Zimbabwe’s Deceptive Road to (Non)Reform - Zimbabwe Situation

Zimbabwe’s Deceptive Road to (Non)Reform

Source: Zimbabwe’s Deceptive Road to (Non)Reform | zimbabwebriefing

False Uhuru

 In the week of the 14th of January 2019, Zimbabwe burst into flames as the general citizenry in urban areas protested at rising poverty and inequality. Interestingly, for Zimbabwe, high hopes had been sold to the citizenry and international community after the deposing of longtime ruler Robert Mugabe in November 2017. Emmerson Mnangagwa, the new president, promised a new era and came up with the ‘open for business’ mantra. Pursuant, to this, the rhetoric of government shifted and during the July 2018 elections, the opposition was allowed to campaign freely and made inroads into some of the rural strongholds.

The elections were never near any perfect, and when the Zimbabwe Electoral Commission (ZEC) delayed in releasing the Presidential election results, this led to protests in the streets of Harare on the 1st of August 2018.  In response, the state unleashed the security services on the protesters leading to the death of six people and more than a dozen being treated for gunshot related injuries. This became the first signal of the ‘foretaste of what was to come’, as threatened by presidential spokesperson, George Charamba, in reference to the terror unleashed on citizens in response to the January 2019 protests.

When the nurses and junior doctors went on strike in December 2018, the government responded with heavy-handedness and arm-twisting tactics. The ruling party has been in denial that at the heart of all these problems and rising discontent are escalating levels of poverty and inequality exacerbated by the worsening macro-economic condition. The government has sought to pursue a path of strict economism that seems to be inspired by the late Chilean dictator Augusto Pinochet. The ‘austerity for prosperity’ mantra championed by the government has become ‘austerity for calamity’ for the general citizenry.

The Poor in the Emergency Room

In 2015, Dr Alex Magaisa, in one of his Big Saturday Read instalments raised concern around rising urban poverty within the townships (popularly known as the ‘ghettos’). He wrote on how the urban underclass had been ravaged by the hostile macro-economic conditions. They were surviving on less than a dollar and could not afford basic essentials in the shops. The populace residing in the ghetto had to rely on the informal economy where they buy basic essentials in repackaged smaller units called ‘katsaona’ (literally meaning a small accident in Shona). However, katsaona in ghetto lingo simply means an emergency relief, and for the urban poor, life had become desperate. In 2014, the Reserve Bank of Zimbabwe introduced Bond Coins, to deal with the problem of liquidity in terms cash shortage, especially as ordinary citizens were being short -changed by local businesses to buy unwanted items. Later on in 2016, Bond Notes were added to the coins, hereafter known as the Zimbabwe (Bond) Bollar (ZWB$), and the Reserve Bank of Zimbabwe declared that they were at par with the United States Dollar (US $) and backed by an AFREXIM Bank facility.

In 2017, banks started to experience cash shortages; firstly, it was the US$ and followed by the local Bond currency. Thereafter, the ZWB$ started to be cross rated with the United States dollar and actually depreciated to its  nadir by 400% 0n  the 10th of October 2018, t0 trade at one Zim Bollar to twenty cents United States dollar (ZWB$1:US$0.20). The government made some legislative interventions that outlawed and criminalized the trade of the ZWB$ on the parallel market, and this threatened many local corporates. According to Zim Bollar Index, from November 2018, the value of the ZWB$ on the parallel market stabilized to an average of US$1: ZWB$3.30 on the parallel market.

The country started to experience a severe foreign currency shortage on the official market as corporates could not go to the parallel market.  In response, business started to demand payment in foreign currency or alternatively started to have different pricing tiers. The structure was such that for those paying in foreign currency goods and services became cheaper but for those using the ZWB$, things became expensive. In all these shifts, prices of basic commodities and services were constantly rising and did not drop. The country experienced, shortages of medical drugs, basic commodities and fuel leading to the emergence of queues again in Zimbabwe reminiscent of 2007-2008.

