A country poised to rebound

By Frank Chikowore, Nicholas Norbrook & Patrick Smith in Harare

Posted on Monday, 27 July 2009 10:38

Miners and businessmen are singing the praises of an economic

recovery, but the politicians have tough hurdles to pass in order to

agree a new constitution and organise elections within two years

In the streets of Harare, Bulawayo and Gweru there is a new mood of hope. Some of the country’s old vibrancy is back and the political bullies are in retreat if not vanquished. Political satire, never totally quashed even in the recent oppressive past, is back with writers, journalists and musicians all lampooning their would-be leaders.

Copies of the latest books by prize-winning Zimbabwean writers such as Pettina Gappah and Brian Chikwava are avidly snapped up, and hoteliers credibly speak about a tourism revival ahead of next year’s World Cup in South Africa. The tentative steps to an economic recovery have started: the abandoning of the Zimbabwe dollar in favour of a multi-currency regime using the US dollar and South Africa’s rand has ended hyper-inflation at a stroke, even if it has created new problems such as the chronic lack of liquidity.

A new Zimbabwean order

The stated aim of Zimbabwe’s new order is clear: the completion of an agreed agenda of political and economic reforms and the holding of free elections within two years. Its key test is the irreversibility of the reforms undertaken since the power-sharing accord signed last September and the coalition launched in February.

Across society, trades unionists, journalists, taxi drivers, lawyers and businesspeople all speak of sweeping changes in the country, but many see several months of political battles ahead. Civic activists and journalists worry about the exclusive nature of the negotiations: they complain that although civil society helped lead the battle for political freedom in Zimbabwe, its activists are being marginalised in the negotiations for a new constitution and electoral commission.

Prime Minister Morgan Tsvangirai insists that power-sharing is delivering despite the efforts of old guard Zimbabwean African National Union-Patriotic Front (ZANU-PF) officials to sabotage it: “We have reached a stage where we are set for an irreversible path to a new Zimbabwe.” Speaking in London in June on a tour to bolster support for the new government, Tsvangirai added: “The building blocks for recovery and national confidence are slowly being moved into place. Our re-engagement with the world is showing positive signs, our children are back in schools, our major hospitals have re-opened their doors to all, the state has hobbled itself back into life and inflation has been contained.”

There is a widespread belief that the country can use the new political climate to rebuild its economy. “I think from a business point of view, it’s amazing that the integration has happened so fast,” says a director of the African Sun hotels group, Farai Rwodzi. “A few months ago people were killing each other, fighting each other and now they can sit at a table and discuss issues. They can sit in cabinet and come up with policies.”

Riches natural and man-made

Businesses that weathered the storm

African Sun Group, Pinnacle Property
Investment and Econet. Read more.

Opportunities abound in a country which combines prodigious mineral and agricultural resources with a still-functioning network of roads and power-stations, local bankers and entrepreneurs are quick to point out. Massive investments in education and health in the 1980s pushed literacy rates to among the highest in Africa and laid the groundwork for the development of a strong professional and business class, many of whom moved across the Limpopo to South Africa as Zimbabwe’s economic decline took hold, while others moved to Europe and the Americas. “One of our greatest needs is the return of hugely abundant talent and expertise, now scattered all over the world,” Tsvangirai said. “Sadly many of those who first fled from the previous government were those whose capacity and educational attainment made them most marketable in other countries – the brightest graduates of what was once the best school system.” But the government will have to work hard to fight scepticism: Tsvangirai was booed when he asked a crowd at London’s Southwark Cathedral to return home.

For many Zimbabweans, the horror of the violence wrought by ZANU-PF militias on supporters of the Movement for Democratic Change (MDC) in last year’s presidential run-off was the turning point. All sides made their own political calculus. President Robert Mugabe and ZANU-PF knew that their regime had lost international, regional and, most of all, national legitimacy after the 2008 elections. The economic and social meltdown would only accelerate unless they started political reforms; MDC leader Tsvangirai faced a stark choice between using the opposition’s victory in the parliamentary elections as a bargaining chip to open power-sharing talks or abandoning the MDC’s stance as a constitutional organisation and starting a guerrilla struggle.

Three months after the second round of presidential elections and amid continuing political violence, MDC and ZANU-PF signed a memorandum of understanding. That was the start of the long road to the launching of a power-sharing government on 5 February, which divides the posts and responsibilities between President Mugabe, Prime Minister Tsvangirai and deputy prime minister Arthur Mutambara, with his own minority faction of the MDC. All sides approached the negotiations with misgivings, but most now accept that there is no turning back – even if there is still fierce debate about the best way forward.

