Open for business… and now politics President Emmerson Mnangagwa and his economic team sat down for a round-table interview with The Africa Report
For the first time, President Emmerson Mnangagwa and his economic team took part in a roundtable interview with The Africa Report, covering elections, international diplomacy, truth and reconciliation, and the financial agenda
Helter-skelter rounds of business deals, diplomacy and political gladhanding have been taking their toll on Team Mnangagwa since last November. When President Emerson Mnangagwa arrived in Abidjan for the Africa CEO Forum with his business and ministerial delegation , they had flown in variously from Europe, China, India, Russia, and the United States. After the Forum, Mnanagagwa flew back to Zimbabwe, pausing briefly to commission a power station, and then on to Beijing and a summit with President Xi Jinping. In dollar terms Mnangagwa’s efforts are paying off. Of the more than $7bn of direct new investment in Zimbabwe, some $4bn is earmarked for a new platinum mine. Other commitments target gold and diamond mining. After four months on the case, Mnangagwa set out Zimbabwe’s roadmap to The Africa Report: “First and foremost, we must make sure that Zimbabwe shall never have food insecurity again. We have developed the model of agriculture that guarantees food security in Zimbabwe. Secondly, we must resuscitate industry and commerce. To do so we need to embrace the international community so they support us.” At the heart of this is the ‘Command Agriculture’ policy. This is not, Mnangagwa insists, a form of deep-state economic conscription, but rather a government-coordinated response to the needs of the cash-strapped small farmers for seeds, fertilisers and market access. “We need two million tonnes of grain. [Around] 1.5 of that is consumption for the year; 500,000 tonnes is strategic reserve for the year. We need 400,000 hectares of land to produce the two million tonnes of grain. But at the end of the day, we have something like 1.6 million hectares of land under plough.” Mnangagwa, himself a substantial farmer, says the government will supervise and finance grain production only on the critical 400,000 hectares.
The main political test will come in July, when Mnangagwa has promised that the Zimbabwe Electoral Commission (ZEC) will hold national elections. For the first time since 2002 – when the Commonwealth observers sharply criticised the political process – the government has invited the United States, the European Union, Australia and the Commonwealth to monitor the elections.
WOOING THE SENATORS
Almost as eagerly as he pronounces Zimbabwe open for business, Mnangagwa has been promising clean and non-violent elections this year. Whatever his own commitments to the ruling Zimbabwe African National Union-patriotic Front, he knows that should the elections fail the international health test, then the next round of really big investors will stay away. And there would be no end to the government's financial arrears logjam with the World Bank and the African Development Bank. An important piece of the puzzle is the US government and its Zimbabwe Democracy and Economic Recovery Act (ZDERA), which rules out official support for Harare unless certain political conditions are met. Washington is more sceptical than its European counterparts about Mnangagwa's reform pledges. Senators Jeff Flake and Chris Coons pushed through an amendment to the ZDERA setting out very specific conditions for the lifting of the US veto on fresh loans and aid for the Zimbabwe government. It was particularly critical of any military involvement in the elections. Mnagagwa's response was to invite Senator Flake and other critics to Harare to meet his officials, the ZEC, opposition parties and local human rights groups. He pushed back hard on the matter of the military's role in the election. “They talk about there are military people in ZEC. If a person joins the army at the age of 18 but at the age of 28 he resigns – perhaps he's becoming an accountant or a medical doctor and he joins a parastatal – he is not counted as military,” argues Mnangagwa. “If you are going to say anybody who has a military background cannot be seen in a democracy, then that is not a country. In that case I will be chucked out because my background is military.” After their meetings with Mnangagwa and opposition politicians in early April, Senators Flake and Coons appeared more upbeat, and more willing to fall into line with the assessments of other organisations such as the African Union, the EU and the Southern African Development Community. Flake kept his options open when speaking to the press : “Nothing will please us more than to recommend to the President that these sanctions are all to be lifted, and the US and Zimbabwe can have full diplomatic relations and remove individuals from that sanctions list, but that depends, as we all know, on what happens in the upcoming months." At the CEO Forum, Mnangagwa, together with finance minister Patrick Chinamasa, reserve bank governor John Mangudya and agriculture minister Perence Shiri, sat down with The Africa Report for a round-table interview. TAR: Are you surprised by the support for your government, especially from countries that had imposed sanctions on your predecessor’s regime? EMMERSON MNANGAGWA: In politics, there are no permanent enemies, only permanent interests. Many countries in the past did not have good relations with us. We are happily surprised that they're embracing us, so we are embracing them. [With] those countries that stood with us during the hard 18 years, we are consolidating our relationships. But we inform them that we need new friends. Zimbabwe, as small as we are, cannot belong to the West nor belong to the East.
