a new currency in the next 12 months, the finance minister said, as a shortage of U.S. dollars has plunged the financial system into disarray and forced businesses to close.

In the past two months, the southern African nation has suffered acute shortages of imported goods, including fuel whose price was increased by 150 percent.

Zimbabwe abandoned its own currency in 2009 after it was wrecked by hyperinflation and adopted the greenback and other currencies, such as sterling and the South African rand.

But there is not enough hard currency in the country to back up the $10 billion of electronic funds trapped in local bank accounts, prompting demands from businesses and civil servants for cash which can be deposited and used to make payments.

Finance Minister Mthuli Ncube told a townhall meeting a new local currency would be introduced in less than 12 months.

“On the issue of raising enough foreign currency to introduce the new currency, we are on our way already, give us months, not years,” he said.

Zimbabwe’s foreign reserves now provide less than two weeks cover for imports, central bank data show. The government has previously said it would only consider launching a new currency if it had at least six months of reserves. Locals are haunted by memories of the Zimbabwean dollar, which became worthless as inflation spiralled to reach 500 billion percent in 2008, the highest rate in the world for a country not at war, wiping out pensions and savings.

A surrogate bond note currency introduced in 2016 to stem dollar shortages has also collapsed in value.

President Emmerson Mnangagwa is under pressure to revive the economy but dollar shortages are undermining efforts to win back foreign investors sidelined under his predecessor Robert Mugabe.

Mnangagwa told reporters that the price of petrol had increased to $3.31 per litre from $1.32 but there would be no increase for foreign embassies and tourists paying in cash U.S. dollars.

Locals can pay via local debit cards, mobile phone payments and a surrogate bond note currency.

With less than $400 million in actual cash in Zimbabwe according to central bank figures, fuel shortages have worsened and companies are struggling to import raw materials and equipment, forcing them to buy greenback notes on the black market at a premium of up to 370 percent.

The Confederation of Zimbabwe Industries has warned some of its members could stop operating at the end of the month due to the dollar crunch. Cooking oil and soap maker Olivine Industries said it had suspended production and put workers on indefinite leave because it owed foreign suppliers $11 million.

A local associate of global brewing giant Anheuser-Busch Inbev said this week it would invest more than $120 million of dividends and fees trapped in Zimbabwe into the central bank’s savings bonds. 

 

By

Reuters

When economically challenged rulers try to run nations, especially fragile ones, they can easily make mistakes.

In the past few weeks demonstrators have taken to the streets of Khartoum and Omdurman to protest Sudanese President Omar al-Bashir’s removal of subsidies that have long kept bread and fuel affordable.

Now it’s Zimbabwe’s turn. Just before flying off to Russia last weekend, President Emmerson Mnangagwa doubled the price of petrol. Doing so brought already impoverished urban Zimbabweans out onto the streets of the capital Harare as well as Bulawayo and a dozen other cities and towns. Protesters blocked roads with tyres, trees and rocks, stopped bus transport, attacked the police, threw canisters of tear gas back at security forces and generally ran amok.

At least five people were reported to have been killed. Flights into Harare were cancelled and the government closed down the internet.

Mnangagwa’s excuse for raising prices so abruptly is not clear. Possibly he thinks that more costly petrol will bring more cash into national coffers that are mostly bare. Or perhaps he believes that more petrol will pour into the country via the pipeline from Beira in Mozambique if it is more valuable. Both ideas are barmy.

Before flying off to Russia, Mnangagwa said that the fuel price rise was intended to reduce shortages of fuel that, he indicated, were caused by rises in the use of fuel and what he called “rampant” illegal trading – accusations that make no sense whatsoever. Making petrol purchasing more expensive for poor Zimbabweans – the majority of the nation’s people – simply adds to their hardship and further slows an already crippled economy.

Instead Mnangagwa should do everything his government can to reduce the shortage of real (rather than fake) cash that is crippling the local economy, reducing local production and corporate and consumer cash flows, and driving an already weakened economy further into recession.

He should also be focused on taking a number of other bold steps to try and reverse the collapse of the country’s economy. Among them are bringing state looting to a halt.

The cash crisis

The US dollar is the official currency of commerce. But because Zimbabwe’s economy has essentially ground to a halt, it has few means of bringing new dollars into the country. That, and the steady money laundering of real dollars by high-level officials of the ruling Zanu-PF party, has drained the country of currency.

