Zimbabwe's military have placed President Mugabe 'under house arrest' and gunfire was heard during the early morning in Harare's northern suburbs, where the president's house and state broadcaster are located. http://bbc.in/2msdDwn
Soon after Zimbabwe’s army confined President Robert Mugabe to his palatial Harare home this week – allegedly for his safety – it was announced in Luanda that Angola’s new President, João Lourenço, had relieved Isabel dos Santos of her position as head of the state-run oil company Sonangol.
While there may not be any direct connection between these two events, they suggest some intriguing comparisons. In both countries ruling families seem to have failed to secure themselves in power.
When Mugabe, as leader of the Zimbabwean African National Union-Patriotic Front (Zanu-PF), became ruler of Zimbabwe at independence in April 1980, José Eduardo dos Santos was already President of Angola. He had succeeded to that position after the death of Agostinho Neto in September 1979.
Dos Santos had to deal with external intervention and over two decades of civil war , during which he ruled dictatorially. Mugabe, despite a facade of constitutionalism and regular elections, also became increasingly dictatorial. He abandoned adherence to the rule of law and his country’s economy collapsed. Angola became notorious for the scale of the corruption linked especially to its oil riches. Zimbabwe went from bread-basket to basket-case. With the great majority of the people of both countries living in dire poverty, Dos Santos flew to Europe when he needed medical attention, while Mugabe went to Singapore.
Though Dos Santos was probably as reluctant as Mugabe to give up power, he decided to quit as president of the country and try to retain influence through the ruling party and members of his family. Mugabe tried to impose his wife on his party as his chosen successor and then to cling on to his positions even when the army took effective control of his country.
Given recent developments in Luanda and Harare, it would seem that neither of these two old men have succeeded in securing their family dynasties.
Dos Santos’s succession plan
By 2016, suffering health problems that took him to Spain for treatment, Dos Santos announced that he would step down as president of Angola and he approved his Minister of Defence, João Manuel Gonçalves Lourenço as his successor.
Following the victory of the ruling Popular Movement for the Liberation of Angola (MPLA) in the general election held in August this year, Lourenço took over as president in September. But Dos Santos remained president of the MPLA, and clearly expected Lourenço to look after his interests and that of his family, who had become enormously wealthy.
From the action Lourenço has now taken against Dos Santos’ billionaire daughter Isabel, it would seem that he’s becoming his own man. It appears he wishes to distance himself from the Dos Santos family, which for many Angolans is associated with corruption on a vast scale.
The London-educated Isabel has proved herself to be a very capable businesswoman, and though the Angolan economy has been suffering because of low oil-prices, on top of massive corruption, it’s unlikely she was sacked to bring in a better chief executive to run the country’s most important state owned company. There is talk in Luanda that Isabel’s brother, José Filomeno dos Santos, will be relieved of his position as head of the country’s large Sovereign Wealth Fund and that his father, the former president of the country, will be replaced as president of the ruling party, though that may have to wait until a party congress is held.
Mugabe’s succession plan
Though at the time of writing, the 93-year-old Mugabe remains president both of the country and of the ruling Zanu-PF party, it’s widely expected that he will soon be relieved of both positions, probably by Mnangagwa, with the assistance of the army.
Changes for the better?
New leadership in Angola and Zimbabwe will have an impact on the region as a whole.
Given Mnangagwa’s record as a long serving member of government in Zimbabwe, and his involvement in the mass killing of Ndebele in the early 1980s, it is hardly likely that he will emerge as a champion of democracy.
In Angola, Lourenço is still finding his feet as head of government.
It is therefore unrealistic to hope that either country will soon move from decades of repressive rule and lack of transparency to greater constitutionalism and closer adherence to the rule of law.
But if we are witnessing the end of an era in which dictators stayed in power for decades and tried to secure their continuing influence through their families, and if we are seeing the diminishing importance of liberation movements turned political party, this must be good not only for Angola and Zimbabwe but for the southern African region as a whole.
It should also hold lessons for those who rule in neighbouring countries.
For decades, Robert Mugabe ruled Zimbabwe in a ruthless, even recklessmanner. Over nearly 40 years, he turned the “jewel of Africa” into an economic basket case that’s seen inflation of up to 800 percent.
Then, late in the night of Nov. 14, the country’s security services detained and put Zimbabwe’s 93-year-old president under house arrest in what appeared to be a military coup. The whereabouts of his powerful wife, Grace, are unconfirmed.
Much remains unclear at this early stage. Will violence erupt? Is this really the end of the Mugabe era?
I don’t know the answers to those questions yet. I’m not sure even Vice President Emerson Mnangagwa, who appears to have orchestrated Mugabe’s overthrow, knows how his gambit will turn out.
But with each passing hour, it is increasingly evident that Zimbabwe – a country whose politics I spent uncountable hours grappling with as a State Department official – is poised to see its first real leadership transition since 1980.
Setting the stage for Zimbabwe’s coup
For decades, Mugabe’s grip on Zimbabwe was iron-clad. Even when challenged by an invigorated opposition in 2008, he kept the presidency by entering into a nominal power-sharing agreement. After a decisive electoral victory in 2013, though, he cast the coalition aside.
