Emmerson Mnangagwa surprised Zimbabwe, and the world, when he orchestrated the resignation of one of Africa’s longest serving leaders. Is this an opportune moment for Zimbabwe’s economic recovery?
It’s three days before Christmas. Normally, at this time of the year, Merton Avenue, in Pretoria, South Africa, is an empty street. But today 3,000 people are pushing and shoving to get into the Zimbabwean embassy.
They all want to see Emmerson Mnangagwa, Zimbabwe’s new president and the man who brought Robert Mugabe’s 37-year rule to an end.
Inside the embassy, floor space is hard to find. There are people from all walks of life, from investors to lawyers to activists.
One of them is Ruvarashe Moyo, a Zimbabwean medical doctor living in South Africa.
“I came out today because I wanted to see the man who took out Mugabe. Many people back home don’t have adequate medical care, while there are thousands of specialists from Zimbabwe around the world. We are not at home because of the economic situation, so now I have hope that I may be able to go home soon. I am happy that the president’s speech was about reviving the economy and bringing us back home,” says Moyo.
Like the rest of hopeful Zimbabweans around the world, Moyo wants Zimbabwe to rekindle its former glory as Africa’s most booming economy.
Outside of land reform, Mugabe’s indigenization policies and allegations of rigged elections saw investors turn their backs on Zimbabwe, resulting in the economy tanking. The ruling Zanu-PF government invested heavily in health, education and parastatals. It meant, for most of the 1980s, public expenditure made up 45% of the GDP, according to the World Bank’s Zimbabwe Public Expenditure Review. It crowded out private investment and fueled inflation.
After 37 years, it means revitalizing Zimbabwe’s economy will not be an easy task.
“There is a lot to fix in the country, but the major thing to start with is fixing the economy so that people can have jobs and at least be able to sustain a decent living,” says Terrence Chitapi, a Zimbabwe-based economist.
According to Chitapi, Mnangagwa has said all the right things since his inauguration but needs to back up his words with action.
“From day one, he has spoken about a fresh start and people expected a quick turnaround of the economy and to see a strong push towards the respect of human rights, but so far we haven’t seen gigantic strides to turn these around,” he says.
In fact, during the back-to-school period, Zimbabweans witnessed a price hike in school supplies, there is still no hard currency and street vendors, the backbone of Zimbabwe’s economy, have been pushed off the streets for not having lisenses.
“There are actually people from the opposition who have been brutalized by the military. Even when they take street vendors off the streets, sometimes the way they conduct themselves borders on infringement of human rights and endangering lives of not only the vendors but also other passers-by which brings fear and is what Mugabe’s presidency represented,” says Chitapi.
When Mnangagwa was Vice President, he spoke about changes that needed to happen in policy matters, state departments, stabilizing the currency, and corruption. According to Anele Ndlovu, founder of the Zim-SA Forum, an organization that encourages investment in Zimbabwe, Mnangagwa is implementing change. The problem is the pace is slow.
Since he has been in power, Mnangagwa has streamlined government ministries from 26 to 22, revised the indigenization policy and announced the sale of some parastatals.
The biggest concern among Zimbabweans is whether the country will see real democracy.
Mnangagwa’s cabinet is similar to Mugabe’s and he appointed former army chief, Constantino Chiwenga, who led the “coup”, as his deputy.
“It was already a mistake to give the military that much power over politics and now to give the head of the military the position of Vice President shows these deals were made before, just so that they can get into high positions. I worry they might not want to leave and if people attempt to go to the streets, force may be used,” says another entrepreneur who refused to be named.
This move has left many Zimbabweans anxious. But, according to Ndlovu, this is a transitional government that might change if Mnangagwa wins this year’s elections.
“You can’t get into government and then try to change everything all at once. Things would fall apart. You need a proper transition but some ministers need to be retired because they have been there for too long,” he says.
At least doing business in Zimbabwe appears to be getting easier.
“People started getting permits quicker, it’s easier and faster to register a business and the visa processing has also become easier,” says Ndlovu.
To cut the budget deficit, Mnangwagwa’s government has invited bids for stakes in up to eight loss-making state-owned enterprises, including its national airline, Air Zimbabwe, sitting on a $300-million debt, and power utility, ZESA, which suffered a $224-million loss in 2016.
“If you give a private entity 35% of ZESA, for example, you know the way of doing business will change. They will be able to do collections, less corruption and it will be run properly. This is a very good move,” says Ndlovu.
Out of the 92 companies Zimbabwe fully or partly owns, 38 ran at losses amounting to about $270 million in 2016. Most of the parastatals have been losing money for years due to mismanagement and high operating costs.
“On big projects, like reviving Air Zimbabwe, the investor would want to know what securities they can get… There is a lot of interest from investors. For example, there is a delegation coming into Zimbabwe interested in agriculture and farming of soya and another Turkish delegation that wants to tour the country and see factories that are closed in Bulawayo and how they can get involved in the tourism sector.”
The Harvard Business Review agrees that investors could benefit if Mnangagwa continues to concentrate on economic revival.
“Mnangagwa’s first actions in office underscore how important he views economic recovery. Even before announcing his new cabinet, Mnangagwa installed a key reformist, Patrick Chinamasa, as Acting Finance Minister, tasked with tackling corruption and re-engaging with international institutions to unlock funds to ease liquidity shortages… In this environment, multinationals that are willing to accept some risk and invest in the country could benefit from first-mover advantages – but only if the new administration follows through with much-needed economic reforms,” reads an article in the publication.
Zimbabwe lost out on Africa’s recent growth boom but Ndlovu says those who are willing to put their money in infrastructure development, healthcare, agriculture, mining, technology and energy might have a big pay day as the economy is projected to grow more than 4.5% this year.
Back in Pretoria, as the crowd dispersed, the sky gradually turned a shade of purple and the stars began shimmering. It is dusk at the embassy but maybe a new dawn is on the horizon for Zimbabwe.
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