Will croc sink or swim?
ANALYSIS: Can President Emmerson Mnangagwa save Zimbabwe?
As Emmerson Mnangagwa is sworn in as Zimbabwe's interim president, Financial Mail explores what this means for the country's economy
After almost four decades of hubris and misrule under Zimbabwe’s founding president Robert Mugabe, Emmerson Mnangagwa may, despite his past, be a far better leader for the economy than Mugabe, whose legacy is a country on its knees.
Mnangagwa was sworn in on Friday as president of Zimbabwe in front of thousands of cheering supporters at Harare’s national stadium, bringing the final curtain down on the 37-year rule of Mugabe.
Taking his oath of office, the 75-year-old former security chief known as ‘The Crocodile’ vowed to uphold the constitution and protect the rights of all Zimbabwe’s 16m citizens.
Financial Mail takes a look at Mugabe’s 37 year-rule and what his departure means for the country's economy.
Politically, Zimbabwe’s upheavals are easy to understand: one lot of thugs is replacing another lot of thugs. The good guys today are the army, who support recently sacked vice-president Emmerson Mnangagwa and detest former first lady Grace Mugabe. And the bad guys are those who supported her gambit to become vice-president.
Mnangagwa (nicknamed The Crocodile) seems to have the support of about three-quarters of all Zanu-PF MPs and the leadership of all 10 provinces who had sacked President Robert Mugabe days before he finally resigned in a letter to the Speaker, just as MPs began to impeach him. There was jubilation inside parliament and on the streets of Harare.
A broad coalition of democrats could help restore Zimbabwe, but the country is not nearly as rich as Mugabe said it was
Mnangagwa said earlier that he would not return home (from SA) to talk to Mugabe just yet as his security could be at stake — just as it was when he tried to leave the country after being sacked and had to force his way across the border to Mozambique. He said he would return soon.
But part of the support for Mnangagwa could be due to some within the ruling Zanu-PF party being afraid they will be arrested, or beaten up, or lose income, or all three, if they don’t back him.
Zimbabwe has no democratic reputation to defend. It is a grubby state with ever-deteriorating social services, no money in the bank and not much hope of being able to pay its bills, foreign and domestic, in the foreseeable future.
The lower ranks of the army, the ones Zimbabweans have seen on the streets day and night for the past week, seemed well-behaved, young, full of grins and somehow slightly embarrassed when people gushed over them. They waved back and smiled too.
The handful of troops in Harare on Monday were absolutely in control because they had no war to win. No enemy. No-one opposed them, on the streets at least. And the police had gone ... where, no-one was sure. So there were no more roadblocks, which were extraordinarily disruptive this year as they covered all main roads in each city, terrorising motorists as they raised money from spot fines.
On Monday, five days after this oddball coup d’etat, there were only a few army juniors around. One of the armoured troop carriers in the city centre had no-one in it, and the small tank further east along the main road through the city, Samora Machel Avenue, had one soldier. No-one took any notice. People were all busy, so was the traffic, kids went to school and supermarkets were open as usual. Though the stock market had shrunk by 20% it was hard to notice a coup had occurred.
But let us remind ourselves: a decade ago, Zimbabwe’s military leaders said they would not take the salute or serve Morgan Tsvangirai, president of the Movement for Democratic Change (MDC), if he won the elections of 2008. He did win, and was cheated out of his victory.
The generals made a statement on Monday saying they had launched "Operation Restore Legacy", which sounded like some old-fashioned, Soviet-era code name.
They wanted to get rid of Robert Mugabe not because he destroyed the country, but because he booted out their man, Mnangagwa, who may (despite his past) be a far better leader for the economy than Mugabe, whose legacy is a country on its knees.
And they detest his wife Grace, which is fair enough. Indeed, a dynasty would have been in the making had she been appointed vice-president in Mnangagwa’s place at the Zanu-PF special pre-election congress in December.
The generals were also embarrassed by the couple’s badly behaved, outlandishly extravagant sons, who are supposed to be studying in Johannesburg. Grace’s fantastic spending, the generals indicated, had destroyed the legacy of the "revolution" which led to independence in 1980, when Mugabe said he was a socialist who admired the German Democratic Republic (East Germany) and gave the freedom of the city of Harare to Nicolae and Elena Ceausescu, the presidential couple from Romania who were so hated at home they would be executed by firing squad a few years later.
The background to all of this is, of course, the economy. It was appalling for people, even those as extraordinarily rich as some generals and some Zanu-PF leaders, to see the Mugabes spending millions from the treasury for his medical treatment in Singapore and her shopping in Dubai.
Each of several annual medical appointments in Singapore cost about R15m a trip on the only surviving Boeing 767 of Air Zimbabwe, which is bankrupt and reduced to three aircraft. Mugabe would not travel on any commercial flight. He was paranoid about security. Not because of any foreign agent: he was terrified of his own people.
It is the economy which is at the heart of the coup. The ATMs are empty. The banks have no queues because there is no cash inside. Neither US dollars, nor bond notes (known locally as "bollars") — the locally printed small denomination currency which emerged a year ago from limited print runs, and which is apparently backed by Afreximbank in Cairo, a mysterious bank most Zimbabweans had never heard about. Zimbabwe was a founding shareholder in it.
Afreximbank would not have been needed had Mugabe allowed his previous, reformist finance minister Patrick Chinamasa, a Mnangagwa loyalist, to trim the civil service budget and the numbers of employed, which eats up 80% of government revenue, so he could pay back US$1.8m to the World Bank and the African Development Bank, and then borrow from the IMF. Each bollar is supposed to have the same value as the preferred currency, the US dollar. But the black market rate during the week of the coup was about 30%-40% for real US dollars.