But as the elderly president grew increasingly frail this year, the power struggle to succeed him became frenzied. Two major camps were vying for power.
Vice President Emerson Mnangagwa, who as a soldier fighting for Zimbabwe’s liberation earned the nickname “the crocodile,” represented the old guard. The 75-year-old enjoyed strong military backing, particularly from the veterans’ association, a powerful coalition of former combatants from Zimbabwe’s independence struggle which began in 1964 and ended in 1979.
Last year, the group broke with Mugabe in a public letter, declaring that he had “presided over unbridled corruption and downright mismanagement of the economy, leading to national economic ruin.” Many believed that Vice President Mnangagwa orchestrated the group’s letter as a shot across the bow to warn would-be rivals.
The second camp jockeying to control Zimbabwe before the coup was led by Mugabe’s current wife, Grace Mugabe. At a relatively spry 53, she represented the younger generation, drawing significant support from the ruling party’s loyalist Youth League and from an informal grouping of emerging leaders known as “Generation 40.”
But Grace Mugabe was deeply unpopular among ordinary Zimbabweans, who called her “Gucci Grace” because of her extravagant spending. Plus, she had a reputation for cruelty. Earlier this year, the president’s wife faced accusations of beating a 20-year old South African model with an electric cable.
As recently as early November, it appeared that Grace’s camp had prevailed. President Mugabe sacked Mnangagwa, who fled to South Africa. Mnangagwa, it seems, had a different plan. While in exile, he stayed in touch with his military allies.
On Nov. 14, Mnangagwa’s camp struck back. By the next morning, Mugabe was under house arrest, his wife had reportedly fled to Namibiaseeking asylum and Mnangagwa’s cohort appeared to control the country.
Democracy or dictatorship?
At least, that’s the picture right now. Events have moved swiftly in the last 24 hours, and some big questions remain unanswered.
If Mnangagwa officially takes power, the first unknown is whether he will rule by fiat or cobble together a transitional government. It’s unclear whether Mnanangwa and his allies have any real interest in introducing democracy to Zimbabwe. To do so, they would need to hold an election within a reasonable period of time, say six months.
Military coups don’t have a promising track record of ushering in democracy. Recent scholarship finds that while “democratization coups” have become more frequent worldwide, their most common outcome is to replace an incumbent dictatorship with a “different group of autocrats.”
Signals in Zimbabwe are mixed so far. Experts generally describe the latest developments as “an internecine fight” among inner-circle elites and ask two key questions: Which side will prevail, and will violence break out?
In my assessment, the answers hinge on Mnangagwa, a hard-nosed realist and survivor who was critical in securing Mugabe’s four-decade rule. Mnangagwa has an appalling human rights record. Many consider him responsible for overseeing a series of massacres between 1982 and 1986 known as the “Gukurahundi,” in which an estimated 20,000 civilians from the Ndebele ethnic group perished.
More recently, in 2008, civil society groups accused Mnangagwa of orchestrating electoral violence against the political opposition and rigging polls in Mugabe’s favor.
It is also true that Mnangagwa is massively invested in ensuring his continued and unfettered access to power, which has proven highly lucrative for him. The vice president is “reputed” to be one of Zimbabwe’s richest people. All of this suggests he might become yet another dictator.
‘Unity’ for Zimbabwe?
Nonetheless, reports indicate that Mnangagwa is currently talking to several opposition parties about potentially forming a transitional government. A key stakeholder in any such arrangement would be Morgan Tsvangirai of the Movement for Democratic Change, who served as prime minister to Mugabe as part of the 2009 power-sharing agreement.
That coalition achieved some success on economic matters, but Mugabe’s party never relinquished any real authority. Mnangagwa was among those who clung to power back then, but I believe he might play things differently now. Mnangagwa is no reformer, but he does need to find ways to bolster his legitimacy. Not to mention he will quickly need to confront Zimbabwe’s massive economic woes.
The choices that Zimbabwe’s political leadership makes in the coming weeks will have immense consequences for the future of a country whose development has stagnated under 40 years of authoritarian rule.
Real transitions in Zimbabwe are all too rare. Mugabe led the country to independence in March 1980, assumed the presidency and never left. His demise represents a chance for a political reset.
President Robert Mugabe is insisting he remains Zimbabwe’s only legitimate ruler and balking at mediation by a Catholic priest to allow the 93-year-old former guerrilla a graceful exit after a military coup, sources said on Thursday.
A political source who spoke to senior allies holed up with Mugabe and his family in his lavish “Blue Roof” Harare compound said Mugabe had no plans to resign voluntarily ahead of elections scheduled next year.
“It’s a sort of stand-off, a stalemate,” the source said. “They are insisting the president must finish his term.”
The army’s takeover signaled the collapse in less than 36 hours of the security, intelligence and patronage networks that sustained him through 37 years in power and built him into the “Grand Old Man” of African politics.
The priest, Fidelis Mukonori, who has been mediating between Mugabe and the generals who seized power on Wednesday in a targeted operation against “criminals” in his entourage, had also made little headway, a senior political source told Reuters.