The government has printed $1 bond notes — known as zollars – for Zimbabweans to use instead of real dollars. They are supposed to be exchangeable at par, but in 2019 they are worth as little as a third of a paper dollar. Many merchants refuse to accept zollars at all.

Bond notes now trade on the black market at 3.2 per dollar, according to the Harare-based ZimBollar Research Institute.

The stress has also spread to financial markets, with locals piling into equities to hedge against price increases.

Mnangagwa may be attempting to obtain loans from Russia and from shady Central Asian countries like Kazakhstan. But what the president should be doing is prosecuting and imprisoning his corrupt cronies. That could limit the flight of dollars from Zimbabwe.

He also needs to trim the bloated civil service of excessive patronage appointments. Most of all, if he dared, he should be cutting military expenditures. Zimbabwe has no imaginable need for its large and well equipped a security establishment.

Such bold measures could return confidence to the country’s corporate and agri-business sectors. If coupled with reduced military and other expenditures, and bolstered by funds no longer being transferred overseas, Zimbabwe’s long repressed economy could take off from a very low base.

Poor leadership

Raising petrol prices in a land where but a few months ago supplies of petrol were short and motorists queued for hours and days outside stations is neither politically nor economically wise. The newly aroused protesters will not readily melt away. Putting such a hefty extra charge on an essential commodity, and doing so just when Zimbabwe’s parlous economy was beginning to show signs of stability, shows few leadership skills and little common sense.

Inflation has soared since the national election in July, almost reaching the Sudanese level of 70% a year. Foreign capital and domestically reinvested capital is avoiding the country.

On top of this, exporters are struggling under draconian Reserve Bank regulations. Only Chinese purchases of ferrochrome, other metals and tobacco, keep the economy ticking over, albeit in an increasingly dilatory manner.

A further drain on confidence and economic rational thinking is the Reserve Bank’s allocation of whatever hard currency there is to politically prominent backers of the president. That is how arbitrage during President Robert Mugabe’s benighted era helped to enrich his entourage while sinking the Zimbabwean economy and impoverishing its peoples.

Work that needs to be done

Mnangagwa’s regime has much more work to do to stimulate sustainable economic growth. He will need to restore the rule of law, badly eroded in Mugabe’s time, put some true meaning into his “back to honest business” promise, and widely open up the economy. That would mean eliminating most Reserve Bank restrictions on the free flow of currency and allowing the entire Zimbabwean economy once again to float.

Most of all, Mnangagwa needs to rush home from Russia and Asia and rescind or greatly reduce the price of petrol. After so many years of repression and hardship, Zimbabweans are out of patience.The Conversation

 

Robert Rotberg, Founding Director of Program on Intrastate Conflict, Harvard Kennedy School

This article is republished from The Conversation under a Creative Commons license. Read the original article.

President Emmerson Mnangagwa says his government was ready to seize and redistribute tracts of idle farmland mostly owned by his top Zanu PF allies.

This follows a land audit which unearthed multiple farm ownership by influential officials in violation of the one-man-one-farm policy by government. 

"The land reform program is done and dusted," Mnangagwa said while addressing some traditional leaders in Kadoma on Monday. "As government, we have embarked on a land commission audit. The audit has unearthed that most of the bigwigs have more than one farm."

To address the anomaly, President Mnangagwa said government was going ahead with plans to repossess the farms for redistribution to other Zimbabweans who did not benefit from the country's controversial land reform process in the past 18 years. Mnangagwa also said his government would also move to downsize some of the farms considered too big.

"The preliminary reports have shown us that most senior officials within the party (Zanu PF) have more than one farm. 

"As government, we are going to address the anomaly. We are going to repossess those farms and redistribute them. We are going to downsize on some of the farms.

"There are some individuals, very influential, whom we cannot name who have more than one farm and we are going after them," he said.

The Zanu PF led government, then under the now former President Robert Mugabe, in 2000 embarked on a violent land reform process which saw militant war veterans storm white owned farms and grabbing implements, livestock and farm houses.

