The recent change of guard within the ruling ZANU-PF party in Zimbabwe from Robert Mugabe to Emmerson Mnangagwa provides a ready opportunity to stimulate a stagnant economy, allow for the restoration of a robust civil society and the consolidation of democracy through free and fair elections in 2018.
The new Zimbabwe President Emmerson Mnangagwa has an uphill task to rebuild the country’s battered economy, end its international isolation and restore sceptical investor and public confidence to boost growth, industrialisation, and development.
Zimbabwe’s economy faces deep structural problems reflected in its high public debt, the large informal economy, weak domestic demand and the lack of local and international investor confidence.
To underscore the economic crisis, last April then Zimbabwean Education Minister Lazarus Dokora, said parents who cannot afford school fees, could now use livestock such as goats or sheep as a form of payment, with many schools having done so already (Moyo 2017).
Worse, Zimbabwe is about to hold elections in 2018, with the competing party campaigns, likely to ratchet up populist rhetoric, hardline policy proposals and possibly violent competition as leaders and parties dig for votes.
Furthermore, Mnangagwa’s own Zanu-PF party is deeply divided between his allies in the military and that of former president Robert Mugabe and his wife Grace Mugabe, meaning that the necessary focus on introducing confidence-boosting reforms may be undermined, as energy is diverted by party infighting.
The result would be increasing investment uncertainty, increasing instability and decreasing business confidence, with potential investors likely to adopt a wait and see attitude until certainty returns, after the elections.
Nevertheless, the change from the regime of long-time leader Robert Mugabe to Emmerson Mnangagwa has already lifted business confidence, optimism for democratic renewal, and social and economic change. The question is whether Mnangagwa can not only sustain this initial boost but lift it further.
Perilous state of the economy
The African Development Bank (AfDB) in its Zimbabwe outlook in January 2018 projected real gross domestic product (GDP) growth to be 1% by the end of 2018, and 1.2% in 2019. Growth was 0.7% in 2016, the 2017 figures are not out yet (AfDB 2018; Finance Ministry 2017).
The AfDB (2018) believes that possible improvements – if Mnangagwa introduces the reforms he has pledged – in the performance of the mining and agriculture sectors and better water and energy service delivery, could lift growth. Zimbabwe’s economy has shrunk by half since 2000. It has deindustrialised to levels seen decades before independence – things it used to produce during colonialism; it does not anymore, and must now be imported.
It has a very high public sector wage bill – of around 19% of GDP (Finance Ministry 2017; World Bank 2017) and a massive foreign debt. Revenues have consistently fallen year on year. In 2017, revenues fell at least 6% from the year before. This means that Zimbabwe has very limited fiscal space for capital, public and social spending (Finance Ministry 2017; World Bank 2017).
The country is suffering from a liquidity crunch, with chronic shortages in foreign currency. In 2016 the country pegged bond notes to the US dollars, however, the negative consequence is that a parallel, informal market for foreign exchange has quickly mushroomed. For another, the country’s real exchange, according to the AfDB (2018) is heavily overvalued, further undermining the competitiveness of the economy.
The security forces and senior officials have become major business and empowerment players in especially the mining and agricultural sectors and used indigenisation policies to secure empowerment stakes mostly by force, in local and foreign companies. They have also “taken major roles in diamond production, crop collection, and food distribution”, crowding out existing private companies, killing off emerging ones and using agriculture production and food distribution for political patronage, showering benefits to supporters, and starving critics (Freedom House 2012).
Zimbabwe’s public finances are in shambles, with irregular, fruitless and mismanagement rife (Auditor-General 2016). The country’s Auditor-General regularly reports weak internal controls, expenditure not supported by documents and non-compliance; combined with lack of consequences, a pervasive culture of corruption and patronage (Auditor-General 2016). Poor corporate governance in state-owned companies (SOEs) is now endemic.
State of democracy
In September 2008, the governing Zanu-PF, with opposition parties, signed the Global Political Agreement (GPA) as a roadmap for “Inclusive Government”. The GPA recognised the importance of freedoms of expression, association and assembly. Mnangagwa last year, hailed a “new and unfolding democracy” in Zimbabwe (Mnangagwa 2017). However, the reality is that he inherited a state where freedom of expression, freedom of association and basic human rights are severely restricted. The state media unashamedly bias Zanu-PF.
Opposition parties and leaders, civil society organisations and activists are routinely portrayed as puppets of foreign powers, fake stories published about them to undermine their credibility (Civicus 2010). The government does not advertise in private media perceived to be critical of it.
Public criticism of the president and government policies and actions are criminalised (CPJ 2015), public protests are similarly criminalised. Patriarchy, sexism, and homophobia are entrenched in politics, the labour market and society. Because of archaic patriarchal beliefs, widows often lose their marital homes and lands when their husbands die (Human Rights Watch 2018). Police appear to have specifically targeted lesbian, gay, bisexual and transgender (LGBTI) activists and organisations (Muchena 2017).