The army appears to want Mugabe, who has led Zimbabwe since independence in 1980, to go quietly and allow a smooth and bloodless transition to former vice-president Emmerson Mnangagwa. Still seen by many Africans as a liberation hero, Mugabe is reviled in the West as a despot whose disastrous handling of the economy and willingness to resort to violence to maintain power pauperised one of Africa’s most promising states.
A fighter, both literally and figuratively during a political career that included several assassination attempts, Mugabe now appears to have reached the end of the road. With the army against him and the police - once seen as a bastion of support - showing no signs of resistance, force is not an option. Similarly, his support inside the ruling party is crumbling and on the streets of the capital he is loathed.
Zimbabwean intelligence reports seen by Reuters suggest his exit has been in the planning for more than a year.
Mnangagwa, a former security chief and life-long Mugabe confidant known as “The Crocodile” who was axed as vice-president earlier this month, is the key player. According to the files and political sources in Zimbabwe and South Africa, once Mugabe’s resignation is secured Mnangagwa would take over as president of an interim unity government that will seek to stabilise the imploding economy.
Fuelling speculation that that plan might be rolling into action, opposition leader Morgan Tsvangirai, who has been receiving cancer treatment in Britain and South Africa, returned to Harare late on Wednesday, his spokesman said.
Former finance minister Tendai Biti added to that speculation, telling Reuters he would be happy to work in a post-coup administration as long as Tsvangirai was also on board.
“If Morgan says he’s in, I‘m in,” said Biti, who earned international respect during his time as finance minister in a 2009-2013 unity government. “The country needs a solid pair of hands so one might not have a choice.”
South Africa said Mugabe had told President Jacob Zuma by telephone on Wednesday that he was confined to his home but was otherwise fine and the military said it was keeping him and his family, including wife Grace, safe.
Despite lingering admiration for Mugabe among older African leaders, there is little public affection for 52-year-old Grace, a former government typist who started having an affair with Mugabe in the early 1990s as his first wife, Sally, was dying of kidney failure. Dubbed “DisGrace” or “Gucci Grace” on account of her reputed love of shopping, she enjoyed a meteoric rise through the ranks of Mugabe’s ZANU-PF party in the last two years, culminating in Mnangagwa’s removal a week ago.
Zimbabweans, including the Mnangagwa camp and the military, interpreted this as a move to clear the way for her to succeed her husband.
In contrast to the high political drama unfolding behind closed doors, the streets of the capital remained calm, with people going about their daily business, albeit under the watch of soldiers on armoured vehicles at strategic locations.
Nobody is safe from the rages of Zimbabwe’s First Lady, “Dr. Amai” Grace Mugabe. There was the young South African model Grace lashed with extension cords. 93-year-old President Robert Mugabe’s longtime and usually trusted ally Emmerson Mnangagwa, was next in the firing line: he was sacked because his supporters allegedly booed her at a rally.
The consequences of her vengeance may have led to a coup headed by Zimbabwe’s army chief General Constantino Chiwenga, who is commonly perceived to be Mnangagwa’s protégé. But ex-freedom fighter Mnangagwa has his own presidential aspirations.
Mnangagwa has been exiled from the party in which he has served since he was a teenager. But he is not just skulking in the political wilderness. On arrival in South Africa he issued a statement calling those who wanted him out “minnows”. He promised to control his party “very soon” and urged his supporters to register to vote in the national elections next July.
As if to back Mnangagwa, on November 13 General Chiwenga announced that he and his officers could not allow the “counter-revolutionary infiltrators”, implied to be behind Grace Mugabe, to continue their purges.
Factions and purges
Chiwenga declared that the armed forces must ensure all party members attend the extraordinary Zanu-PF congress next month with “equal opportunity to exercise their democratic rights”. He flashed back through Zanu-PF’s history of factionalism, reminding his listeners that although the military “will not hesitate to step in” it has never “usurped power”. Chiwenga promised to defuse all the differences “amicably and in the ruling party’s closet”.
Although this airbrushed more than it revealed about the party’s rough patches when leadership vacuums appeared, the statement appeared more as a cautionary note than a clarion call to arms. It’s not often a coup is announced before it starts; but once in motion direction – and history – can change. Grace Mugabe may have unleashed a perfect storm and her own undoing.
All the “shenanigans” that have inspired the generals to consider a coup have set the stage for an extraordinary Zanu-PF congress this December instead of in the expected 2019: that is, before rather than after the July 2018 national elections.
This suggests some people were in a hurry to settle the succession issues for the president, who is now showing every one of his 93 years. Maybe Robert Mugabe won’t rule until he is 100-years-old. If not, and members of his family or party wanted to keep their dynasties alive, they had to work quickly lest some similarly inclined contenders are in their way.
These contenders include Mnangagwa and a slew of his “Lacoste” faction consisting of war veterans and the odd financial liberal. The best-known of these is Patrick Chinamasa. This former finance minister tried to convince the world’s bankers he could pull Zimbabwe out of the fire. He was demoted to control cyberspace and then fired. Perhaps he may make a comeback in the wake of the semi-coup.
The pro-Grace faction includes the members of Generation 40, or “G-40”. Many are well over 40. But in Robert Mugabe’s shadow they appear young, as does the 52-year-old First Lady. Without a base in the liberation-war cohort, they resorted to working with the Mugabe couple: sometimes their ideology appears radical, espousing indigenous economics and more land to the tillers.
