Africa Confidential
In an extended mea culpa on behalf of President Emmerson
Mnangagwa's government, Finance Minister Mthuli Ncube has written to the
international financial institutions (IFIs) in Washington saying it takes
'responsibility for the recent policy missteps during late 2019' which have led
to inflation currently running at an annual rate of over 500% year.
Ncube then writes that the government and economy are near
to collapse, with the coronavirus pandemic dealing the final blow. The letter,
dated 2 April, came a few days after reports of a coup plot against Mnangagwa
had been circulating. A security source said the authorities had delayed the
lockdown in Harare for fear that dissident officers might exploit conditions to
move against the president and his circle.
In the letter, a copy of which has been seen by Africa
Confidential, the usually upbeat Ncube paints a relentlessly grim picture.
'Zimbabwe's economy could contract by 15-20% during 2020 – with very serious
social consequences. Already 8.5 million Zimbabweans (half the population) are
food insecure,'
he writes.
So bad is the situation, says Ncube, that it could cause an
implosion of the state and threaten security in neighbouring states. 'The
global pandemic will take a heavy toll on the health sector, with many lives
being lost and raise poverty to levels not seen in recent times, including
worsening food security. A domestic collapse also would have potentially
adverse regional effects, where spillovers are significant.'
Concerns in southern Africa about conditions in Zimbabwe
are deepening. They might explain a call by South Africa's President Cyril
Ramaphosa, at an African Union teleconference on 28 April, for Western states
and the IFIs to lift sanctions against the Mnangagwa government.
Strive's plan
On the previous day, Zimbabwean telecoms magnate Strive
Masiyiwa called for urgent aid for his country to fight the pandemic. His
Econet cellphone and money transfer companies have been a lifeline for many
Zimbabweans.
Masiyiwa said the World Bank, the IMF and other
multilateral institutions should create humanitarian trusts for Zimbabwe and
Sudan, both under United States sanctions, to be managed by third parties to
ensure a fair distribution of life-saving aid.
'For the avoidance of doubt; this is not an appeal for the
lifting of sanctions,' said Masiyiwa. 'I don't want to get into the issues around
how and why there are sanctions. Everyone knows I had to flee my country
because of persecution 20 years ago.'
The state media in Harare covers every donation from
business supporters of the ruling Zimbabwe African National Union – Patriotic
Front (ZANU-PF) to the government's coronavirus campaign but is more reticent
about contributions from non-partisan donors such as Masiyiwa's Higher Life
Foundation. Earlier this year, Higher Life paid health workers' salaries after
the government said it had exhausted the budget.
Ncube's letter is addressed to David Malpass, President of
the World Bank, Kristalina Georgieva, managing director of the International
Monetary Fund, and Akinwumi Adesina, President of the African Development Bank.
He asks them to support the rescheduling or cancellation of all Zimbabwe's
foreign bilateral debt arrears and help in clearing all its multilateral
arrears (AC Vol 60 No 6, Ncube wins foreign fans).
The government also needs $200 million, says Ncube, for
unplanned spending to fight the pandemic, referring to World Bank estimates
that the country's financing gap is nudging $1 billion for health, education,
food security and social protection.
Without those funds, Ncube says, the government will have
no choice but to revert to printing money, risking a return to hyperinflation
and the crash of the local currency.
In exchange for the Bank and the IMF agreeing to an
emergency debt rescheduling, the government promises a 'time-bound programme'
of economic, political and governance reforms. Ncube, who has been at odds with
Reserve Bank of Zimbabwe governor John Mangudya, pledges the government will
introduce a market-determined exchange rate and end what he calls the reserve
bank's 'quasi-fiscal operations' and its direct lending programme. It will also
include all state subsidies in the budget documents presented to parliament and
scrutinised by the Public Accounts Committee, he adds.
This, according to finance officials in Washington, is code
for saying conditions are so horrendous that Ncube has been the given the
political cover to promise a crackdown on grand corruption at the heart of the
government. They add that it is well-known among banks and business people as
well as foreign diplomats that RBZ subsidies to gold-mining companies have
directly benefited President Mnangagwa's inner circle.
This group and senior army officers have also benefited
from preferential access to foreign exchange and schemes that profit from
arbitrage between the official and parallel rates of the Zimbabwe dollar, the
officials add. Even if he wanted to, there is no way that Mangudya could have
stood up to those factions.
Promises
Ncube's letter also promises to 'limit the fiscal costs of
the financing of agriculture, ensure transparency, and resolve all the related
governance issues'. This would deal with another big leakage of state funds:
the financing with zero accountability of Mnangagwa's favoured Command
Agriculture scheme (AC Vol 60 No 18, Cash at the generals' command).
Apart from failing to boost productivity substantially –
due to poor distribution of seeds and fertiliser as much as the latest regional
drought – the Command Agriculture Programme has become a formidable source of
patronage for Mnangagwa's ally Kudakwashe Tagwirei, owner of the Sakunda group
of companies working with Swiss-based Trafigura to import fuel, and well as
running its own agricultural projects (AC Vol 60 No 23, Cashing in on the
crisis).
One of Zimbabwe's canniest operators, Tagwirei, who
financed ZANU-PF's election campaign in 2018, has evaded any attempt to limit
his sprawling empire, and maintains close ties to both Mnangagwa and
Vice-President General Constantino Chiwenga even though they are bitter rivals
(AC Vol 61 No 8, Rule by rivalry).
Against this, Ncube's promise of an 'ambitious
anti-corruption strategy' rings hollow to finance officials. Neither do they
take seriously his promises of political reform, most of whose elements have
been on the government's agenda for the past five years. Ncube's final pledge
to continue with 'engaging in National Dialogue' elicited the response of 'what
dialogue?' from an official in Washington.
We hear that neither the World Bank nor the IMF have
responded formally to Ncube's letter, nor do they intend to, despite him
following up with phone calls over the past week. 'Zimbabwe is in a political,
not an economic policy, crisis …without credible change on that level, nothing
else will move,' concluded the official.
Failing that, the country's best hope might be for an
international organisation to work with Masiyiwa's plan for an independent
humanitarian trust to distribute food and medicine to the most threatened
people. Africa Confidential
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