However, China is one of Zimbabwe’s strongest allies? That is correct. Of old friends who stood by Zimbabwe during the hard times, China is one. I'm a
Zimbabwe, as small as we are, cannot belong to the West nor belong to the East
graduate of their military academy. Since my inauguration, I paid visits to my peers in the Southern African Development Community (SADC) and then on the African continent. But the first visit outside Africa is to China – that is significant.
Why are you holding elections this year? Why didn’t you form a government of national unity to address the economic crisis first? There was only change in one political party, the ruling party. Nothing else has changed. I am completing the mandate of that party, which ends about the 21st or 22nd of July this year. This is when we are going to have our elections. This time I have opened these elections to international observers. In the past, we used to have observers from SADC and the continent, the African Union and a few selected countries. But we have said now we don’t need any violence, and I would like all political parties in Zimbabwe who would like to participate in these elections to commit themselves to nonviolence. So we have opened up for the United Nations. They can come, the EU can come. And how have investors responded to the new dispensation? During past decades, the maximum foreign direct investment was $400-$600m per year. But in the last three months, it was over $7bn in committed investment. For those who are brave and want to make money, this is the time. We want to catch up with our colleagues in the region in terms of infrastructure. Our roads must talk to the roads of South Africa, the roads of Botswana, roads of Zambia and so on. Our railway system must do the same. We must modernise and refurbish all this infrastructure.
The land issue has dominated Zimbabwe’s politics. Can your government resolve it? In the 15-year bitter war which we fought, [land] was the major grievance. The way our forefathers lost their land to the colonial settlers from Britain. After the Lancaster House agreement, we were given 10 years not to change anything, and we complied with that. […] I was made minister of justice, so I begin crafting legislation to acquire land without compensation. That did not please the British. Then the sanctions were brought on us. But we felt it was necessary to correct that land imbalance – take the land, give it to the rightful owners.
Are you saying that you have succeeded politically in giving land back to the people? The people became happy. The land and the people united. In that process, production went down drastically. But we felt that it was more important to control our land rather than keep our land in foreign hands. Today, in grain and in cotton, production levels have exceeded what was being produced during the Ian Smith regime. Which means now our task, especially under my administration, is to make land productive, modernise agriculture, invite investors at the production level.
How are you boosting production levels now? PATRICK CHINAMASA: The tobacco industry is now dominated by small-scale farmers. The small-scale farmers’ production is now more than what used to be produced by the commercial farmers. What has sustained them is financing through contract farming. Through the Reserve Bank there’s now a facility to assist the small-scale farmers to grow their tobacco through drip irrigation. That project is going very well.
How does the lack of a national currency limit your economic strategy? Will you restore the Zimbabwe dollar? The biggest challenge we face is that we don’t have a currency of our own. We have no instrument of growth because we don’t print US dollars. That also leads to shortages. We are accelerating all the reforms that are necessary to get us to a point where we have our own currency. This includes having to address the fiscal deficit. Out of every $100 of revenue we collect, 90% of it goes to wages. That is a structural weakness in our budget. We are also addressing issues to do with low production across all sectors and accessing capital on the international markets and building reserves. We are accelerating reforms – including state enterprise reforms – and [addressing] issues about the ease and cost of doing business. So as a result of all of these reforms, there is the normalisation of political relations. When all these processes which we are doing in parallel are achieved, we hope to be in a position where we can have our own currency. Then we can be treated like any other country.
