Economy is biggest loser in Zimbabwe’s power struggle

Veteran economist John Robertson

JOHANNESBURG — AN annual conclave that will shape Zimbabwe’s future is getting under way, and squabbling to succeed a nonagenarian President has already claimed one casualty: The economy.

Yesterday, Zimbabwe’s ruling party begins a six-day annual meeting, with an eye toward selecting new leaders and setting policies for the government of President Robert Mugabe.

Few analysts see a quick turnaround of the faded continental star.

More likely, they say, is more mudslinging and muddling along.

President Robert Mugabe
President Robert Mugabe

Africa has a long list of ageing presidents presiding over young populations, but Zimbabwe is among the countries where these strains are most acute.

Mugabe, who has run Zimbabwe since independence in 1980, has shown no sign of wanting to retire. He won what Western observers considered a flawed re-election in 2013.

And under a new constitution, the 90-year-old can run again in 2018.

Should Mugabe step down or die before then, others are lining up to take over.

Fighting between allies of Vice-President Joice Mujuru and Justice minister Emmerson Mnangagwa has spilled into Zimbabwe’s media.

Vice-President Joice Mujuru
Vice-President Joice Mujuru

The Sunday Mail, among others, has reported on an alleged plot to assassinate Mugabe, apparently orchestrated by allies of Mujuru.

The surprise entrant in these factional battles is the president’s wife, Grace Mugabe. Supporters of Mugabe, a 49-year-old former typist, have nominated her to lead the ruling party’s women’s league.

Even as analysts play down Mugabe’s prospects for succeeding her husband, she is expected to keep others off balance long after the conference concludes.

“What we don’t get out of this process is clarity and stability,” Piers Pigou, Southern African project director in Johannesburg for the International Crisis Group, a think-tank, said.

“The economic problems will never really be addressed until Zimbabwe has political leadership that’s trusted domestically and internationally.”

There are many dark clouds over Zimbabwe’s economy. Foreigners are not investing, as they await clarity on a contentious empowerment law; banks are not lending, as nonperforming loans are at nearly 20%; and graduates are not getting jobs, as an unemployment rate exceeding 80% saturates the labour pool.

The International Monetary Fund (IMF) projects Zimbabwe’s economic growth will slow to 3,1% in 2014, as the mining industry contracts and companies close.

That is down from 4,5% in 2013, and far off the double-digit growth the previous three years.

Justice minister Emmerson Mnangagwa
Justice minister Emmerson Mnangagwa

Shortages of staples such as maize are now common, a stark shift from the days when Zimbabwe was known as the breadbasket of Southern Africa.

To revive investment flows, Zimbabwean officials are trying to repackage the country’s story. They are targeting those comfortable on the extreme fringe of frontier markets.

“Your investment in Zimbabwe will be protected,” Trade and Industry minister Mike Bimha assured prospective investors at a recent meeting in Johannesburg.

The returns in Zimbabwe’s private sector, he added, “are very excellent”.

Such assurances are needed. Forcible seizures of white-owned farmland in the 2000s sent the economy into a tailspin.

Prices soared, professionals fled and the central bank was forced to replace the local currency with the US dollar to stabilise the economy.

A violent 2008 vote led to a fractious power-sharing government and policy disarray. Mugabe’s allies fought for indigenisation, or transferring majority ownership of ventures in mines and other sectors to lift up black Zimbabweans.

Former Prime Minister Morgan Tsvangirai’s team argued against a radical redistribution of assets that they said would scare off investors.

Former Prime Minister Morgan Tsvangirai
Former Prime Minister Morgan Tsvangirai

Now with Mugabe’s party in full control of the economy — and bearing full responsibility for its failures — officials are rethinking indigenisation.

“Our policies are good,” central bank governor John Mangudya, who attended the same meeting with investors in Johannesburg said.

“Our interpretation of them leaves something to be desired.” Some foreign investors have turned bullish on Zimbabwe, on the premise that things could not get much worse.

An economic collapse would cost everyone, including the country’s rulers, Andrew Lapping, a fund manager at Allan Gray, who invests in Zimbabwe, said.

“When there is no money for the people there is also a lot less money for the politicians — something they want to avoid,” he wrote in a recent research note.

The cash crunch is precarious. The government is struggling to pay State workers — about 80% of the budget goes to public wages.

Weak platinum prices have also squeezed Zimbabwe, home to some of the world’s largest reserves of the precious metal. Neither the IMF nor China, a top trading partner, shows much appetite for lending to a country so slow to repay debts.

That leaves foreign investors as the best available option to stave off an economic crisis, if Mugabe’s government can bring itself to improve ties with business.

The president was, after all, a political survivor, said former US ambassador to Zimbabwe Tom McDonald, who met Mugabe about 25 times and who now heads the government-policy practice at law firm Baker Hostetler.

“He has a way of pushing things to the precipice and to be able to pull back,” said McDonald.

Ahead of the party conference, however, no particular faction seems ready to say how it would revive the economy.

Fighting for business-friendly overhauls, said John Robertson, an economist and business consultant in Harare, had never been a winning strategy in Zimbabwe’s brass-knuckle politics.

“We see only evidence of people who want to remain in power,” he said. “We don’t see any evidence that if they came to power they would bring new policies.”

— BD Live