The chaotic exercise saw some locals allocated pieces of land to both build homes and to fend for their families. Some influential government officials and security bosses used their stamina to grab bigger and more fertile pieces of land with rich infrastructure while some even went for more than a single farm. Although he led the one-man-one-farm mantra, then Mugabe was this year said to be owner of 21 farms, some of which he secretly leased to white farmers.

However, other reports linked the once feared leader to a total 13 farms under his and family ownership.

"I am still receiving evidence of what the (former) first family had. When that process is complete they will select one farm and the rest will be given elsewhere," Mnangagwa told the Independent Foreign Service in a wide-ranging interview August this year.

"It's not a question of voluntary giving up, but about complying with the policy."

Mnangagwa, who is often regarded as a reformist, has refused to return land into the hands of its former white owners saying the land reform process was "irreversible".

 

Credit: New Zimbabwe

Zimbabwe's President Emmerson Mnangagwa on Friday laid the foundation stone for huge new parliament to be built with Chinese funds outside the capital Harare.

The imposing circular complex will be built over 32 months by the Shanghai Construction group at Mount Hampden, 18 kilometres north-west of Harare, the Zimbabwe Broadcasting Corporation reported. Officials say the current colonial-era parliamentary building in the city centre is too small to accommodate lawmakers.

Mnangagwa said at the ceremony that China had provided a "grant, not a loan, to build a new parliament", without giving a figure.

"Other facilities like banks, hotels will be built around this place," Mnangagwa said adding that a "modern, smart city" was planned.

Tweet PresidentZimbabwe

Mnangagwa took over from long-time ruler Robert Mugabe who was ousted by the military in November 2017.

He has vowed to revive Zimbabwe's economy that has been in ruins for nearly two decades.

China has funded and provided loans for many infrastructure projects across Africa in recent years, ranging from roads and power plants to sports stadiums and government institutions.

Critics say China's increasing sway over the continent undermines democracy and sovereignty.

 

AFP

Econet group founder and executive chairman Strive Masiyiwa has found himself at the centre of a social media storm after appearing to back President Emmerson Mnangagwa and calling for the removal of sanctions against Zimbabwe.

Masiyiwa recently told continental broadcaster CNBC Africa that Western sanctions against Harare, now in place for some 20 years, should be lifted, noting that the country could not move forward with its hands shackled behind its back.

Further, he suggested that, President Mnangagwa was sincere in his much-touted efforts to open up the democratic space Zimbabwe and turn around the country's stricken economy.

Mnangagwa assumed leadership of the country after a military coup last November and strengthened his hold on power in bitterly disputed circumstances in the July 30 elections.

After the vote the military moved into central Harare to beat back opposition protestors and six people lost their lives in the resultant clashes.

Masiyiwa's apparent backing for Mnangagwa was therefore certain to anger the opposition, and it did.

Commenting on Twitter, MDC politician and former education minister David Colart challenged the self-exiled tycoon to return home if he was so confident about Mnangagwa's regime.

Masiyiwa has not returned to Zimbabwe in close to 20 years after being hounded out by the former Robert Mugabe regime.

Former high education minister Jonathan Moyo - also a political exile - was also unimpressed, telling Masiyiwa to "must shut up if he does not want people to disagree with him!"

Masiyiwa took to his preferred Facebook platform to hit back, saying the sanctions had adversely impacted his companies' ability to raise funding through international loans.

He added; "Intimidation and threats have never affected me.

"I stood up to Mugabe when most of those issuing threats by Twitter were either in diapers, or hiding, or even simply minding their own business."

Below is Masiyiwa's response in full;

"I BELONG TO EVERYBODY, AND I BELONG TO NOBODY"

As an entrepreneur, on many occasions I have had initiatives for my country Zimbabwe, which could have created tens of thousands of new jobs. When I have discussed them with either investors or banks, they have turned me away, saying:

"We don't want to violate the sanctions in your country."

I have documents and emails from bankers and investors. I tried so hard to persuade some of them, often suggesting that they are not interpreting the sanctions correctly.

In my case I was forced to go to China to secure loans to support our Zimbabwean businesses. But this was not always ideal. I have spoken about it publicly on many occasions even in the US and China itself.

It is not right that we as business should have to work under such conditions, when all we want is to create jobs and livelihoods for ordinary people.

Now, if Zimbabwe had been a person who committed a crime, for which they went to prison, would you not say 20 years is enough? Zimbabwe has served its prison time. It's time for the country to be given a chance to get back on its feet.