If the history of their best-known member – the current Minister of Higher Education Jonathan Moyo – is indicative, however, they are pragmatic; or less politely put, opportunist.
But with Grace Mugabe sans Robert, they would have to muster inordinate amounts of patience and manipulation to steer the sinking ship to the shores of stable statehood and incorporate yet younger generations who cut their political teeth as Robert Mugabe’s rule faltered.
Yet the possible plan for the upcoming congress – to create a third vice-president – appears not to move far beyond the cold hands of the old. Phelekezela Mphoko would be pushed to third vice-president status. Grace would be the second vice-president.
The current defence minister, Sydney Sekeramayi would be first vice-president and so, next in line for the presidential palace. He is a quiet but no less tarnished member of the Zanu-PF old guard; especially when one remembers the massacre of thousands of Ndebele people during the Gukurahundi.
When performing the calculus necessary to rectify Zimbabwe’s graceless imbalances, remember that Mnangagwa was perhaps the key architect of the nearly genocidal Gukurahundi, now chronicled in archival detail in historian Stuart Doran’s Kingdom, Power, Glory: Mugabe, Zanu, and the Quest for Supremacy. Among the scores implicated therein are the British, condemned by Hazel Cameron, another meticulous archivist, as exercising “wilful blindness” during what Robert Mugabe has dismissed as a “moment of madness”.
Perhaps it’s no surprise, then, that many are suspicious of Mnangagwa’s relationship with the UK. Many suspect he has been swimming with perfidious Albion for a very, very long time.
Those waters, in the shadow of Mugabe’s heritage, will take a few more generations of hard political work to clear. It hardly seems propitious that a coup, and the same generation that has ruled since 1980, starts it off.
The armed forces seized power in Zimbabwe after a week of confrontation with President Robert Mugabe’s government and said the action was needed to stave off violent conflict in the southern African nation that he’s ruled since 1980.
The Zimbabwe Defense Forces will guarantee the safety of Mugabe, 93, and his family and is only “targeting criminals around him who are committing crimes that are causing social and economic suffering in the country in order to bring them to justice,” Major-General Sibusiso Moyo said in a televised address in Harare, the capital. All military leave has been canceled, he said. Mugabe is preparing to step down, Johannesburg-based News24 reported, citing unidentified people familiar with the situation.
Denying that the action was a military coup, Moyo said “as soon as we have accomplished our mission we expect the situation to return to normalcy.” He urged the other security services to cooperate and warned that “any provocation will be met with an appropriate response.”
The action came a day after armed forces commander Constantine Chiwenga announced that the military would stop “those bent on hijacking the revolution.”
As several armored vehicles appeared in the capital on Tuesday, Mugabe’s Zimbabwe African National Union-Patriotic Front described Chiwenga’s statements as “treasonable” and intended to incite insurrection. Later in the day, several explosions were heard in the city.
Constantino ChiwengaPhotographer: Jekesai Njikizana/AFP via Getty Images
The military intervention followed a week-long political crisis sparked by Mugabe’s decision to fire his long-time ally Emmerson Mnangagwa as vice president in a move that paved the way for his wife Grace, 52, and her supporters to gain effective control over the ruling party. Nicknamed “Gucci Grace” in Zimbabwe for her extravagant lifestyle, she said on Nov. 5 that she would be prepared to succeed her husband.
The events unfolded as Zimbabwe is in deep crisis. The economy has halved in size since 2000 and the nation has no currency of its own, using mainly the dollar as legal tender. Lines of people waiting to make bank withdrawals snake around city blocks in Harare. Some sleep in the streets to ensure they’re served. An estimated 95 percent of the workforce is jobless and as many as 3 million Zimbabweans have gone into exile.
The country is now under military rule, said Alex Magaisa, a Zimbabwean law lecturer who is based in the U.K. and helped design Zimbabwe’s 2013 constitution.
Man In Uniform
“When you see a man in uniform reading news on national television, you know it’s done,” he said in a text message. “There are no more questions. Authority is now in the hands of the military.”
Mnangagwa, who said he fled Zimbabwe because of threats against him and his family, had been a pillar of a military and security apparatus that helped Mugabe emerge as the nation’s leader after independence from the U.K. in 1980. He was Zimbabwe’s first national security minister.
Mnangagwa’s dismissal signaled Mugabe’s break with most of his allies who fought in the liberation war against the white-minority regime of Rhodesia, leaving his wife’s so-called Generation-40 faction of younger members of the ruling party in the ascendancy. While Zanu-PF named Mugabe as its presidential candidate in elections next year against a possible seven-party opposition coalition, he’s appeared frail in public, sparking concern among his supporters that he wouldn’t be able to complete another five-year term.
In this image made from video, Major Gen. S.B. Moyo addresses to the nation in Harare on Nov. 15.Photographer: ZBC via AP Photo
Moyo, in the statement, told members of parliament that the military’s “desire is that a dispensation is created that allows you to serve your respective constituencies according to democratic tenants.”
Elections probably won’t be held as scheduled, Rashweat Mukundu, an analyst with the Harare-based Zimbabwe Democracy Institute, said by phone.
