Zimbabwe’s economic woes continue as Mugabe is buried

Robert Mugabe died in September, but nearly two years after his overthrow Zimbabwe is still struggling to overcome the political and economic problems he bequeathed. Tendai Marima reports from Harare.

The death of former President Robert Mugabe in September marks the end of an era for Zimbabwe. After 37 years in power, the liberation hero turned strongman left a legacy of political instability and economic mismanagement.

Although he was ousted by a military coup in 2017 and succeeded by former protégé Emmerson Mnangagwa, recent events suggest that the post-Mugabe dispensation’s promise of Zimbabwe as an attractive investment destination is yet to reach fruition.

In a bid to drum up foreign confidence in Zimbabwe, Mnangagwa briefly attended the World Economic Forum (WEF) in Cape Town before Mugabe’s death forced him to return home.

With Zimbabwe ranked 155th out of 190 countries listed in the World Bank’s 2019 Doing Business report, Mnangagwa appealed for greater dialogue with investors to improve the country’s business climate.

“[I]t is critically important that we have conversations with the people over there but we must create conditions in our jurisdictions where they feel that their capital is safe,” he said.

Despite Mnangagwa’s assurances of an economic turnaround by year-end, Zimbabwe’s economy remains in deep trouble. The country is facing its worst economic crisis in a decade with inflation soaring amid a crippling cash shortage. Fuel and electricity are in critically short supply.

The scarcity of essentials and the continued rise in basic prices has led frustrated citizens to protest. The country’s main opposition, the Movement for Democratic Change (MDC) organised nationwide protests in August against the deteriorating economy.

The first protest in Harare was disrupted by riot police, and subsequent attempts to protest in other cities were blocked by court orders citing the risk of public disorder and possible damage to private businesses. Some citizens feel the prohibition limits their chance to express their grievances to the government.

An unemployed university graduate in retail management tells African Business that he hopes that the government will listen to its citizens:

“I’m frustrated by this situation; I went to school but I graduated to find the country has nothing to offer me. I’m hustling my way to survive daily, but this situation is not conducive.”

Government seeks bailout

After years of international isolation under Mugabe, the government is trying to change its image and attract investors back into the country. However, Mnangagwa’s term has done little to improve the failing economy.

The country is in desperate need of a bailout to prevent economic a collapse akin to that of 2008, when uncontrollable hyperinflation led to the death of the local currency. According to Mthuli Ncube, the minister of finance, Zimbabwe is hoping to begin talks to clear its arrears in early 2020 with international debtors such as the World Bank and the African Development Bank.

At the WEF, Ncube said Zimbabwe was looking to secure bridging loans to help pay off arrears amounting to nearly $2bn. The repayment of outstanding debts inherited from the Mugabe era could help to unlock new financing that could halt the economic freefall. 

Ncube maintains that Mnangagwa’s engagement in political dialogue will help to attract foreign investment and international support for Zimbabwe. The government convened a forum to bring political parties together in May, but the MDC has boycotted the talks.

Brokers have urged MDC leader Nelson Chamisa and Mnangagwa to “find a way out of the current impasse” through dialogue in order to avoid a repeat of the early 2000s, when a spiralling economic crisis worsened political tensions and hardened Mugabe’s response to opposition. But according to MDC spokesman Nkululeko Sibanda, the party plans to continue holding rallies to show its discontent.

Meanwhile the US, a key member of the World Bank, IMF and Paris Club, wants to see movement on political reform before it countenances further financial support for Zimbabwe.

US Ambassador to Zimbabwe Brian Nichols continues to press for concrete democratic reforms as the gateway to improving relations. In an off-the-record briefing with reporters, a US official said that their disappointment with the country’s performance “just keeps getting worse and worse,” suggesting that financial relief may be some way off.

Dewa Mavhinga, the Southern Africa director for Human Rights Watch told African Business that if Zimbabwe hopes to win over international support the government’s heavy-handed response to citizen protest needs to change.

“Police heavy-handedness undermines government efforts at international re-engagement and keeps much-needed investment away.”

Back to the brink

The end of Mugabe’s reign brought hopes that democratic and economic reforms could stimulate investment, but Mnangagwa’s transitional stabilisation programme has yet to have the desired effect.

Zimbabwe’s recovery continues to be undone by a large fiscal deficit, external debt overhang and excessive state expenditure.

By year end the country plans to relaunch its own full-fledged currency and abandon all use of the US dollar. With inflation rising and little guarantee that the official launch of a new currency will be an antidote to soaring prices, the risk of Zimbabwe being pushed back to the brink is high.

While Mugabe may have departed the scene, the chances of an immediate recovery in the precarious situation of many citizens remain low.