I fled my country when assassins were sent to kill me. I had been tipped off by someone in the Mugabe government who was related to me. Even when I left the country, there were other attempts to kidnap me in SA. It has been 18 and a half years. Only I have the right to decide when to come home.

My executives [in Zimbabwe] were arrested and held in leg irons for 16 days. I endured all the persecutions, including the bombing and shutting down of my newspaper business. No one stood in our corner, or expressed indignation, perhaps because there was no Twitter?

Now will the end of Western sanctions end all our problems? Absolutely not!

As I have said, no one should be under any illusion that this is not going to be very, very tough, as many of the issues to be tackled are due to bad policies going back decades including corruption.

Let's not allow the sanctions to be a crutch and stumbling block to some of the issues that need resolution.

"My name is Strive Masiyiwa, and I'm with the suffering ordinary Zimbabweans who need to see jobs, livelihoods, and investment in our country.

"I call for an end to sanctions now. And I reiterate my call for people to work together in the national interest."

Intimidation and threats have never affected me. I stood up to Mugabe when most of those issuing threats by Twitter were either in diapers, or hiding, or even simply minding their own business.

Whatever! I did not rail at them, and never will or demand that they say only what I approve.

"I BELONG TO EVERYBODY, AND I BELONG TO NOBODY" [Charles De Gaulle]

Source: New Zimbabwe

 
 

When President Emmerson Mnangagwa campaigned in July for Zimbabwe’s presidency, he promised to be a business friendly leader, and to return his country’s economy to twentieth century times of plenty and prosperity.

But Mnangagwa has already shown himself incapable of jettisoning the state centrist, rent-seeking predilections of his predecessor. A “big-bang” sharp break with Zimbabwe’s recent past is essential to reassure consumers and capitalists. Yet Mnangagwa and his cronies have so far rejected anything forward-looking and sensible.

Mnangagwa’s administration is struggling to overcome the national economic destruction wreaked on Zimbabwe over two decades under Robert Mugabe. This included profligate spending, immense debt pileup, colossal corruption, and ravaging of the country’s once immensely productive agricultural sector.

As a result, Zimbabwe now lacks foreign exchange with which to buy petrol and ordinary goods to stock the shelves of its supermarkets. In the last few weeks many shops – such as Edgars, a long-time clothing store; Teta, an eatery; KFC, a fast food outlet – have simply shut their doors. Queues for petrol stretch for miles.

Banks have no US dollars, or South African rands or Botswana pulas (the notional national currency), and therefore cannot supply stores or customers with the funds to carry on business as usual.

This week the locally created Zimbabwe bond note, officially supposed to trade 1 to 1 with the US dollar, has traded as high as 10 to 1 on the Harare black market. Sometimes it trades for a little less. It is unofficially called the zollar.

The new administration has naturally resorted to printing its own faux money. That inevitably has led, as always, to hyperinflation and monetary collapse.

China may yet help Mnangagwa – but in exchange for multi-years worth of precious minerals and Virginia tobacco at discounted prices. With Zimbabwe’s leadership so thoroughly tainted by decades of peculation and mendacity, and devoid of any real notion of “the public interest,” Mnangagwa’s regime is otherwise unlikely to clean up the prevailing fiscal mess because of its refusal to break sharply with the fiscal derring-do of the Mugabe era. Its principals continue to profit from Zimbabwe’s economic mayhem.

What went wrong

Zimbabwe’s economic weaknesses are unsustainable. Governments in such parlous straits would turn, even now, to the International Monetary Fund, for a bailout – as Pakistan has just done. But Zimbabwe is already in arrears to the international lending institutions and has very few helpful friends left.

Government is running a hefty overdraft. And it’s been unable to collect as much as it needs from the national tax base. Its now attempting to impose a 2% tax on internal electronic financial transactions. This only shows desperation. If implemented, it could yield twice as much revenue as is derived annually from VAT. But that losing manoeuvre has already helped drive commerce underground. It has also undermined what little confidence consumers and financiers have in their current rulers.

The Mnangagwa government has also reimposed import and exchange controls, thus creating additional incentives to avoid regular channels of commerce. Those controls also permit officials to allocate “scarce” resources and licenses to import, export, and so on. These are well-known occasions for corruption and for giving rent-seeking opportunities to cronies.