“The military is going to determine the shape of Zimbabwean politics, although they’ve tried to say this is not a coup,” he said. “This may result in the creation of a new unity government which will involve the opposition.”
Zimbabwean police arrested a US citizen on Friday for allegedly tweeting that President Robert Mugabe is a "goblin whose wife and step-son bought a Rolls-Royce," lawyers said.
Zimbabwe Lawyers for Human Rights (ZLHR) said officers detained Martha O'Donovan in a dawn raid at her home just weeks after Mugabe appointed a cyber security minister charged with policing social media.
Police confiscated her laptop and transferred O'Donovan, who works for Harare-based Magamba TV, to the city's central police station, the group added in its statement.
"The reported offensive and insulting tweet does not make any mention of the president's name," ZLHR said.
However Mugabe's stepson with his wife and first-lady Grace, Russell Goreraza, is thought to have recently imported two Rolls-Royce vehicles into the country, local media reported.
The British-built cars — both Rolls-Royce Ghosts that sell for around $220,000 and have a top speed of 155 miles per hour — are marketed by the manufacturer as "more measured, more realistic" than the $300,000 Rolls-Royce Phantom.
Grace Mugabe's son is also reported to have purchased two Range Rover 4X4s, two Mercedes-Benz S-Class limousines and an Aston Martin, while Grace herself is also thought to have acquired a Rolls-Royce.
"The US embassy has been in contact with the American who has been arrested and her counsel," an embassy spokesman said. "We will continue to monitor the situation."
Police did not respond to calls for comment. There have been several arrests in recent years for actions deemed to undermine the president, although no one has been convicted. Two men were arrested separately on Friday after they allegedly said they would not vote for the ruling ZANU-PF party and comparing Mugabe to a dog.
The new cyber-security ministry is "an attempt to clamp down on social media movements that pose a big threat to his regime ahead of the election," Bulawayo-based analyst Dumisani Mpofu previously said.
Mugabe has already been named by ZANU-PF party as its presidential candidate for the 2018 poll.
Zimbabwe has an unemployment of more than 90 per cent and rising levels of poverty.
Less than a decade after hyperinflation obliterated Zimbabwe's dollar along with its pensions and savings, the southern African nation is suffering a return to precipitous price rises.
Zimbabwe adopted the U.S. dollar in 2009, along with Britain's pound and the South African rand, to tame inflation that topped out at 500 billion percent. But the relative financial stability of the last eight years has unravelled in the last two months as acute foreign exchange shortages have led to sharp price increases. Meanwhile money in banks is losing value fast.
The situation is still a far cry from 2008 when the central bank printed a Zimbabwe $100 trillion note.
But Steve Hanke, an economics professor at Johns Hopkins University in the United States, said in paper published this week that hyperinflation - defined as monthly inflation above 50 percent for at least 30 consecutive days - had returned.
Zimbabwe's real inflation rate, measured by purchasing power parity and taking into account its de facto exchange rate, was 313 percent a year and 112 percent on a monthly basis, said Hanke, who has written a book about the country's 2008 crisis. He dismissed official statistics that put year-on-year inflation at just 0.78 percent in September as a "truly fantastical piece of artwork".
"Zimbabwe, welcome back to the record books! You have once again entered the inglorious world of hyperinflation. It is a world of economic chaos, wrenching poverty and death," he said. "Its purveyors should be incarcerated and the keys should be thrown away," he concluded, taking a swipe at the government of 93-year-old President Robert Mugabe.
Other economists said Hanke's figures might be a bit steep but also dismissed the official numbers as fantasy.
University of Zimbabwe economist Tony Hawkins said an increase in money supply through massive treasury bill issuance this year and depreciation of the domestic currency pointed to inflation as high as 40 percent or more in the next two years. Locally-based Econometer Global Capital put the September inflation figure at 65 percent.
However, Mutasa Dzinotizei, who heads the Zimstats statistics agency, dismissed the alternative calculations. His organisation's methodology, based on domestic dollars taken at face value, was sound, he told Reuters.
"Inflation is reflected at the retail end of the market. We don't go to the stock exchange or look at the exchange rate. I have never seen it done anywhere in this world," he said.
Aside from locally-produced staples such as maize meal and bread, prices of imported goods on Harare supermarket shelves have shot up 30-150 percent in the last two months. Importers attribute the increases to the price of foreign exchange, which they have to buy on the black market at a premium.
WHAT PRICE A DOLLAR?
Assessing the true value of U.S. dollar balances in Harare banks, known locally as "zollars", is difficult but on the black market they were trading at a 65 percent discount to cash this week. Economists including Hanke have used another gauge of value from the old hyperinflation days - the Old Mutual Implied Rate - to try to measure the extent and pace of Zimbabwe's financial collapse.
The Old Mutual rate, based on the relative values of shares in insurance firm Old Mutual in Harare and London, suggested a discount of as much as 80 percent this week after the Harare shares hit $14.29 compared with $2.44 in London.
In effect, this means $100 in a bank in Harare is actually worth less than $20. With Zimbabweans piling into any asset they think might retain value, virtual currencies such as Bitcoin have soared. On the local bitcoin exchange, Golix (golix.io), bitcoins were at $9,800 compared with a spot rate of $5,820.
