Zimbabwe: A Military Transition to Economic Reform?
POLITICAL REFORM OR MORE OF THE SAME?
Mugabe’s removal and replacement has been greeted by mixed degrees of optimism. To many, particularly in Zimbabwe, the transition represents an opportunity to move beyond decades of political mismanagement. Mnangagwa’s inauguration speech looked towards Zimbabwe’s “new and unfolding democracy”, and excitement grew around the appointment of a new cabinet, which enthusiastic onlookers hoped would include technocrats and members of the opposition. However, enthusiasm was dampened on 30 November, with the unveiling of a cabinet dominated by ZANU-PF veterans; new appointments included the military leaders behind the de facto “coup”. Though a small reshuffle two days later represented some concession to public criticism, most key controversial appointees maintained their positions. The selections serve as a reminder that November’s transition originated from the decision of a military-backed ZANU-PF faction to end a long-standing struggle over Mugabe’s succession, not from the popular will or an opposition political party. Substantial political reform by a government led by ZANU-PF’s political veterans is unlikely in the short term. Mnangagwa’s government will prioritise the consolidation of its position and a return to stability. Despite attempts in August 2017 to form an opposition grand coalition, there is a low likelihood of any coalition forming and gathering sufficient cohesion and momentum to challenge ZANU-PF before a general election scheduled for mid-2018.
Though a small reshuffle two days later represented some concession to public criticism, most key controversial appointees maintained their positions.
A NEW ECONOMIC DIRECTION?
Optimism is more justified for Zimbabwe’s economy and business environment, which are currently limited by serious structural challenges. Zimbabwe has a spiralling deficit problem: the World Bank estimates that the public sector wage bill stands at 22-percent of GDP, and an enormous 82-percent of government expenditure. Dramatic reductions in unsustainable public spending are essential for Zimbabwe. Mnangagwa’s reduction of the number of cabinet ministers from approximately 30 to 22 could be a symbol of impending public expenditure slashes. Mnangagwa’s key focus over the next 12 months will be settling a deal with the International Monetary Fund: an IMF delegation travelled to Harare in early December to commence negotiations. Zimbabwe has been unable to borrow internationally since it defaulted in 1999, and still owes a reported USD 1.8 billion to the World Bank, African Development Bank and European Investment Bank. The new Zimbabwean President must come to an agreement to start servicing these outstanding debts before the IMF will consider lending. These negotiations will represent the start of Zimbabwe’s re-engagement with the international financial community and will likely be assisted in this by the UK and by China, both of whom have a stake in the normalisation of Zimbabwe’s international relations. Rory Stewart, UK Minister of State for Africa, has already visited Harare post-Mugabe, and Boris Johnson, UK Foreign Secretary, has said that the UK will consider providing Zimbabwe with bridging loans to aid the servicing of its debts, contingent upon unspecified levels of “democratic progress”. The implementation of substantial structural economic reform will also form a necessary precondition for IMF lending. Mnangagwa and his Minister of Finance, Patrick Chinamasa, understand the importance of implementing a meaningful reform program, both in order to ease the country’s re-engagement with the international financial community and to solidify Mnangagwa’s position ahead of elections next year. Though the initial steps towards many key reforms were in fact already underway in the final years of Mugabe’s government, implementation will be significantly easier following the shift of power in favour of a single ZANU-PF faction. Anticipated impending policy reforms include changes to Zimbabwe’s controversial indigenisation policies, which require majority ownership of companies by black Zimbabweans. This would represent a substantial easing of Zimbabwe’s business environment for international investors. The beginnings of a policy shift were announced last year by Mugabe, but Chinamasa, in one of his first interviews as newly appointed Minister of Finance, explicitly stated that the policies will be reviewed.