Should Zimbabwe join the South African rand zone? JOHN MANGUDYA: If you look at the structure of Zimbabwe’s imports, most are in US dollars. Fuel, that takes the bulk of foreign currency. Electricity comes from South Africa, but we pay US dollars. So it doesn’t make any business sense [to join the rand zone]. What makes sense is to ensure that we improve productivity in Zimbabwe. Because of the use of multiple currencies, Zimbabwe has become very uncompetitive. We cannot devalue. This is why we have introduced in Zimbabwe the export incentive scheme. Why have an export incentive scheme? It is to provide a discount to those companies exporting. The problem which we are facing now is that the demand for foreign exchange has gone up so much because the economy is expanding. We’ve dollarised, but we have no access to long-term foreign finance.
What is your strategy to manage your debt and rejoin international financial institutions? P.C.: We cleared our arrears to the International Monetary Fund, and the rule is that we must address our indebtedness to the Paris Club creditors and bilateral creditors. We are in the process of mobilising resources to clear arrears to the World Bank and to the African Development Bank (AFDB). In our conversation with the World Bank – the arrears come to $1.2bn – we have been saying we have expectations that when we clear the arrears, we should get new money into the economy. Since January, the World Bank and the AFDB are undertaking an exercise to determine our needs across all sectors. That will inform what new money they can consider pumping in to resuscitate and revive our economy.
So how are you financing the government? You’re spending all this money on salaries. You have a health service that needs medicine. What you need to appreciate about Zimbabwe is that a lot of the wealth is now being created in the informal sector. But as the informal sector intersects with the formal sector, that’s how we get our revenue to sustain our operations. But in terms of capital development and infrastructure, much of it has been through loan financing. His excellency [President Mnangagwa] will be commissioning a 300MW power station just completed by a Chinese contractor through loan financing from China Exim Bank.
When will you release a roadmap for the elections? How much more work needs to be done on voter registration, and will the register be publicly available? E.M.: We have introduced biometric voter registration. [...] There was an outreach programme which ended on 12 January and we extended it again for another two months, which ended in March. So now they are uploading and preparing the voters’ rolls. When that is done and is published, this is when I must make a proclamation of the general elections. How are you getting on with the opposition these days? I was pleasantly surprised when almost all the opposition leaders attended my inauguration. I felt very good, and there was such chemistry with us. […] In any democracy, in a family, in a nation, you don’t always agree. This is how democracy is – the best argument should win the day. I accept the opposition; I have no problem with them. In fact, the more they interrogate and make constructive criticism of our administration, [the more] I like it because I correct myself and I continue ruling.
You have asked parties to commit to nonviolence. Do you intend to establish a South African-style truth and reconciliation commission? Our new constitution provides for the creation of the national healing commission. We’ve created it. So they must go and listen to the grievances of the people across the board. They’ve just begun. I will not determine what report they are going to bring back. They are holding public hearings covered by the press. It’s the creation of an environment of transparency, openness, brotherhood, sisterhood, love and unity among ourselves. We must continue talking to each other. We mustn’t say ‘them’ and ‘us’. We must always be us together. That’s the philosophy we want to put across […]. We don’t need institutions forcing people to love each other. It must be through dialogue and conversations with all groups. I give servant leadership to the country. I must be a listening president, and it’s working very well in our situation.
Patrick Chinamasa, Emmerson Mnangagwa, Perence Shiri and John Mangudya, flanked by The Africa Report’sNicholas Norbook (left) and editor Patrick Smith (right)
Top: Harare hopes to sustain its mood of optimism Above: Small-scale tobacco farmers are the backbone of the economy