"There is far greater demand for bitcoin in Zimbabwe than supply because people see bitcoin as a store of value for their money in the bank," one Harare Bitcoin trader said.
At an international conference on non-communicable diseases, Tedros Adhanom Ghebreyesus, the World Health Organisation director general, recently named Zimbabwe president, Robert Mugabe, as a new WHO “goodwill ambassador” on non-communicable diseases (NCDs) for Africa.
Following international uproar the accolade was rescinded – but the debacle showed both misguided good intention and the importance of internal communication.
Ghebreyesus (or Tedros, as he likes to be known) was elected to lead the WHO in May. He has a strong record of global health leadership, having previously served as chair of the board for the Global Fund to Fight AIDS, Tuberculosis, and Malaria, the Roll Back Malaria Partnership, and co-chair of the Partnership for Maternal, Newborn and Child Health. From 2005-2012 he served as Ethiopia’s minister of health, winning plaudits for reforming the health system, improving outcomes, and widening access to care. He has his critics – at the same time as he was reducing maternal mortality by 60% – his government was accused of covering up three cholera epidemics. Ghebreyesus dismissed these “smears” and was supported by several independent public health leaders. Nevertheless, he did serve in a senior position in a government that has been criticised for human rights abuses.
Tedros trained at the prestigious London School of Hygiene and Tropical Medicine and completed his PhD in community health at Nottingham University. He is generally well regarded, and is the first non-medic and the first African to hold the WHO’s top job.
You probably know about Mugabe already. The 93-year-old has ruled Zimbabwe with an iron fist for 37 years. The US imposed sanctions against him for his human rights abuses, and the UK’s monarch stripped him of an honorary knighthood in 2008 for violently repressing political opposition. Amnesty International accuses his government of corruption, of ruining the economy, crushing democratic opposition, and of illegally detaining and torturing journalists and political activists. Under his watch rampant hyperinflation and gross mismanagement has devastated the economy in the country once referred to as “the breadbasket of Africa”.
The health system in Zimbabwe has collapsed under his rule and he does not trust his own hospitals, flying to Singapore for medical care three times since January. In total he spent US$53m on foreign trips last year – an amount equal to a fifth of the entire health budget.
On paper, the health system is well designed – built on the principles of universal access, health promotion, and strong primary care. However, by the WHO’s own assessment chronic underfunding has led to poor outcomes (Zimbabwe comes 180th out of 193 countries for life expectancy - a dismal 59 years).
So what happened?
On October 18th Tedros made the following announcemt mid-way through his speech: “Today I am also honoured to announce that President Mugabe has agreed to serve as a goodwill ambassador on NCDs for Africa to influence his peers in his region to prioritise NCDs” (The full transcript of his statement is available here.)
I work as a consultant for the WHO Global Coordination Mechanism on NCDs, based at the HQ in Geneva. This unit instigated the conference. It does not seem that the Director General shared his intention with any senior WHO staff; my colleagues were as dumbfounded as the international community. There also isn’t any evidence to suggest that the decision was anything more than a terrible and uncharacteristic political misstep. But there is past precedent to help explain what he might have been thinking.
Tedros built his platform on universal health coverage: encouraging countries to extend an increasing range of health services to a greater proportion of the population while improving financial protection for people, for example through health insurance, when they fall ill.
His focus on universal health coverage is microcosmic – he has also championed a more universal vision of global health and has put real effort into inviting all members of the global community to support his goals. During his candidacy he visited a huge number of member states, and an article in the China Daily is indicative of his efforts to court all countries regardless of their political record.
His years of experience pragmatically overseeing significant health improvements within an oppressive government may explain his willingness to engage with other unsavoury regimes. This is a difficult line to tread. Non-communicable diseases advocates sympathise with his inclusive inclinations, but have drawn the line at having Mugabe as their figurehead.
Awareness of NCDs
A few good things have come out of the debacle. The international uproar has applied fresh diplomatic pressure on Mugabe and served to highlight the plight of his people. The episode also put non-communicable diseases into headlines; NCDs are the leading cause of death and disability worldwide but they are misunderstood, under-funded, and under-researched. The swift cancellation of the accolade was also a victory for civil society, and a rare example of a leader who is willing to listen and change their mind when wrong.
The unforced clanger has badly tarnished the WHO’s reputation, undermined its credibility, and raised serious questions about the new director’s judgement. Seen in the context of his efforts to “seek broad support” and “high-level political leadership for health” his error is perhaps more understandable. However, commendable efforts to include everyone on the journey to truly universal healthcare cannot come at the cost of condoning and legitimising despots and oppressive regimes. Violence, political oppression, and corruption are anathema to the founding principles of the WHO: promoting the highest standards of mental, physical, and social well-being for all.
Zimbabwe’s foreign exchange situation is getting worse in spite of extensive touting of a ‘nostro-stabilisation’ loan the Reserve Bank of Zimbabwe says it got from Afreximbank. How do we know this? Watch the indicators from your bank.