Bollars are as hard to come by as US dollars. So there are other ways of shopping, such as phantom currency. Bank account holders can swipe their bank cards. Six months ago they were swiping US dollars, which they could get out of the bank in green notes. Today they are swiping phantom notes, as the notes to back up the swipes of the debit cards are not there.
Some shops and hotels accept foreign credit cards. Some do not. Foreign debit cards cannot be used in most places and cannot be put in an ATM to withdraw cash, bollars or dollars.
But there is a saviour for the people, and his name is Strive Masiyiwa. He is no longer in Zimbabwe, having fled years ago, and lives in London. He is a billionaire, a major funder of the disadvantaged and of good causes. He is, many people believe, almost a saint.
He was the creator of the largest mobile network, Econet, in Zimbabwe. He managed to get it going with help from Europe, by going to court again and again as Zanu-PF tried to stop him. Econet is huge. Its network is huge. It also has the most expensive mobile calls in the region — in US dollars — but it works. It supplies most of the Internet via fibre, which costs about R3,000/month for unlimited access (which is not in reality unlimited). But it is there.
And in the past six months his swipe mechanism, for those who don’t have bank accounts (and that’s most of the population, even in urban areas), EcoCash has become efficient and it keeps urban dwellers at least able to shop, buy fuel sometimes, pay their rent, services, salaries.
It has improved dramatically in the past six months. It helps Econet as it means users are not scrambling for cash to buy a recharge card. They can do it on their mobile. It is easy to sign up to at the post office or any of Econet’s many outlets around the country. It is for those who have a Zimbabwean ID, and they don’t need to prove where they live.
The cost of living is shocking.
Groceries, apart from bread and mealie meal, have gone up about 30% since the panic of September, when Zimbabweans believed the economy had crashed as it did in 2008, when there was no fuel for those without coupons, when supermarkets were empty and schools and state hospitals were unable to teach or heal.
In 2008, the Zanu-PF administration had crashed everything about the economy. The Zim dollar had no value. Hyperinflation was incalculable. Then came an inclusive government and the MDC, assisted by the international community, which restored much.
Today EcoCash makes life bearable for those in a country which has not much to offer for any of its citizens. Without it there would be collapse, as there was under the previous Zanu-PF administration which chose to print dollars and steal the real ones from the central bank, as Grace Mugabe did at the height of the collapse. She nicked R15m for her eldest son and sent it to SA.
But EcoCash is phantom cash. There is little to back it up. No-one is sure how long it can continue, though some people believe Afreximbank might come to the rescue again, that there will be a new era, a new administration, a new Zimbabwe.
But for people in the rural areas — 67% of the population — many of whom live as they did 50 years ago, life is particularly tough. It has been eased only by the great agricultural season they had last year, when there was abundant rain.
Zanu-PF has lived on a myth since independence: that another nation, whether the UK or some other country in the West, wants it or wants to invade it.
Zimbabwe is an uncomfortable place to live. Its natural beauties are all under threat. Its forests are disappearing at an astonishing rate as poor new farmers use trees, not costly coal, to cure their tobacco in the three cropping provinces.
At least hundreds of thousands of Zimbabweans are in SA, and there are more black Zimbabweans in the UK since 2000 than there were whites in Rhodesia at the height of the colonial era. Many of the Zimbabweans abroad are professionals.
Mugabe has indeed left office, as constitutionally as could be managed. Any sensible person is hoping the thugs within the winning section of Zanu-PF will include some of the more sensible, rational democrats in the MDC and its allies to help fix the administration (which has to be dramatically shrunk) and to borrow some cash.
Mugabe is gone, but he has been negotiating for immunity for all the crimes he has allegedly committed, including his family’s thefts from treasury and to secure his lifestyle.
The generals knew they had to satisfy the Southern African Development Community (SADC). This is ironic, in retrospect, as only Botswana’s Ian Khama spoke out at the time against the abuses and the murders, the mass arrests and torture of MDC members. (The MDC, remember, nearly defeated Zanu-PF at the polls in 2000, nine months after it was formed.)
Mugabe and his colleagues always said Zimbabwe had huge resources, and that its economic failure was due to sanctions. This cannot be true, because the EU financial and travel sanctions have been against Mugabe and Grace for the past four years. The US list is wider, but it is travel and financial — that is, no citizen of the US can do business with those on the list, and they are mostly politicians and the military.
Zimbabwe’s trade with the US, which is tiny, was not affected. The natural resources, apart from platinum and chrome, are quite small, and well used without corruption. But it’s not enough to pay the debts.
Tobacco production, now at about 200mkg, financed by Chinese and US companies, has probably reached its limit in the international market and brings in about US$700m.
Agriculture that was not destroyed in the land invasions post-2000 was good, creative and diversified but it wasn’t a game-changer.
The other main forex earner is from the diaspora — Zimbabweans sending cash home.
Even without Mugabe, even if Mnangagwa, as many suspect he will, chops the civil service, runs a tiny cabinet and cleans it all up, there isn’t much room to pay debts. The West will have to help with aid to restore social services, to fix roads and railways. There is a scheme for a new hydroelectric power plant if there is enough demand in the region. And there are many, many Zimbabweans who will work like hell to try to restore their country.
The MDC is a key element in Zimbabwe’s move towards a post-Mugabe democracy. Former SA president Thabo Mbeki and his team never recognised this when they helped produce the inclusive government that was heavily biased in Zanu-PF’s favour. Mbeki and Co admired Mugabe.
But it was the MDC which restored some confidence through the inclusive government from 2009 to 2013.
A broad coalition of democrats can help restore Zimbabwe, but the country is not nearly as rich as Mugabe said it was.
- with Reuters