Grey skies still cloud Zim economy

Humanitarian crisis: Zimbabwe’s cash shortage hits its citizens hard. (Tafadzwa Ufumeli/Anadolu Agency)

Humanitarian crisis: Zimbabwe’s cash shortage hits its citizens hard. (Tafadzwa Ufumeli/Anadolu Agency)

Upheaval in Zimbabwe may mark the end of Robert Mugabe’s financially devastating reign, but analysts say it does not signal an awakening from the country’s deep and persistent economic nightmare.

The world woke up on Wednesday to the news that the army had taken control of the country. It now appears that Mugabe’s former vice-president, Emmerson Mnangagwa, may be installed as the new or interim leader.

It sounds like politics, but “this is really all about the economy”, said Harare economist Vince Musewe. “Unless we change the economy, there will be no longevity for anyone who wants to come into power.”

Analysts say mapping economic scenarios is difficult while the situation is unfolding. Under current conditions, the economy will continue on its recessionary path, said Neville Mandimika, an Africa analyst at Rand Merchant Bank. But “stabilising the economy would certainly carry political points ahead of the elections in 2018”, he noted.

Zimbabwe was once dubbed the bread basket of Africa. But under Mugabe’s 37-year rule and a succession of economically crippling policies, the country is now flat broke. The Zimbabwean dollar is extinct and hyperinflation and unemployment have hobbled the nation.

Zimbabwe desperately needs cash, Musewe said. “It’s a humanitarian crisis. The economy needs money.”

Isaac Matshego, a Nedbank economist, said the developments could be good for the economy. “If the new Zimbabwean leadership adopted new policies, and good policies, there will be a turnaround,” he said.

“But increasingly it is looking like this is an internal Zanu-PF coup. Mnangagwa is still part of the old guard, so I don’t believe they will change anything drastically.”

If the party continues to rig elections, there is little hope of real change, he said.

Injecting cash, possibly in the form of an emergency rescue package, was the first and most vital step for a new leader, Musewe said. “It is like giving blood to a patient who is dying. You must first give the blood before you can deal with the diseases.”

He said an economics team that inspires confidence, and a respected finance minister, must be installed.

The director of Economists.co.za, Mike Schussler, said the minimum reform needed in Zimbabwe is to bring back property rights.

Gary van Staden, an analyst at NKC African Economics, said easing European Union sanctions would help in the short term — but it will take more than Mugabe’s removal to revive Zimbabwe’s economy.

Things can get better, but could they get worse? The key factor seems to be Mnangagwa.

“Mr Mnangagwa is the kind of man Zimbabwe parents frighten their kids with to get them to listen. He is a Mugabe hit man from decades back with blood on his hands,” said Van Staden. He was referring to the 1980s Matabeleland massacres when Mnangagwa was alleged to have been responsible for thousands of deaths. Mnangagwa has denied this.

Van Staden added that Mnangagwa has big business interests that may be damaging to the economy if elements of state capture enter the equation.

But a recent Reuters investigation found that Mnangagawa appears willing to compromise on some of the policy issues the international community has been most unhappy with.

According to documents acquired by Reuters, Mnangagwa believes that reviving the commercial agriculture sector is vital. He apparently plans to collaborate with white farmers to resuscitate the sector.

Musewe remained upbeat: “Here we are, we are in a house that is burning, and somebody has opened the window for us to jump out and we are questioning who opened the window. Which is sad.”

The political impasse presents the opportunity for a new dispensation and Musewe believes that modern-day geopolitics does not allow the same behaviours of the past. “Mugabe cannot be recreated because the world has changed. There is also a general awakening of Zimbabweans that we created this monster. I think Mnangagwa is not stupid; I think he also realises you cannot use the same old playbook.”

Musewe noted a “general level of excitement” in Zimbabwe about the developments this week. Regardless of what happens from here, “I argue that the power metrics will never be the same again,” he said.

The only thing that could make the economy worse is the collapse of the mining sector, said Matshego. “But I don’t think that will happen,” he said, noting that, although the diamond fields and platinum mines are still operating, they are marginal, if not loss-making.

But Van Staden said things between Zanu-PF and the military could get out of hand unless cool heads prevail. Although the military may have been able to bring Mugabe to heel, it probably won’t be able to remove him. “Whether this flexing of military muscle would stretch to a coup remains doubtful,” he said.

The region is concerned. President Jacob Zuma has sent a special envoy to Zimbabwe and has called a meeting of Southern African Development Community (SADC) leaders.

But experts expect regional intervention will be limited. “Our view is that, unless directly requested to do so, any SADC and/or South African intervention would be inviting far larger trouble,” said Van Staden.

Mandimika saw the worst-case scenario as an all-out coup. “Under such a scenario, it will become difficult to map out the path towards a return to civilian rule,” he said.

Matshego fears an influx of Zimbabweans over the borders, triggered by armed clashes. Should this not happen, SADC nations would share in the benefits of an improved Zimbabwe. For South Africa, Schussler noted, it would be a boost for trade in a nation that was once South Africa’s fourth-largest export market, but today is its 12th.

Lisa Steyn

Lisa Steyn

Lisa Steyn is a business reporter at the Mail & Guardian. She holds a master's degree in journalism and media studies from Wits University. Her areas of interest range from energy and mining to financial services and telecommunication. When she is not poring over annual reports, Lisa can usually be found pottering about the kitchen. Read more from Lisa Steyn

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