On 11 October 2017, Ecocash, which some moons ago actively promoted its Mastercard, had this to tell its customers: “Due to the prevailing foreign currency challenges we regret to advise that with immediate effect, Ecocash will be suspending international transactions on the debit card…” Of course, they added the usual ‘we apologize for any inconveniences (sic) caused…” bla bla bla. This is not just true of Ecocash and its mother bank, Steward Bank. It’s true of many banks in Zimbabwe, including the foreign-controlled ones.
Foreign exchange is a resource. Unlike five years ago, the obtaining situation is that very few, a privileged few, have access to it. In its wisdom or lack of it, the Reserve Bank of Zimbabwe, and by extension, Government of Zimbabwe decided to plug the gap by printing a note (bond note) they assigned the same value as the United States dollar. In my previous writings, I argued that the bond note is in fact a local currency, so there is no need to dwell much on this.
Technically, a note (whether bond or promissory) is a signed document containing a written promise to pay a stated sum to a specified person or a bearer at a specified date or on demand. As such, strictly speaking, the Reserve Bank of Zimbabwe used bond notes and various other negotiable instruments like treasury bills to borrow real United States dollars from depositors.
Former Finance Minister Patrick Chinamasa recently revealed that $2,5 billion Treasury Bills were issued out as at June 30, with $127 million going towards paying the Reserve Bank of Zimbabwe debt and $263 million towards recapitalisation of State Enterprises and Parastatals. It’s up to citizens and various other institutions representing citizens to audit and assess how those funds were used.
But the important point is – they decided to use the force of law through Statutory Instrument 133 of 2016 Presidential Powers (Temporary Measures) Amendment of the Reserve Bank of Zimbabwe Act, which INSISTS that bond notes are acceptable legal tender, and that they have an equal value to United States dollar.
So, let’s take a step back! Adam Smith laid the foundations of classical free market economic thought through his 1776 work called An Inquiry into the Nature and Causes of the Wealth of Nations [often referred to as The Wealth of Nations]. It’s important because exchange rates are indeed a function of the wealth of nations.
Through what he termed “the invisible hand”, Smith suggested that an economic system is automatic, and, given substantial freedom, is able to self-regulate and drift towards self-efficiency. The self-regulation ability is of course limited by tax incentives, externalities, monopolies, political lobbying, and things like privileges given to one group of economic players at the expense of others.
The most relevant part of Smith’s work to my thinking is as follows: “As every individual, therefore, endeavours as much as he can both to employ his capital in the support of domestic industry, and so to direct that industry that its produce may be of the greatest value; every individual necessarily labours to render the annual revenue of the society as great as he can.
He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.
Nor is it always the worse for the society that it was no part of it. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good. It is an affectation, indeed, not very common among merchants, and very few words need be employed in dissuading them from it.”
I got into an engagement with Busisa Moyo of United Refineries about parallel market pricing. He argued that the rates were crazy and there is no basis (pricing model) for the rates. But he could not tell me either what the basis or pricing model was for insisting that the value of a bond note is the same as the United States dollar as intended by Mugabe’s decree. I argued there was a basis for parallel market pricing.
The basis is rationalism. Rationalism is the philosophy that knowledge or actions are driven by reason, logic and intuition. This philosophy brought into economics the notion of homo economicus, or economic man or rational man; which suggests that humans are consistently rational agents that pursue narrow self-interests to maximise utility (satisfaction).
Although the thinking around the rational man came centuries later through John Stuart Mill and others, Smith had noted this already when he pointed out that: “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.”
We could argue as well that it is not from the benevolence of the Reserve Bank of Zimbabwe governor, the president or the minister of finance that they fix the rate of the bond notes to that of the United States dollar and insist the two currencies are equal, but from their regard to their self-interest – and if I may add, political self-preservation, which gives them access to power, money and control.
So what drives the parallel market rates. As I told Busisa Moyo, it’s a simple case of supply and demand. The scarcer the United States dollars, the higher the value of Zimbabwe dollars (defined as bond notes, digital bank balances and other instruments) you must offer for US dollars.
President Mugabe admitted on national television this year that he also now keeps cash at home (I am not sure which bank gives him that cash), he is just being a rational man. If you also keep cash at home, you are just being a rational man. If I keep cash in my home, I am just being a rational man. If the next guy hasn’t got the United States dollars cash, but badly needs them, and he wants to exchange them for the Zimbabwe dollar as (defined above), the rational man, in pursuit of his own self-interest and not charity, will have to charge a price for them.
If the one with Zimbabwe dollars want the United States dollars badly enough, he will have to pay or negotiate an exchange rate. It’s how things work in the market that officials have chosen to refer to in pejorative terms like a parallel market or black market. But the fact is – it is the real market. It is made up of rational, economic men and women who have woken up to the reality that in the face of United States dollars scarcity, the notion that bond notes have the same value as United States dollars, by decree or any other means is not only ridiculous, but a giant fraud!
Let us be honest. Let us face it. Even Mangudya would not give you $5,000 United States dollars cash from his personal hoard in exchange for 5,000 bond notes. We can challenge him and put him to the test. Those ministers of government would not do it either. Take your bond notes or RTGS and challenge anyone shouting the one is to one mantra and challenge them to give you United States dollars cash in exchange and see if they will.
The reason they won’t do it is because they are economic men, and as such are not stupid. In short, to echo Adam Smith: “As every individual, therefore, endeavours as much as he can both to employ his capital in the support of domestic industry, and so to direct that industry that its produce may be of the greatest value.”
