Zimbabwe: still not open for business
Disastrous policies suggest Emmerson Mnangagwa is not up to the job
In little more than a year, the man who promised to open Zimbabwe’s economy for business, President Emmerson Mnangagwa, has managed to shut it down.
At the time of the coup in November 2017, Robert Mugabe warned that Mnangagwa was not up to the job and that the change in government was cosmetic. He has been proved right. President Cyril Ramaphosa, the British government and the EU are left with egg on their faces.
The promised three-day shutdown sparked by Mnangagwa’s ill-conceived 150% fuel price hike last weekend brought the long-simmering crisis out into the open. The government, which for the past five years borrowed recklessly at home and abroad while printing increasingly worthless local currency, published distorting data to prove to the naive that the economy was on the mend. It began to fall apart in October last year, when the "local currency", which the government still insists trades at par to the US dollar, collapsed to $14c in the parallel market. It has recovered to $21c but is set to plunge again when markets reopen. Inflation surged from 5% in September last year to an estimated 35% last month.
The new finance minister, Mthuli Ncube (a former head of Wits Business School), imposed a 2% tax on electronic transactions to raise $3bn in 2019. This was followed with two catastrophic missteps. He offered Zimbabwe’s 350,000 public servants, including underpaid teachers and doctors, a derisory 10% pay rise, which infuriated them.
The subsequent quadrupling of the fuel tax to $2.40 a litre sparked Monday’s shutdown. The urban population, which voted heavily against Mnangagwa in the elections in July last year, downed tools. By Tuesday the country was in lockdown with police and soldiers on the streets. At least five people were shot, though it is not known if any were killed. Filling stations, supermarkets, banks, offices and schools were shut and internet connections cut.
As this happened Mnangagwa was consorting with Russia and dictatorial regimes in Eastern Europe. Next week he will take his now forlorn open-for-business pitch to the Davos faithful.
Just how the shutdown will play out remains to be seen. But it is clear even to the government’s supporters that re-branding Zanu-PF is no solution to the country’s woes. Though there is no enthusiasm for a coalition government, there is a growing sense that economics alone will not resolve the crisis.
Time is running out.