Zimbabwe’s economy circles the drain

Published in the Globe and Mail 5 June 2014

Robert I Rotberg blog - June 6, 2014

The city water taps run dry daily in Harare, Zimbabwe’s capital. Electrical power is scarce and there are frequent blackouts; private homes and all businesses need generators. Hospital supplies and doctors are scarce. So are functioning schools, street lights and all of the other daily governance items that governments, even some in Africa, normally supply.

But this is Zimbabwe, where President Robert Mugabe has ruled despotically for 34 long years. His ZANU-PF party won presidential and parliamentary elections last July by cleverly packing the voters roll, rejigging constituencies and constituency boundaries, and ensuring that shack-dwellers and villagers knew precisely for whom they should vote, and how often.

Since the ZANU-PF victory, the national economy, having successfully recovered from a total collapse in 2006-2009 while under opposition management, has once again melted down. The Mugabe government has been unable to pay full civil service, police and army wages since the beginning of 2014. Local experts believe that the government will be providing just a small part of what is owed later this month and will then absolutely run out of cash by August, depriving even soldiers of their normal wages.

Six banks have failed and 11 more are operating precariously. Cash flows are limited, liquidity nonexistent. Businesses are failing daily, with 70 having gone bust since the beginning of the year. Government revenues are only 30 per cent of daily expenditures.

Lack of confidence in the Mugabe government accelerated massive capital flight, which is continuing. (Zimbabwe has used the U.S. dollar as its major currency since printing local dollars led to a 250 million per cent inflation and huge shortages of fuel and consumer goods.) That crisis of confidence continues, so the economy inexorably slides backward.

The slide has not been arrested by a confiscatory attempt to transfer or “indigenize” non-African-owned businesses and to harass successful mining companies and foreign-owned sugar mills. As a result, incoming foreign investment is no more and domestic entrepreneurial activity has halted.

This absence of economic drive has been accentuated by the smuggling of locally mined gold into South Africa and the drying up of the country’s alluvial diamond-harvesting bonanza. The remaining abundant diamond trove is encased in a long ridge of rocky conglomerate that requires the kind of technological expertise unavailable in a weak Zimbabwe. The $11-billion worth of diamonds that were plundered from 2010 largely was appropriated by Mugabe, his wife, cronies, security forces and a Chinese company. Very little revenue from diamonds ever reached state coffers.

This week, Zimbabwe may well be broke, and growing economically at a low or even a negative level. One remedy that the ruling party – but no sane economist – is considering is the printing again of local dollars, thus allowing the government to pay soldiers and others. But inflation would result, confidence levels would ebb further, and petrol and many consumer goods would vanish. A prominent banker told me that the government lacked funds with which to print local dollars, and he had seen no preparatory signs. But, by August, when the army and air force become restive, Mugabe might possess no other way to placate the troops.

In most African countries with so much dysfunctionality and widespread theft by cabinet ministers, officials, police, army and almost every person with access to a permit or a franchise, a military coup would be likely. In Zimbabwe’s case, however, junior officer ranks have carefully been weeded and senior officers have for long fed themselves at the trough of corruption. They are so much a part of a venal system of enrichment that little can be expected from such quarters.

Moreover, Mugabe, now 90, has so successfully created a climate of fear – and patronage rewards – that key politicians and secureocrats are careful to stay obedient, the better to enrich themselves. And the followers are immensely wealthy, with dollar accounts offshore.

Mugabe is frail, but still strong enough to review troops at passing out parades (where his police chief collapsed) and occasionally to preside over cabinet and central committee meetings.

Almost everyone in Zimbabwe muses concernedly about the leadership succession. Before its disastrous showing in last year’s elections, experts assumed that the Movement for Democratic Change would play a major role in the country’s future. But now the MDC has fewer than 90 seats in a 210-seat parliament. It has also split into two, with most members staying with former prime minister Morgan Tsvangirai and a rump group seceding with former finance minister Tendai Biti.

ZANU-PF will determine Zimbabwe’s future both constitutionally and in terms of power. Vice-President Joice Mujuru is in line to preside when Mugabe goes, but only temporarily, until parliament votes. But there are less clear provisions if Mugabe becomes incompetent in office.

In either event, the Mujuru faction within the ruling party may not be able to prevent Emmerson Mnangagwa – now minister of justice, chair of the joint operations command, a leading securocrat and ambitious pretender to the throne – from pushing Mujuru aside and taking power with military support. Foreign diplomats now view Mnangagwa as the only politician capable of maintaining stability and returning Zimbabwe to international respectability.

Mnangagwa is very canny, determined, corrupt, and ruthless. At 64, he is also younger than many of his rivals and enemies. Recently, he pushed aside another minister to take control of a large petroleum distribution complex capable of greatly rewarding him and his close associates for for years to come.

Unfortunately, other than a soft coup on behalf of Mnangagwa, or South African intervention to persuade Mugabe to relinquish office or to cede day-to-day power to Mnangagwa (or a weaker Mujuru), there are few alternatives. South Africa could attempt to bully Mugabe to install an interim cabinet of technocrats, as in Greece, but South Africa’s appetite for meddling is reduced by its own economic weaknesses and internal political problems.

What is more certain is that Zimbabwe’s economy will continue to crumble, and that Mugabe will retain enough control to cow Mujuru, Mnangagwa and others. The MDC will weaken still further. Only when the ZANU-PF holds its national congress in December will Mnangagwa try to move decisively against Mujuru – assuming Mugabe lives that long.

By then, however, there may be little left economically of Zimbabwe. Metaphorically, it will remain for some last politician to turn off the lights.

This post appeared first in the Globe and Mail under the same title, June 5 2014


Robert I. Rotberg is a frequent commentator on conflict and conflict prevention in the developing world, especially Africa, Asia, and the Caribbean, on failed and fragile states, on good governance and encouraging good governance, on genocide and ethnic cleansing, on corruption, and on specific civil wars and other contemporary issues in Sudan, Kenya, Rwanda, Zimbabwe, South Africa, Somalia, Burma, Sri Lanka, and Haiti. He has also created the Index of African Governance.

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