The rational man thus seeks the greatest value from his capital. In short, it would be stupid to give away my $100 for 100 Zimbabwe dollars when John wants to pay me 140 Zimbabwe dollars for it, and while Peter is offering 150 Zimbabwe dollars for the same.
As a rational person, I will have to take the highest offer for my US$100. This is the basis for the pricing that we see real market – what officials want to call parallel market. As a matter of fact, it’s just a normal market which gets a bad label from our politicians, who are mere economic man pursuing their political self-interest.
To be clear, Zimbabwe no longer uses the United States dollar as currency. We now have a hotch-potch of digital bank balances, bond notes and bond coins.
I also argued that, “Robert Mugabe is the only President with the unique distinction of battering two different currencies in his lifetime and within a space of fifteen years. He did not just ruin the Zimbabwe dollar, but also tore apart the United States dollar as we knew it 2009 to 2013.”
When the Zimbabwe dollar died slowly in 2008, it was the rational and economic man and women of Zimbabwe, the people, who buried the corpse and brought in the United States dollars as we know them. Between 2013 and 2018, through warped policies, wanton spending, recklessness and gross ineptitude, Mugabe’s government chased away the United States dollar, leaving the Zimbabwe dollar in its trail.
But guess what, its repetition all over again. The government is battering and killing this Zimbabwe dollar, by overprinting it. And if you watch carefully, again, like in 2008, the people are bringing back the United States dollar again, at the right price officials like to call parallel market rates.
In short, they are busy killing the Zimbabwe dollar they brought back between 2013 and 2015, and the people are, once again, bringing back the United States dollar at the right price. They are the heroes, you know why? Because they are rational economic men and women! It’s the work of the invisible hand.
President Jacob Zuma said South Africa and Zimbabwe must implement their 2009 agreement aimed at cutting the massive delays characteristic with the Beitbridge border post by having a one-stop border post at the busy international gateway.
“I wish to underscore the strategic significance of a one-stop border post at the Beitbridge border. This border post is the busiest border post on the continent. Much of our goods and services go through it. We cannot afford to continue to have unnecessary delays at that border,” Zuma said while addressing the second session of the neighbouring countries’ Bi-National Commission (BNC) in Pretoria.
“It is therefore important and urgent that we start in earnest the process of establishing a one-stop border post. Our two countries took a decision to do so as far back as 2009. In this regard, we direct the relevant ministers and officials to move with speed and report progress at the next BNC [to be hosted in Harare next year].”
After a closed door meeting between the delegations of the two countries, a joint communique read out by South Africa’s International Relations and Cooperation Minister Maite Nkoana-Mashabane at the conclusion of the BNC said resolved to speed up the development of legal framework for the one-stop border post.
“Having noted the developments on the one-stop border post (OSBP) at Beitbridge, they [the two heads of state] welcomed the establishment of a joint technical committee whose mandate, among other things, will be to develop the necessary legal framework for the project. The two heads of state reaffirmed the strategic importance of the OSBP and directed the relevant ministers to fast-track its operationalisation,” she said.
On Monday, of Zimbabwe’s Foreign Affairs Minister Simbarashe Mumbengegwi, also said the two governments should wrap up issues which have long been on their agenda, particularly the establishment of a one-stop Beitbridge border post.
“Our two countries stand to benefit immensely from the smooth movement of people and goods through the Beitbridge-Musina border post. A one-stop at the busiest border post in the African continent will bring harmonised processes, improved infrastructure and smiles to many of our compatriots and others who regularly traverse through this border. It will produce impacts that will extend beyond our two countries and region,” said Mumbengegwi.
“The establishment of the one-stop border post at Beitbridge-Musina is an urgent issue that needs our dedicated attention.”
South Africa and Zimbabwe have good bilateral political, economic and social relations underpinned by strong historical ties dating back many years. The two countries do not only share strong historical relations but also economic cooperation. Zimbabwe is one of South Africa’s top five trading partners on the continent, with trade statistics showing annual growth.
In 2016, South Africa’s exports to Zimbabwe amounted to approximately R29.3-billion.
There are over 120 South African companies doing business in Zimbabwe in various sectors including mining, aviation, tourism, banking sector, the property sector, the retail sector, construction sector, and the fast food sector and many more.
At the BNC hosted at the Sefako M. Makgatho Presidential Guesthouse in Pretoria on Tuesday, Zuma was supported by several ministers including Nkoana-Mashabane, Defence and Military Veterans Minister Nosiviwe Mapisa-Nkqakula, Trade and Industry Minister Dr. Rob Davies, Labour Minister Mildred Oliphant, Minister of Telecommunications and Postal Services Siyabonga Cwele, and Transport Minister Joseph Maswanganyi.
Visiting Zimbabwean President Robert Mugabe, who co-chaired the BNC with Zuma, was accompanied by his officials including Mumbengegwi, Defence Minister Sydney Sekeramayi, Health and Child Care Minister David Parirenyatwa, Home Affairs Minister Ignatius Chombo and the country’s Public Service, Labour and Social Welfare Minister Prisca Mupfumira.
Source: African News Agency