Zimbabwe’s positive outlook clouded by political risk

African Business: What has Emerson Mnangagwa’s presidency been like and what does he stand for?

Dr Knox Chitiyo: Mnangagwa’s big mantra was and continues to be that Zimbabwe is open for business. He was seen as more of a business technocrat, in some ways kind of similar to Ramaphosa in South Africa as the business guy who would get the economy going. There have been positives and negatives. The positive is that he has tried to push on the ease of doing business in Zimbabwe – Zimbabwe has improved in that regard. 

Border bureaucracy has been reduced to some extent, but there’s still a long way to go. They’ve set up the Zimbabwe Investment Authority which is there specifically to guide investors. Some areas of the economy had improved prior to Covid – the tourism sector had definitely improved.

The mining sector has improved, agribusiness has improved. To some extent Mnangagwa and the government have tried to create an enabling environment and there have been a lot of consultations with the business sector, with the informal sector. There’s actually a Presidential Advisory Council which advises Mnangagwa on economic policy.

The biggest thing they did was to remove the Indigenisation Act, which was mainly around mining, which meant 51% of any profits had to remain in Zimbabwe. That had been a big deterrent to a lot of investors. It was removed in 2018, so more business-friendly legislation came in.

That’s the positive but there have been issues – there’s been corruption, and issues around the extent to which foreign investors have been able to come in and remit their profits because Zimbabwe’s currency has been an issue. But overall they have tried. 

The problem for Mnangagwa is that he was brought in by the military – he has to bear in mind the domestic and political agenda. The problem is that politics has been involved in Zimbabwe’s economy. The politics is always an undercurrent in the economy.

Who is the opposition, and is it robust and credible?

In purely political terms Mnangagwa has had a good Covid – he’s been able to consolidate his power vis-à-vis the opposition, both within Zanu-PF and also the opposition outside, ie the MDC. 

In purely political terms the opposition have had a very bad Covid. [Opposition leader] Nelson Chamisa was riding high in 2018-19 on the back of a good election result… his high water mark was probably 2019.

But when it came to Covid, there have not been political meetings because of lockdown. And that really hit the opposition.

There have not been by-elections, and the opposition splintered. The opposition have fragmented and fractured and Chamisa’s standing in Zimbabwe and outside has been hit quite badly. 

Chamisa still has support in the younger urban community but even there he’s lost support. All of this has played into Zanu-PF’s hands. 

General elections are scheduled for 2023. There are supposed to be by-elections but because of Covid we don’t know if and when they will happen. Chamisa is really desperate for by-elections because he feels he might win some and regain some credibility. Overall, the Chamisa opposition have lost quite a lot of ground. It’s possible they might claw it back when Covid ends but he’s got a lot of work to do.

Civil society is still vibrant but government is mulling legislation, there’s talk of an NGO bill which might be a crackdown on human rights NGOs in Zimbabwe which government sees as hostile. The human rights organisations are in a precarious situation.

From an investor perspective what are the political risks on the horizon?

I think the fundamental political risk is that there are clearly tensions between Mnangagwa and his number two [Vice-President] Constantino Chiwenga. Those seem to have been managed during Covid, but we’re not sure how that will play out. Mnangagwa is not young and come 2023 he’ll be over 80, so there’s the age questions.

[Relations with Chiwenga] may be managed or contained but we don’t know. With elections in Zimbabwe, and the period after elections, things become very divisive. 

The elections themselves may be a bit of a risk. I wouldn’t want to exaggerate it and say we’re definitely heading for a bloody and confrontational period. I don’t know if that’s what we’re heading for given the weakness of the opposition currently, but Managagwa’s age and the relationship between him and Chiwenga is a factor.

On the plus side we’ve had good rains, Zimbabwe’s agriculture is actually booming, some diasporans are coming back and investing in agriculture. Mining is picking up, tourism has taken a hit from Covid, but some of the moving parts within the economy have picked up. Horticulture is doing well. 

Government is predicting 7% growth this year – I think that’s a bit unlikely. The World Bank is predicting 4% growth which is more realistic, but that in itself is quite impressive as we’ve had negative growth the last two years. 

There’s always political risk but I would say to investors, give Zimbabwe a look, have conversations. There is risk, certainly, but I wouldn’t say it’s the kind of intolerable risk where you’re definitely going to crash and burn as an investor. We have had domestic and foreign investors in the last few years giving Zimbabwe a second look. 

I wouldn’t say the politics is an insurmountable barrier to investment. The one thing to be concerned about is issues around corruption, that’s a whole issue itself and something that people can flag up, but every country has issues around corruption.

What has the public health response to Covid-19 been?

The government was a little bit slow on the uptake last year when Covid hit. They’ve since moved forward. Most of the vaccines in Zimbabwe are Sino­ph­arm, the Chinese vaccine, and to some extent the Russian Sputnik one. 

Government has made the vaccines available. The problem to some extent is that people themselves were slow on the uptake in going for the vaccine. People now are rushing for the vaccine because we’re having our third wave of the virus and this is the Delta variant which is more virulent. 

Official figures say more than 1m have received their first or second jab – the idea is to have at least 10m vaccinated within the next years. The vaccine is available in towns, rural and peri-urban areas and it’s available free. 

There’s a Covid task force including government and the health sector and the response has been reasonable. More could have been done and can be done, but government has been on it. 

Zimbabwe is now on its fourth lockdown, because of the Delta variant. It’s been tricky because it’s 80-90% an informal economy and lockdowns really hit the informal economy. 

There have been negotiations around a responsible semi-opening to prevent complete economic lockdown. They haven’t forced people to be locked in their homes. Everyone is praying and hoping Zimbabwe can move forward from this.