It wasn’t always this bad. Despite the massive loss of formal employment that occurred under Mugabe, the informal sector flourished and Zimbabwe’s poor probably benefited. This was partly because under the unity government of 2009-2013, when Tendai Biti of the Movement for Democratic Change was finance minister, there were no such controls and there were plenty of US dollars and no questionable bond notes and Treasury bills. Hard currency (the US dollar) permitted Zimbabwe to start growing economically after the long Mugabe slide, and individuals and businesses to prosper. The country ran a budgetary surplus.

But this all came to an end when the government of national unity collapsed in 2012.

What needs to happen

To begin to restore the economy, the government needs to acknowledge corrupt dealings and repatriate the huge amounts of cash that have fled the country as laundered money.

The regime could also try to take ill-gotten gains away from Mugabe and Grace Mugabe, as Malaysia’s new government is doing to its previous kleptocratic prime minister and his wife.

Gestures in that direction would help to begin to restore confidence, a step towards eventual prosperity. So would promises to restore the rule of law. Investors might also return if a sound currency was likely. But that would only follow shedding of ministers, civil service layoffs, military reductions, and many other indications that Mnangagwa and his minister of finance were serious about reducing the debt hangover.

Cutting some sort of deal with the IMF would also be worthwhile, but that could mean giving control over the Treasury to foreign advisors. Zimbabwe is and, since Biti’s day, has been, a basket case. It’s time to acknowledge that fiscal reality and to do something about it.The Conversation

 

Robert Rotberg, Founding Director of Program on Intrastate Conflict, Kennedy School, Harvard University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Zimbabwe will not import maize as it has become food secure, with farmers having so far delivered 1,1 million tonnes to the Grain Marketing Board for the 2018 marketing season, thanks to the successful Command Agriculture programme.

GMB officials said they expected the delivered maize to reach 1,2 million tonnes as farmers continue to bring the grain to the depots.

GMB general manager Mr Rockie Mutenha said that they were paying farmers for grain delivered within a week. “We have received 1 111 809 tonnes of maize from farmers since the beginning of the marketing season on April 1 and are expecting to reach to 1 180 000 tonnes,” he said.

“During the same period last year, GMB had received 1 091 349 tonnes of maize. Our maize stock were 1 314 383 tonnes of maize including the Strategic Grain Reserve.”


This means that the country is now food self-sufficient and will not import grain. During the past years, farmers preferred selling to intermediaries who offered cash on the spot, as GMB took long to pay.

This time around, GMB has been paying farmers early, a move that encouraged more to deliver the grain directly to its depots.

“GMB is buying maize, red sorghum, white sorghum, rapoko and millet at $390 per tonne. The parastatal is also buying soyabeans at $780 per tonne,” said Mr Mutenha.

The GMB boss said there was no need for farmers to sell their maize to unscrupulous business people who offered low prices, as GMB was paying timeously. He said the producer price of $390 per tonne was only meant to benefit genuine farmers.

At the beginning of the grain marketing season, the Agricultural Marketing Authority indicated that no one else was allowed to buy maize except those who contracted farmers. Maize production in Zimbabwe has been on the increase since the advent of Command Agriculture.

The brainchild of President Mnangagwa, Command Agriculture has also rescued thousands of farmers who would have failed to productively use their land owing to funding challenges. Banks were hesitant to extend loans to the farmers.

Those offering loans demanded collateral security in the form of immovable properties, which most farmers do not have. This has made borrowing by farmers expensive. Through Command Agriculture, Government avails farmers with all the necessary inputs.

The programme has seen the country harvesting enough maize for consumption and there is potential to export the surplus. Prior to the introduction of Command Agriculture, Zimbabwe failed to produce enough grain for consumption, forcing it to import from neighbouring countries and beyond.

President Mnangagwa is on record as stating that through Command Agriculture, Zimbabwe will never import maize.

 

Credit: Herald Live

The World Bank and IMF have endorsed Zimbabwe’s plan to clear more than $2 billion in foreign arrears, the finance minister said, adding that the lenders had also backed his two-year economic recovery programme.

President Emmerson Mnangagwa has promised to revive the struggling economy, pay foreign debts that the country has defaulted on since 1999 and end Zimbabwe’s international pariah status gained under Robert Mugabe’s near four-decade rule.