Restrictive laws are undermining civil society, independent media and opposition parties. The most repressive laws include the Public Order and Security Act (POSA), Access to Information and Protection of Privacy Act (AIPPA), and the Criminal Law (Codification and Reform) Act. Independent journalists, civil society activists, and opposition leaders, when arrested for anti-government protests have often been tortured, denied access to legal representation, and timely and fair hearings. Civil society activists are spied on (Civicus 2010).
The judiciary is in many cases under the thumb of the executive. In July last year, then president Robert Mugabe pushed through a constitutional amendment in parliament which gives the president the power to appoint senior judges. Judges have been harassed and the government has on many occasions refused to carry out court orders. The police, military, and intelligence agencies are used by Zanu-PF to terrorise not only political opponents but ordinary citizens.
“Security forces abuse citizens with impunity, often ignoring basic rights regarding detention, searches, and seizures. The government has taken no clear action to halt the rising incidences of torture and mistreatment of suspects in custody” (Freedom House 2012).
Zanu-PF has appointed more than 5000 youth officers across the country, who have been accused of running a terror campaign against Mugabe and Zanu-PF opponents. But Zanu-PF militias have, especially in the far-flung rural areas “committed assault, torture, rape, extralegal evictions, and extralegal executions” (Freedom House 2012) of party and government critics with impunity.
In a recent Freedom House survey, 65% of Zimbabweans polled said that “fear of violence and intimidation” from the governing Zanu-PF and government agencies will stop them from voting for opposition parties (Freedom House 2012). Amidst all of this, following years of government intimidation and internal infighting, the opposition is divided, often undermining their effectiveness.
Zimbabwe’s economic and democratic silver linings
There are a number of silver linings for the Zimbabwean economy. Energy supply is likely to be boosted following the completion of the Kariba South Extension Plant in December 2017, one of the country’s key post-independence infrastructure projects.
The mainstay of the country’s economy is mining and agriculture – turning these two sectors around should be the priority for the new president. The country’s large mineral wealth, its arable land, still relatively better human capital and business infrastructure, are key foundations to build on.
International commodity prices are likely to show growth in 2018, which could boost the demand for Zimbabwe commodities (AfDB 2018). Zimbabwe has over 60 minerals, including natural gas, diamonds and copper. It has the world’s second-largest deposits of chrome and platinum, and the 5th largest producer of lithium. The Zimbabwean Mines Ministry reckons that that country’s 800 mines could earn US$18bn per year (Chitando 2018). However, they have earned only US$2bn yearly since 2009.
Despite being heavily proscribed, civil society remains vibrant. The country’s independent media, although starved from government advertising, harassed and restricted by repressive laws, remains robust. Social media platforms, such as the #ThisFlag movement spearheaded by Pastor Evan Mawarire, are increasingly used to fight democratic repression.
Many judges, although being intimidated by the executive, with government last year threatening they cannot vouch for the safety of individual judges, courageously upholds the law. In 2016, in a victory for press freedom, Zimbabwe’s Supreme Constitutional Court bravely ruled that the country’s criminal defamation laws are unconstitutional (CPJ 2016). Opposition parties, although often fighting more with each other than the governing party, are relatively more robust than in many African countries.
Zimbabwe needs a coherent industrial policy
The country will have to make its mining and agricultural policies more investor-friendly. Given that growth-wrecking, unpredictable and ad-hoc indigenisation policies, have undermined property rights, scared off investors and led to capital flight. Such policies will have to be part of a thought-through industrial policy, be more pragmatic, and balanced with protecting basic property rights.
Mnangagwa will have to clean up some of the destructive indigenisation policies in the mining and agricultural sectors which have rather than lead to broad-based empowerment, have led to self-enrichment by Zanu-PF elites, scared investors led to capital flight and caused the deindustrialisation of the economy.
Mnangagwa has stated he will pay compensation to white farmers whose land was unfairly compensated. The indigenisation policy must be revised. The aim of an indigenisation policy should not be to enrich a few well-connected political entrepreneurs, to destroy the country’s economy, therefore, making it even more vulnerable for recolonisation or capturing by industrial or emerging powers, nor impoverish the black majority.
The government should consider reducing the 51% requirement for local ownership to below 50%, to offer investors the majority control as an incentive, but give locals significant control. It should end well-connected political capitalists with links to Zanu-PF and the army, from securing lucrative empowerment deals. Instead, employees and local communities should be the beneficiaries of empowerment through trusts, cooperatives or similar broad-based empowerment structures.
Indigenisation should be aligned to industrialisation, skills and technology transfer. The focus should be on getting foreign owners to stimulate local manufacturing, skills transfer, and local development – this is a more sustainable form of indigenisation. Furthermore, indigenisation should compel companies to promote local value addition, beneficiation and processing of minerals – which creates more jobs, and more widely.
Zimbabwe needs to prioritise building a manufacturing industry – which would create more jobs, but which has essentially collapsed since independence. Small manufacturers must be linked to the supply chains of state companies, based on merit, rather than political connections or ethnicity.
