Can new leaders be trusted to bring Zimbabwe back from bankruptcy?
Mugabe may be gone, but question marks hang over Mnangagwa’s integrity and the potential for true transition
Zimbabwe’s intra-elite transition — a palace coup with little blood spilled and careful diplomatic power-transfer language – resolves a long-simmering faction fight within the ruling party and ends the extraordinary career of Robert Mugabe. His long-standing Zanu-PF comrade, Emmerson Mnangagwa, is widely mistrusted due to his responsibility for (and refusal to acknowledge) the “Gukurahundi” massacre of more than 20,000 people, mainly members of the minority Ndebele ethnic group from 1982-85.
He also stands accused of subverting the 2008 election. And as for his personal wealth, consider Mnangagwa’s close proximity as defence minister to widespread diamond looting from 2008-16. Indeed, in 2016 Mugabe himself complained of revenue shortfalls from diamond mining in eastern Zimbabwe’s Marange fields: “I don’t think we’ve exceeded $2bn or so, and yet we think that well over $15bn or more has been earned in that area.”
The vast scale of this theft was confirmed by anticorruption campaigner Farai Maguwu. For Mnangagwa to set up the main Marange joint venture – Sino Zimbabwe – with the notorious Anjin Investments boss, Sam Pa (now apparently jailed), the army occupied the Marange fields. In November 2008, troops then murdered several hundred small-scale artisanal miners.
As a result, concern arises that celebration of the coup and at least momentary adoration of the army will relegitimise a brutal Zanu-PF network and thus slow a more durable transition to democracy and economic justice.
Aside from a popular revolution, the only other safeguard would be the urgent appointment of a genuine government of national unity that could acquire desperately needed funds from China and the main western donors in Washington and the EU.
Zimbabwe is broke. Late in 2016 $200m worth of a dubious new currency (the “bond note”) was introduced by the Zimbabwe Reserve Bank. The reason for this move was that officially accepted US dollars and South African rand, which most Zimbabweans have used since 2009, fell into increasingly short supply, causing payment system blockages and renewing fear of hyperinflation. Some banks only offer customers $5 per day maximum cash allowances.
Beijing’s Global Times, which often parrots official wisdom, became increasingly wary of Mugabe. According to a contributor, Wang Hongwi of the Chinese Academy of Social Sciences, “Mnangagwa, a reformist, will abolish Mugabe’s faulty investment policy. In a country with a bankrupt economy, whoever takes office needs to launch economic reforms and open up to foreign investment… Chinese investment in Zimbabwe has also fallen victim to Mugabe’s policy and some projects were forced to close down or move to other countries in recent years, bringing huge losses.” (Hongwi did not mention whether Sam Pa represents the ethos of such Chinese investors.)
Mnangagwa is not only being toasted in Beijing, but also by Tory geopolitical opportunists in London. Although many Britons object, the UK ambassador to Zimbabwe, Catriona Laing, has for three years attempted to “rebuild bridges and ensure that re-engagement succeeds to facilitate Mnangagwa’s rise to power” with a reported $2bn economic bail-out.
There is every reason to fear that while launching “economic reforms” to increase business power, the post-Mugabe Zanu-PF leaders will amplify old habits, combining state asset stripping, repression and profiteering.
This is likely if the country’s financial crisis continues into the Christmas season and donor aid is not forthcoming.
Economic barriers to bureaucratic looting are periodically reached in Zimbabwe — for example, when the world’s worst hyperinflation wiped out the former currency in 2008 — and new arrangements are required (in that case, the turn to the US dollar and rand).
Today, hoarding hard currencies under the mattress represents one form of stored value during crisis, since placing them in bank accounts risks Reserve Bank seizure.
Other desperation strategies include rapid purchases of consumer durables each payday, as well as raging speculation in bitcoin, real estate and the Zimbabwe Stock Exchange, which was the world’s fastest rising bourse in 2017 despite rapid economic decline.
For nearly two decades the Zimbabwe government has been in default on $9bn-plus of international debt and today is failing to pay foreign corporations profit remittances they are due. Even state restrictions against importing those basic goods that should instead be manufactured in Zimbabwe failed to ease the currency shortage.
Two of the most crucial economic decisions the next government will face are whether to continue introducing $300m worth of fast-devaluing bond notes into the banking system in the next few weeks, and whether to honour a huge fine due to the US Treasury’s Office of Foreign Assets Control.
US President Donald Trump’s treasury secretary, Steven Mnuchin (formerly of Goldman Sachs), is demanding immediate payment of $385m — down from an initial $3.8bn — by the country’s largest bank, Commercial Bank of Zimbabwe, following more than 15,000 separate cases of sanctions busting that date from the Bush and Obama regimes’ punishment of Mugabe for human rights violations.
In a third financial controversy, the Movement for Democratic Change’s (MDC’s) 2009-13 finance minister, Tendai Biti, suspects his immediate successor, Patrick Chinamasa, has fraudulently issued treasury bills and backed up the new currency with illegitimate African Export-Import Bank loans.
Biti is calling for a full debt audit. (That may be one reason Chinamasa said on Sunday that Zanu-PF has no interest in a coalition government with democratic opponents.)
To make matters worse, those whose savings were in the Harare stock market discovered that the coup week’s uncertainty left them 18% poorer, as the shares’ capital value fell from $15.1bn to $12.4bn, caused mainly by international investor panic selling.
In this context, says University of Zimbabwe law scholar Munyaradzi Gwisai, “There’s a potential that the Mnangagwa, MDC elites and the military could be part of a national unity government. Ultimately they are also scared of the working class, because austerity could lead to revolts.”
Bond teaches political economy at the Wits School of Governance. He is the author of Uneven Zimbabwe: A Study of Finance, Development and Underdevelopment, and co-author of Zimbabwe’s Plunge: Exhausted Nationalism, Neoliberalism and the Search for Social Justice.