A rudderless ship: Government disowns its own money

The Government of Zimbabwe (GoZ) in late 2018, through Treasury announced a 2% tax on all virtual transactions, which were later revised to transactions between ZWB$10 -20,000. Essentially, this increased the cost of doing business and the cost was passed on to consumers. In the 2018-19 budget announced in November 2018, the GoZ demanded duty tax for cars and other goods to be paid for in foreign currency. Taking into account several utterances of the Minister of Finance, Mthuli Ncube, in domestic and international fora, stating that the ZWB$ was not at par to the US$, this generated further uncertainty within the economy.

Therefore, by insisting on the policy of the Zim Bollar being equal to the American dollar, yet at the same time demanding some of the statutory obligations to be paid in hard currency, it meant government was somehow disowning its currency. These policy contradictions from the government created distortions within the economy, thereby rendering it ungovernable. This led to rising prices of basic commodities as well as inflation figures, thus adversely impacting on consumers. As all this mayhem ensued within the economy, salaries of civil servants (the majority), ordinary workers in the private sector and payments by the general populace in the informal economy were transacted in ZWB$ and virtual payments. Resultantly, the country faced a number of labour upheavals, as workers found their earnings and savings eroded by inflation.

It seemed Zimbabwe was returning to 2007/8 when citizens lost pensions and savings due to hyperinflation.  In all these economic challenges, government pursued a denialist syndrome, never saw its policies as culpable but blamed business and some faceless saboteurs. In a way, the government went back to the Mugabe default settings. At the heart of Zimbabwe’s unending political and economic challenges is the need for fundamental structural reforms.

Will ZANU PF Reform itself out of power?

The events leading to the ultimate fall of Mugabe in November 2017 gave Zimbabweans a glimmer of hope for a new beginning. It became almost a rallying point that Zimbabweans had to ‘give ED (Emmerson Mnangagwa) a chance’, but sooner than no later it began to emerge that ZANU PF was not interested in serious political and economic reforms. Before the November 2017 Coup, ZANU PF had been consistent and asserted on record that they ‘will not reform themselves out of power’. President Emmerson Mnangagwa shifted from the radical rhetoric of his predecessor, Robert Mugabe, but beyond that failed to bring in new policy changes that would enable the government to “walk its talk.” Therefore, the ‘open for business’ mantra lacked substantive policy and administrative actions to make it a reality and turn the fortunes of the economy.

Allegations of patronage and corruption that had characterised President Mugabe’s rule began to resurface. Former, presidential special adviser, Christopher Mutsvangwa raised the lid on the existence of a cabal in the fuel sector and how they are milking the treasury, riding on the distorted exchange rate system. Later on, Acie Lumumba of Viva Zimbabwe, after his short-lived appointment as the chairperson of the Ministry of Finance Communications Taskforce, gave credence to the existence of the fuel cabal and its deep connections at the Reserve Bank. Prior, to this, the Mnangagwa administration had seen the domestic debt ballooning from $3.6bn to $7.6bn in 8 months, allegedly, to fund the elections via command agriculture and the presidential input support scheme.

At the core of this economic indiscipline and lack of appetite for reform is a parasitic network of a black business class with strong party-military links. Dr Jabusile Shumba’s book, “Zimbabwe’s Predatory State: Party; Military and Business”, gives illuminating insights into how this politico-military elite class uses state power, patronage and violence for accumulation purposes across all sectors of the economy. The group derives its power to influence policy via the Joint Operations Command (JOC), a body that has been allegedly confirmed by exiled former ZANU PF Politiburo member and Information Czar, Professor Jonathan Moyo, in one of his tweets. The activities of JOC are well documented in the media regarding various policy positions and actions on the economy. These have sometimes extended to Local Government level, especially with regards to the continuous removal of vendors from the streets and demolishing of informal business structures by the military.

When its power is threatened, this political-military elite does not hesitate to flex its muscle, and when it does so, as on the 1st of August 2018 and now 14th -21st of January 2019, the Constitution and citizen’s rights have always been suspended.  Therefore, any economic or political reforms in Zimbabwe that do not address or seek to assuage the interests of this securocrats business class will most likely yield nothing.