The three members of the Joint Implementation and Monitoring Committee which assesses the government’s progress– Innocent Chagonda, an eminent human rights lawyer and Tsvangirai’s advisor; Welshman Ncube, an academic lawyer and minister of industry and commerce; and Patrick Chinamasa, justice minister and leading ZANU-PF member – insist the government is working no matter how heated the discussions get.

“This year we have reached the point where both sides see a return to the old situation as unworkable,” explained Chagonda. “ZANU-PF would not be able to deal with the economic consequences and the MDC sees the opportunity for a real political transition now. There is now a sense of hope that this will work.

“?That is an important assessment coming from someone whose job it is to resolve the disputes arising in the power-sharing regime. Although positive about the prospects, Chagonda is realistic about the difficulties: in May, the MDC called on the Southern African Development Community (SADC) to mediate in a dispute with ZANU-PF over ministerial portfolios and responsibilities. “Resolving differences through a constitutional framework is the key point,” Chagonda said. Several other political quarrels haunt the government, such as the continuing role of ZANU-PF stalwarts like Reserve Bank governor Gideon Gono or attorney general Johannes Tomana. On 13 July, the first sitting of the “all stakeholders” constitutional conference broke up with open clashes between ZANU-PF and MDC members.

There is a clear division between ZANU-PF and the MDC at the constitutional talks: Mugabe is pushing for the ‘Kariba draft’ which was hammered out at a closed meeting two years ago between ZANU-PF and MDC in the expectation of imminent elections. Kariba leaves most of the powers to the president, does not limit party or presidential patronage and makes no provision for independent electoral and judicial commissions. Both wings of the MDC reject it but still want to push a constitution through to speed up the holding of elections.

There they differ with Lovemore Madhuku and the National Constitutional Assembly (NCA), who are insisting that the constitutional conference should start immediately to consult Zimbabweans before writing a first draft. Any division between NCA and MDC members will help ZANU-PF prolong the negotiations and cloud the central issues of accountability.

Progress on constitution-making is critical for other political projects: plans for a truth and reconciliation commission, strengthening of the judicial system and the restoration of civil liberties. There is also a long list of economic reforms awaiting implementation following finance minister Tendai Biti’s launching of the Short-Term Emergency Recovery Programme on 19 May. Alongside the dollarisation of the economy, Biti abolished the requirements on Zimbabwean companies to surrender their foreign exchange to the Reserve Bank. Essentially that restricts governor Gono’s role to the core business of supervising banks.

The pace of Biti’s reforms is impressive: the recovery plan was put together in four days, and a revised plan was ready a month later. By the end of March, treasury officials, led by Biti and minister for economic development Elton Mangoma, had put together a $8.5bn economic rescue plan to be presented to SADC. Following SADC’s endorsement of the plan, South Africa and Botswana extended some $200m in credit lines to support the plan, while other government officials have tried to draw in more international support. Part of Biti’s fund-raising efforts will involve the sale of state enterprises, about which both factions are adopting a pragmatic approach: “We would rather own 10% of an elephant than 100% of a rat,” said Arthur Mutambara, who is playing a leading role in the restructuring of public sector companies, having drawn up a list of the businesses due to be restructured. The recent budget is slightly larger at $1.22bn, financed by aid and a 3% tax on gold miners.

A gold-plated future?

Mining executives such as Kaala Mpinga of Mwana Africa and Roy Pitchford of Central African Gold enthused about the new environment at a mining conference focusing on Zimbabwe in London in June. “Risk is in the eye of the beholder,” said Mpinga, arguing that Zimbabwe’s overall climate was now extremely favourable.

The forex reforms, allowing companies to retain all their dollar earnings had hugely boosted local business said Pitchford: “We are now getting full value for the gold – we can sell our gold where we like and we don’t have to wait for Reserve Bank approval to bring in new equipment.”?

For now, there is an uneasy consensus – among businessmen and politicians – that power sharing is the best way forward, but there are plenty of hurdles before the economy begins to stabilise and the parties can agree the rules for fresh elections. Packing the reforms into the next 18 months is the formal timetable and looks increasingly ambitious. However, many on both sides share Innocent Chagonda’s hopeful view: “the longer the accord lasts, the stronger it will get.”

Understand Africa's tomorrow... today

We believe that Africa is poorly represented, and badly under-estimated. Beyond the vast opportunity manifest in African markets, we highlight people who make a difference; leaders turning the tide, youth driving change, and an indefatigable business community. That is what we believe will change the continent, and that is what we report on. With hard-hitting investigations, innovative analysis and deep dives into countries and sectors, The Africa Report delivers the insight you need.

View subscription options