It won’t be easy to clean up Bob’s mess
Economic promises thick on the ground in Zimbabwe hustings
● Former president Robert Mugabe may no longer be in office — his absence robbing opposition parties of the popular election rhetoric of “Mugabe must go” ahead of this month’s polls — but there is still plenty left in Zimbabwe to serve as a reminder of his 37 years at the helm.
Mugabe’s legacy is a broken economy, and whoever is the victor on July 30 will have the difficult task of trying to piece it back together while addressing growing impatience among citizens yearning for swift economic relief and returning the country to the international stage.
Robert Besseling, the director of business intelligence firm Exx Africa, does not foresee an immediate flow of foreign investment into Zimbabwe after the elections.
“Despite its pro-investment rhetoric and pledges towards political and economic reform, Zimbabwe’s government will first need to clear the twin hurdles of elections and debt clearance before attracting meaningful fresh investment. As such, many investors and international partners are maintaining a ‘wait and see’ approach,” he said.
If Zimbabwe is ever to gain access to substantial credit lines, the country will have to clear its arrears with international financial institutions, particularly the World Bank and African Development Bank, Besseling said.
Zimbabwe’s external debt stands at $10.2-billion (R136-billion). Last year, Trading Economics valued the GDP of the country at $17.8-billion.
But paying off the external debt is just one piece of the puzzle, as Zimbabwe’s economic ruin runs deep.
For almost a decade, the country has not had a currency of its own, relying on 12 currencies — among them the US dollar, the rand, the British pound and the euro — for transactions.
In February 2009, the adoption of different foreign currencies appeared to be a master stroke and seemed to have dealt a body blow to runaway hyperinflation recorded in July 2008 at 79 billion percent. But now even foreign currency is in short supply.
The severe liquidity crisis has deepened, laying bare the extent of economic collapse. It has been years since most bank ATMs doled out any bills to depositors.
On Mugabe’s watch, companies folded in their hundreds, unable to do business in a country notorious for its lack of respect for property rights and its insistence that a 51% share of any company must be held by locals under the “indigenisation” law.
For the companies that did manage to keep going, remaining afloat was an arduous task as they had to navigate the black market to buy foreign currency and use it to procure raw materials to keep the wheels of production turning.
All the while, companies had to be wary of not being on the radar of the monetary authorities, trigger-happy and ready to accuse them of “externalising” foreign currency.
The high costs incurred by companies inevitably were passed on to consumers, who, in a bid to stretch their meagre earnings, turned to buying goods from South Africa, fuelling a bustling informal sector.
Yet it is the same economic ruin left by Mugabe that has given a new lease of life to candidates vying to be the country’s next president. The economy is centre stage and is the buzzword on the lips of all 23 presidential candidates.
The incumbent, President Emmerson Mnangagwa, has framed his campaign with the “Zimbabwe is open for business” mantra — ironically trying to use the years of ruin by his Zanu-PF comrade Mugabe as his launch pad into high office for a five-year term.
Mnangagwa has promised to turn Zimbabwe into a middle-income country by 2030 through a revival of agriculture and mining, and infrastructure development.
Adopting the rand
But the ace in Mnangagwa’s hand appears to be his relentless courting of Western governments, which were personae non grata during Mugabe’s time.
A path to Harare is being beaten by highprofile visitors from the UK, Germany, the EU, Russia, China and the United Arab Emirates, all willing to consider getting a foothold in the country.
Patrick Colegrave, the Africa director at Norton Rose Fulbright, this week said the spike in interest in Zimbabwe was from parties keen to get a feel of what was going on, with a view to potentially investing after the elections.
“The influx of foreign investors, this is very real and has been confirmed by a number of members of the business community who are also seeing it . . . I do think that a good proportion relates to tangible investment set to flow provided that the elections pass off smoothly and are adjudicated to be free and fair. So, barring any major election upset, I don’t see the influx of investors that the country is currently seeing as being a passing phase,” said Colegrave.
Gary van Staden, senior political analyst at NKC African Economics, said “serious” investors would still hold back even if the poll turned out to their satisfaction.
“It seems that real investment will wait for policy certainty, some indications of an environment conducive to making a profit, and the ability of investors to move capital without too many restrictions,” he said.
Mnangagwa’s arch-rival in the polls, Nelson Chamisa, also has his eye on the economy, promising to turn it into a $100-billion economy by 2029.
Among the swift changes that Chamisa has promised are to have Zimbabwe join the rand monetary union and adopt the rand as legal tender, and to modernise the country’s dilapidated infrastructure systems.
With almost $5-billion in trade between the two countries last year, South Africa is Zimbabwe’s largest trading partner.
The sheer amount of work ahead to repair the economy means whoever wins at the end of the month will have little time to celebrate his or her victory.
Voters expect their vote to count and the president will have their work cut out to deliver economic recovery, a feat that eluded Mugabe for nearly four decades.
Former president Robert Mugabe left his country’s economy in ruins.