Which way: the benevolent dictator or the democratic developmental state?

Emmerson Mnangagwa’s government has sought to pursue the benevolent

 

dictator model in the mould of Rwanda’s Paul Kagame, Singapore’s Lee Kuan Yew and China’s Deng Xiaoping. In these countries the value system and meritocratic bureaucratic framework were complementary; and deterred overt, large-scale and inefficient corruption. Furthermore, they were underpinned by the idea of a capable and efficient Developmental State that is able to kick-start or accelerate economic development. Hence, the need for principled authoritarian leadership. In Mnangagwa’s thinking, a focus on strict economism will deliver growth and thus make human rights inconsequential.

Unbeknown to the Mnangagwa administration is how history, technology and opportunity have not been on their side, and ever shifting since Deng assumed power in the late 70s in China, Paul Kagame in the mid-90s in Rwanda and Lee Kuan Yew in the late 50s. History presented these three leaders with a great opportunity as they came to power with almost unquestioned hegemony and the necessary moral legitimacy to pursue economic reforms. All the three countries sought a clear break with their past and took a hard stance on corruption. For instance, Lee Kuan Yew jailed his benefactor during the elections campaign when he became corrupt and in China a number of high ranking Chinese Communist Party (CPC) have been sentenced to death over corruption convictions. In Mnangagwa’s second republic, much emphasis has been put on ‘economic commandism’ (an economic model that emphasises ordering or forcing people to do something, rather than freewill) in a largely deeply polarised society and at the same failed to undertake the necessary key governance reforms and instituting meritocratic bureaucratic frameworks.

Ever since, the emergence of the opposition Movement for Democratic Change (MDC) in the late 90s, Zimbabwe has been largely socially divided along urban versus rural, though with strong interlinkages. ZANU PF largely relied on coercion to remain in power, but the geography of its influence has been mostly confided to the rural and farming areas. On the other hand, the MDC, despite state supported repression has managed to dominate within the urban areas and pockets of relatively developed rural business and mining centers. Outside the thesis of violence, Zimbabwe has remained an electorally divided nation and a close reading of electoral data from 2000 to present show that the two major parties ZANU PF and MDC have been neck and neck in terms of numbers.

No party has managed to effect total hegemony on the Zimbabwean polity, producing the urban versus rural dynamic, despite that there are strong interlinkages. On a general note, the Urbanites have mainly driven commerce and industry while the ruralites drive agricultural production; yet, the lines are blurred. Some of the securocrats or ruling party affiliated urbanites have been steering agricultural production with rural proxies. The rural-urban divide has not been a clear-cut neat aspect. Therefore, for any economic reform and growth to take place, there is need to marshal together the productive forces of these two groups towards a common national development vision.

Having a common national development vision means having a political and economic governance model that seeks to shift from exclusive ‘command economics’ and possibly inclusive ‘democratic developmental economics’. Engaging the opposition, civil society and business becomes a sine qua non for any progressive step forward. There is need to shift governance mode from domination to devolved power. The 2013 Constitution sets up a basis for this new approach. However, it seems the Mnangagwa administration, ever since its assumption of power has sought an exclusive economic growth model that do not take a significant section of its citizens on board.

The relentless pursuit for ‘Open for Business’ at the expense of poor citizens, will most likely breed more instability. There is a mistaken assumption, that economic reforms can be fostered on the people via the barrel of the gun. Also, to seek an inclusive governance model, would mean talking to the opposition, a position not favoured by the politico-military business class, despite, the conditions and circumstances demanding the government to be inclusive. This is the dilemma that the Mnangagwa administration faces.  The era of strongman politics in Africa seems to be increasingly facing challenges as the case with Bobi Wine in Uganda and Dianne Rwigara in Rwanda. This is why the current path of ‘command economism’ may not be sustainable and thus deceptive. It’s time for the government to pursue seriously its recent found calls for dialogue.

Tamuka Chirimambowa is a Development Studies PhD Candidate at the University of Johannesburg. He was the Guest Editor for this edition

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