Finance Minister Mthuli Ncube, who is attending the International Monetary Fund (IMF) and World Bank meetings in Bali, Indonesia, said in a statement his plans to clear the arrears to the World Bank, African Development Bank and European Investment Bank had been accepted.

“All the cooperating partners and creditors present uniformly expressed their support for Zimbabwe and its arrears clearance Road Map,” Ncube said. He did not give details and none of the creditors had an immediate comment.

The lenders and Western donors urged Ncube to “judiciously” implement his two-year economic recovery programme announced last Friday, the statement said.

Ncube’s plan will see cuts in government spending and its wage bill, and privatisation of loss-making state-owned firms.
Zimbabwe, which adopted the U.S. dollar after hyperinflation left its own currency worthless in 2009, is gripped by acute shortages of cash dollars. Prices of basic goods and medicines have risen in the last few days.

Hyperinflation trauma

At the heart of its economic problems is a $17 billion domestic and foreign debt, a $1.8 billion trade deficit that has worsened dollar shortages and lack of confidence in the ruling party by citizens still traumatised by hyperinflation.

Prices of basic goods, medicines and drugs, building materials and public taxis have risen by at least 50 percent in the last week.

The economic crunch is increasing political tension after a July vote that was supposed to lay the foundation for Zimbabwe’s recovery was instead followed by turmoil that left six people dead after an army crackdown.

The latest crisis was triggered by fiscal and monetary changes announced on Oct. 1, including a 2 percent tax on money transfers and separation of cash dollars and foreign inflows from bond notes and electronic dollars, that caused the collapse of the surrogate currency on the black market.

When the changes were announced, $100 in bond notes was worth $49 cash dollars but was worth only $26 on Wednesday.

In a separate statement, Ncube said the bond note and electronic dollars would remain officially pegged at 1:1 to the U.S. dollar as the government seeks to protect people’s savings.

He said the government would also gazette rules protecting foreign dollar inflows to ensure the money was not taken by the central bank or government, good news for mines outraged by the U.S. dollar shortages.

On Wednesday, some shops and restaurants, including the local franchise of fast-food chain KFC had closed their outlets because some suppliers of goods and medicines were demanding cash dollars. – Reuters

Zimbabwean President Emmerson Mnangagwa said on Monday a new tax on electronic payments was a painful but necessary part of the government’s attempts to revive the economy, his first comments since the imposition of the levy last week sparked a public outcry.

After narrowly winning a disputed presidential vote in July, Mnangagwa is trying to put back on track an economy that all but collapsed under the near four decade rule of Robert Mugabe which ended after an army coup last November.

Finance Minister Mthuli Ncube on Oct. 1 announced the 2 percent tax, saying the money raised would be used in the roads, health and education sectors.

The tax will apply on mobile and card payments and bank transfers above $10 with exceptions for foreign payments and transfer of government funds.

However business and citizens objected, saying they would be paying for the government’s profligate spending.

Economic analysts said the tax would raise nearly $2 billion annually.

Oil companies temporarily stopped delivering fuel because of the impact of the tax, causing shortages. The price of some basic goods and medical drugs have shot up in the last few days.

To improve the economy, the government would have “to take measures that are going to be painful and this is one of such measures” Mnangagwa told a business meeting in Harare.

“In our quest to leapfrog and cover the period of two decades of stagnation, these things have become necessary.”

A 388-page government economic plan released by Finance Minister Ncube on Friday shows the government plans cuts in spending, borrowing and the amount it spends on the civil service. The report also outlines plans for privatisation and the closure of state-owned firms, among several other reforms to improve the economy.

Zimbabwe is facing acute shortages of U.S. dollars, which the country adopted in 2009 when it abandoned its own currency after hyperinflation made it worthless.

The shortages have fanned a black market where the premium for dollars increased to more than 200 percent on Monday, up from 165 percent on Saturday. – Reuters

The toxic presidency of Mugabe may be over, but the new Zimbabwean government of Emmerson Mnangagwa must quickly make some hard foreign policy decisions if it is to change the country’s fortunes.

For so far no major foreign power has undertaken to relieve in any significant way the country’s economic distress. Although election observer reports have been guardedly and conditionally – almost grudgingly – accepting of the election results, the question marks raised and, particularly, the totally unnecessary violence unleashed against protesters in the wake of the election have made all governments shy of offering full endorsement of the regime.

