Mnangagwa has a colossal job and very little time to get it done

● The task of turning around Zimbabwe’s economy will be a tough one as the extent of the ruin runs deep and there is no quick fix.

The economy is an empty shell after nearly two decades of former president Robert Mugabe’s ruinous economic policies. Land invasions in 2000 disrupted agricultural production and the takeover of controlling stakes in foreign-owned companies under the indigenisation law resulted in an exodus of foreign investors.

A severe US dollar shortage is now in its second year and inflation is on the rise — at 2.97% in November from 0.7% last January, according to central bank figures.

A World Investment Report in 2016 ranked Zimbabwe lower than Mozambique, which has emerged in the past decade from civil war and natural disasters, in attracting foreign direct investment. In 2016, Zimbabwe attracted foreign direct investment of $319-million in contrast with Mozambique’s $3-billion.

The lowly ranking of Zimbabwe is despite the immense advantages the country has over other African nations, such as its fairly strong infrastructure base, human resources skills and vast mineral resources of platinum, diamonds, gold and lithium — which make it a notable global producer.

Now, President Emmerson Mnangagwa has an opportunity to chart a new course, despite inheriting a poisoned chalice.

Stuart Culverhouse, a director at Londonbased investment bank Exotix, said that over the medium to long term a lot depended on what kind of government emerged under the new leadership.

“If it is a continuation of the Mugabe-type policies, then Zimbabwe will continue its sub-par growth. If we see it put on a better path there’s huge potential in Zimbabwe . . . and that could transform the country and arguably the southern [African] region.”

The difficult task ahead seems not to be lost on the new leader, who recently has said: “We have an economy to recover, a people to serve.”

The sense of urgency that has gripped Mnangagwa is compounded by the fact that he will be in power for just eight months before elections in August. The elections will be closely watched, given the violence and brutality of previous polls.

Global consultancy AKE International said in a note: “Although Mnangagwa committed to holding elections scheduled for 2018, it is less clear whether he will pursue meaningful electoral reforms . . . It remains to be seen how much of a break from the past the new regime will be, but there is finally some cause for optimism in Zimbabwe.”

With time clearly not on Mnangagwa’s side as he juggles delivering an economic turnaround and the looming election, his administration is abuzz with talk of its 100day plan.

The plan will be the compass to show voters and the international community not only the path the new administration is pursuing, but also proof that it has broken with Mugabe’s old ways.

Robert Besseling, executive director at Exx Africa, a business intelligence risk firm, said one of the key steps which Mnangagwa had taken was to reappoint Patrick Chinamasa as finance minister, a strong indication that the new government would prioritise economic recovery.

Chinamasa is a darling of the financial markets in London and Washington and is viewed as a reformer and pro-business figure in the ruling Zanu-PF.

“Chinamasa’s spending cuts, which seem to amount to more than $300-million over the next year, are a key condition of re-engagement with the IMF and the World Bank. Therefore public payroll cuts will be closely monitored by the IMF and other potential lending partners. Considering that the country will hold highly anticipated elections within months, it is unlikely that fiscal deficit reduction targets will be fully met,” said Besseling.

It remains tough in Zimbabwe as cash shortages persist and prices rise. Funding has not yet started trickling in as it must first settle $1.8-billion in debt to the IMF before talks on new credit lines can begin.

But Mnangagwa is standing his ground on austerity and policy overhaul as ways to boost the economy and the initial signs are positive. His administration has scrapped the 51% indigenisation law, except for diamond and platinum mining.

The government intends to cut its 300 000-strong public workforce. This month, it will retire workers above 65 years old and last month, it fired about 538 unqualified workers.

Yet, the biggest change which the new administration has ushered in, just days into the new year, is the proposed sale of lossmaking parastatals that have been surviving on treasury bailouts.

Terence Mukupe, the deputy finance minister, recently said the government was “diluting our shareholding in those entities and our shareholding might go to 0% in some”.

Although details of the sale are sketchy, the privatisation of entities such as the struggling Air Zimbabwe and the Zimbabwe Electricity Supply Authority, among others, is expected to save the treasury millions in taxpayer funds and to plug shortfalls in the national budget.