Tag Archives: Peacebuilding

#PFEE Economy Collapsing: Why ED Has No Answers !!!🤔

 | Kennedy School, Harvard University

 4 minute read

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.

The locally created Zimbabwe bond note which is officially supposed to trade 1 to 1 with the US dollar, has been trading as high as 10 to 1 on the Harare black market according to unconfirmed local shopping experiences. In its October 20th edition The Economist reported that the bond note, known unofficial as the zollar, was trading for as little as 17 cents, or roughly 6-1.

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.

Robert Rotberg does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.Originally published on The Conversation. 
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#WednesdayWisdom: Mnangagwa’s been wooing Zimbabwe’s white sports heroes. Here’s why

Tapiwa Chagonda | University of Johannesburg
4 minute read

Sport in general, and particularly gifted sports people, have been known to rouse feelings of national unity. In the process, they instil a sense of patriotism and pride in their countries. Good examples include George Weah, the soccer legend from Liberia now the president of his country and Imran Khan, the cricketing star from Pakistan, now its prime minister. Notable sports figures have managed, to some extent, to unify their troubled nations. In the process they have shown how powerful a force sport can be.

This salient observation has not escaped Zimbabwe’s newly elected president, Emmerson Mnangagwa. In a bid to restore and paper over the badly damaged relations between the governing Zanu-PF party and the country’s white community both inside and outside Zimbabwe, Mnangagwa has appointed the former swimming sensation, Kirsty Coventry as Minister of Youth, Sport, Arts and Recreation.

The 35-year-old is a seven time Olympic medallist. She is the only African to break the 1:00 min barrier in the womens 100m backstroke. She also has the highest number of individual Olympic medals of all female swimmers in history.

But Coventry’s appointment is not where Mnangagwa ended. He also reached out to the flamboyant footballer, Bruce Grobbelaar, the former goalkeeper for the Zimbabwean national football team as well as British football club Liverpool whose nickname is “Jungleman”. In an interviewhe described Mnangagwa’s call which started with the president saying: “Hello, Jungleman, how are you?”

By wooing Coventry and Grobbelaar, Mnangagwa is clearly hoping to achieve a number of outcomes. The first is that he is hoping to repair the damaged relations between Zanu-PF and Zimbabwe’s white community. As a long shot, he might also be hoping that this will help normalise relations with the West which could, in turn, unblock much needed foreign direct investment.

Working with the hugely popular Coventry and equally liked Grobbelaar could also lure the young urban electorate back to Zanu-PF. They left the party in droves for the Movement for Democratic Change (MDC) when it was launched in 1999.

The history

When Zimbabwe gained independence in 1980 the country’s populationstood at just over 7 million people. The white population was around 230 000. This began to decline steadily white Zimbabweans began to emigrate to countries such as South Africa, Australia and New Zealand. The exodus increased significantly after 2000, when the Zanu-PF government began embarking on violent land grabs that resulted in Zimbabwe’s economy going into meltdown.

The last census in 2012, put the number of white Zimbabweans at 28 000. This community has been very active and is still, to a limited extent, influential, in sectors such as agriculture, mining and manufacturing. Whites have also traditionally been active in sports such as cricket, rugby and swimming.

Zanu-PF’s fractured relationship with the white community dates back to Robert Mugabe’s rule. He presided over the breakdown in relations when he began implementing a violent land reform programme which ended up benefiting Zanu-PF members and chiefs.

But relations hadn’t always been bad between the party and white Zimbabweans. At the advent of independence, Mugabe famously pleadedwith the white community:

Stay with us, please remain in this country and constitute a nation based on national unity.

And in 1980 Mugabe retained white Zimbabweans such as Ken Flower. Flower had been in charge of Rhodesian prime minister Ian Smith’s intelligence services which had been accused of masterminding the assassination of some of Zimbabwe’s leading nationalists such as Herbert Chitepo and Jason Ziyapapa Moyo.

Mugabe also appointed white ministers such as Dennis Norman(agriculture) and advocate Chris Andersen (mines) to his first cabinet.

But this rosy relationship turned sour in 1999 when the white community rejected a draft national constitution that included a clause on redistributing the country’s most fertile land – the bulk of which was in the hands of around 4 000 White farmers – without compensation.

This set the scene for violent land seizures. This, in turn, resulted in sanctions being imposed on Zimbabwe by a number of Western nations. These only served to harden Mugabe’s resolve towards the white farmers. In a presidential election rally in 2002, he thundered:

Our party must continue to strike fear in the heart of the white man, our real enemy.

In the intervening years Zimbabwe’s political and economic landscapes have continued to deteriorate as the country became a pariah state and a basket case. This was largely because of the punishing ramifications of the sanctions and the corruption and ineptitude of the Mugabe regime.

Zimbabwe’s economic crisis reached its peak in 2008 when hyperinflation reached a stupendous 231 million percent, officially, even though leading inflation experts such as Steve Hanke estimate that the country’s inflation rate far exceeded the official figure.

Picking up the pieces

For his part, Mnangagwa has always cultivated good relations with white Zimbabweans. This goes back to the 1980s when he had cordial working relationships with people like Flower who were in intelligence.

In later years, Mnangagwa has been linked to a number of white business people in some of his business ventures.

In mending the relations with the white community by roping in Coventry and Grobbelaar, Mnangagwa might just have pulled off a masterstroke. He must be hoping it will eventually help extricate Zimbabwe from its economic quagmire.

Associate Professor of Sociology at the University of Johannesburg. Chagonda has in the past received funding from the South African National Research Foundation (NRF). Article curated from The Conversation.