Mnangagwa has to encourage small farmers to diversify their production, to produce not only for their household consumption but produce the things the country currently imports. It will be crucial to bring small farmers into the production chains of large state and private companies as a former black economic empowerment partner. Small farmers need to be reskilled and given financial, technical and market support.
The country has to better maintain ailing infrastructure and build new ones. Mnangagwa has promised to sell government bonds to finance infrastructure build. He has to restructure the loss-making state-owned companies, tackling corruption and bring in new skills to run them. There has to be greater political will to tackle corruption – to restore business confidence. It will be crucial that the new regime diversify its trading partners. Mnangagwa must reach out to African, developing and industrial countries by which Zimbabwe’s relationship has soured under Mugabe.
Conclusion: rebuilding Zimbabwe through democratic reform
The Zimbabwean government has announced it will set up 10 specialised courts to try corruption cases, and gave corrupt officials until the end of February 2018 to return money illegally moved abroad (Mnangagwa 2017). It will be important that the government is seen to be even in their pursuit of the corrupt. It should not turn out to be a witch-hunt against the Mugabe faction and government opponents, but that corruption committed by Mnangagwa allies should also be tackled.
Mnangagwa will have to introduce merit into appointments in the party, public sector, and tendering for government contracts. It should stop political deployments and cronyism based on “struggle” credentials, ethnicity and party factions. Zimbabwe has a large diaspora community, with skills, capital, and market influence. Mnangagwa will have to draw them in to help with restoring the country’s economic fortunes.
To do so, at the least minimum, he will have to introduce merit into the public service appointments and government contracts, import Zimbabwean diaspora experts and protect individual property rights from arbitrary seizure by Zanu-PF leaders. Management of public finance must be more prudent, pragmatic and responsible, and corporate governance at SOEs must be strengthened.
The Zimbabwean government must honour its own democratic constitution, in behaviour, decision-making, and spirit. Furthermore, Zimbabwe must implement the international rights and democracy charters they have signed up, such as the African Charter on Human and Peoples’ Rights and the International Covenant on Civil and Political Rights. It must scrap colonial-era insult laws, which makes it a crime to criticise the president.
Repressive laws such as the Public Order and Security Act (POSA), Access to Information and Protection of Privacy Act (AIPPA), and the Criminal Law (Codification and Reform) Act, must equally be scrapped. The army must withdraw from politics but rather defer to democratic, civil society and civilian oversight.
Zanu-PF needs to democratise itself or risk its undemocratic party governance system continuing to undermine the consolidation of democracy in the country itself. Opposition parties must collaborate more effectively and ally more smartly with civil society, to hold the government accountable, defend the rights of citizens and offer a credible political alternative.
African Development Bank (2018) African Economic Outlook: Zimbabwe Outlook, African Development Bank, Abidjan, Ivory Coast, January 16
Winston Chitando (2018) State of mining in Zimbabwe: Presentation by Zimbabwean Mines Minister Winston Chitando, Mining Indaba, 8 February, Cape Town
Civicus (2010) Civicus laments continued harassment of Zimbabwean human rights defenders. Civicus, March 26
Committee to Protect Journalists (2016) Zimbabwe Constitutional Court Strikes Criminal Defamation Laws. CPJ, 3 February
Committee to Protect Journalists (2015) In Zimbabwe, three journalists’ investigating elephant poisoning charged with slander, CPJ, 5 November
Department of Finance (2017) Budget Proposal 2016/2017. Government of Zimbabwe, December
Tony Hawkins and David Pilling (2017) How Zimbabwe’s economy was brought to the brink of collapse. Financial Times, 19 November
Human Rights Watch (2018) World Report: Zimbabwe – Events of 2017. Human Rights Watch, January
John Makamure (2016) Public finance management still in shambles. Newsday, 1 July
Emmerson Mnangagwa (2017) Presidential Inauguration Address. November 24, Harare
Jeffrey Moyo (2017) Zimbabwe’s parents barter goats, labour to pay school fees. Reuters, 6 September
Deprose Muchena (2017) Zimbabwe: Robert Mugabe’s Legacy. Amnesty International, December 4
Conrad Mwanawashe (2016) Govt loses $830m to poor public finance management. The Herald, February 10
Office of the Auditor-General (2016) Report of the Auditor for the Financial Year Ended December 31, 2016 on State Enterprises and Parastatals. Office of the Auditor-General of Zimbabwe
Office of the Auditor-General (2016) Report on the Audit Appropriation Accounts, Finance and Revenue. Statements and Fund Accounts in terms of Section 309 (2) of the Constitution of Zimbabwe read together with Section 10 (1) of the Audit Office Act (Chapter 22: 18) for the year ended December 31, 2016. Office of the Auditor-General of Zimbabwe
Vukasin Petrovic (2012) The Human Rights Situation in Zimbabwe. Briefing to the Tom Lantos Commission on Human Rights, Freedom House, October 18
World Bank (2017) Zimbabwe Economic Update: The State in the Economy. World Bank, June