What this has meant is that foreign investor confidence, while not discouraged entirely, is very slow to assume the kind of mass and speed of movement the economy needs. The IMF has spoken of some negotiated relief, but only under a “reform package”. The Chinese also feel that they do not want to put good money after bad. Previous loans have not been repaid and, although rumours of seizing Zimbabwean institutional assets as collateral have been swiftly denied, it is no secret that the Chinese are not best pleased with Zimbabwe’s approach to fiscal responsibility.

Chinese influence

The Zimbabweans seem not to have noticed that, increasingly, Chinese liquidity is made available through Chinese banks. They may or may not be state-owned – but it is not the state that makes a benefaction; it is a bank that makes a loan. And banks stay in business by realising the returns from a loan. As it is, liquidity has been either misused, misappropriated, or used simply to balance books that otherwise would be parlously unbalanced.

Although the Americans have lowered the tone of their criticisms of the government, the softly-softly approach cannot hide the strict conditionality they seek. This resides in guarantees of future electoral conduct, but also essentially the desecuritisation of the ZANU-PF machine. In a word, the problem is Constantino Chiwenga, the former defence forces chief, now vice-president, who has a strong influence within the military – but, no matter what the Americans want, he is going nowhere fast, and he will not sacrifice his deep influence within the military.

The Europeans have lifted the huge majority of their sanctions, but the outgoing European representative has been critical of both the election and the violence that followed. This leaves the British as a key player.

Catriona Laing, the British ambassador to Zimbabwe, is being promoted to the High Commissionership in Nigeria, and it is no secret she laid much of her prestige and credibility on the line in seeking to persuade Whitehall that Mnangagwa was a credible figure. This of course should be seen in the context that Grace Mugabe certainly was not. But it signals nevertheless that the days of British antipathy towards a ZANU-PF government have gone.

Laing’s successor as the new British ambassador will be, not a diplomatic figure with foreign office experience, but someone with huge experience in development assistance. Melanie Robinson will not be in the mould of Laing, nor of her predecessors, Deborah Bronnert and Mark Canning. She will need to be dealt with differently by the Zimbabwean government and the ZANU-PF apparatus. Whereas her predecessors were often perceived as political actors, Robinson is purely a development technocrat.

But, despite the obviously signalled change in emphasis, the British now have no money left to give. Brexit will compound that. All the British can do is throw their weight behind the IMF and encourage corporations to invest in Zimbabwe – but the British weight cannot, in itself, counteract US and EU reluctance to give a full green light to investment in Zimbabwe.

Russia would like to make some inroads in Zimbabwe, but has earmarked no sizeable funds for doing so.

All eyes on reform

In short, almost everyone is looking towards reform. What happens domestically will impact the success or otherwise of foreign policy. As for foreign policy pure and proper, Zimbabwe has not been properly represented by top-flight ambassadors for some time. There had been only an acting Zimbabwean ambassador in the UK for almost three years, from 2015-18, and agreement to appoint a substantive ambassador was long delayed because the nominee, Ray Nahulukula, had received land seized from a white farmer. The finally agreed ambassador is Christian Katsande. The minister of lands, Perence Shiri, has now begun talking of some kind of compensation for white farmers who had lands seized, but no plans can be laid because there are no funds for compensation of any sort.

So it all comes down to money. The Mugabe years from 1997, when the economy began to tank, a process that was hurled into accelerated overdrive with the farm seizures in 2000, were years of mismanagement and accumulation without the reinvestment and circulation of capital. It was the era of the oligarchs. A lot of the funds that wound up at their disposal was used for consumption. If now these “fat cats” are somehow involved in foreign policy negotiations, particularly to do with economic and financial diplomacy, there will be no credibility on the Zimbabwean side.

I conclude with a story of one of my visits to Beijing some years ago. Chinese officials showed me their figures on the Zimbabwean economy. I looked at them and said, “So you know it’s a basket case?” “Yes,” was the reply. “But we continue to show solidarity.” But it is clear those days have now faded into memory. Fine words will now not be enough for diplomacy. Everyone wants actions.The Conversation

 

Stephen Chan, Professor of World Politics, SOAS, University of London

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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