COMPANIES are anticipating and adding up renewed and increased political uncertainty onto Zimbabwe’s risk profile ahead of by-elections in March in the aftermath of the violence and chaos that rocked internal polls within President Emerson Mnangagwa’s Zanu-PF party this month.
The chaotic nature of internal elections in Zanu-PF in the past week reportedly resulted in the firing of a cabinet minister and two other senior officials.
Violence marred the Zanu-PF district and provincial elections and businesses and companies see this as a precursor to greater political agitation when Zimbabwe holds by-elections in March, culminating in national elections next year. Mnangagwa will square off with Nelson Chamisa, leader of the splinter opposition MDC Alliance formerly fronted by the late Morgan Tsvangirai.
“The quarter will witness increased political activity related to the by-elections scheduled for March 2022,” Alex Makamure, company secretary for soft drinks and alcoholic beverages maker, Delta Corporation, said this week.
Analysts at Oxford Economics Africa say the sacking of Owen Ncube, the state security minister, by Mnangagwa over irregularities in the ruling party’s internal elections, signals “infighting” which gives a “hint at discord with his (Mnangagwa) deputy, Constantino Chiwenga, and unhappiness – in some quarters – over his 2023 re-election” bid.
Chiwenga supported Mnangagwa’s ascension to power after a military coup in November 2017 and has publicly pledged allegiance to the Zimbabwean leader although there are reports that alleged bickering between the two could stoke up tensions ahead of next year’s polls.
Fadzai Mahere, the spokesperson for the Nelson Chamisa led MDC Alliance opposition, said at the core of Zimbabwe’s political and economic crisis was a “cycle of disputed elections” often marred by violence over the past years.
Zimbabwe has performed poorly in terms of foreign direct investment as international investors grew apprehensive over the country’s failure to stem political violence, rights abuses and corruption. Analysts expect investment flows to remain subdued until after next year’s elections.
“This has led to the people being governed by rulers they have not chosen. We face an illegitimacy crisis; 49 percent of Zimbabweans are suffering from extreme poverty,” Mahere said.
The renewed political risks are a further headwind to Zimbabwe’s economy in which companies and businesses are suffering poor access to foreign currency amid low investment flows. The chamber of mines of Zimbabwe has already said that there will be no new investment into the country’s crucial mining industry.
According to economist Davison Vandira, the Zimbabwe dollar – which has been in a tailspin – has “retreated 4 points from last auction price of 108.66 to 112.82 (at the opening auction for 2022 on Tuesday) per every one US dollar”.
Some business leaders and economists say Zimbabwe’s central bank is tightly controlling the exchange rate, resulting in the local unit trailing the parallel market rate which is trading at 1:200.
“This is what happens if you control any particular market for political reasons,” said an economist with a local bank in which the government has interests.
“The central bank and treasury are controlling the exchange rate as a political means to shield the local currency for political reasons because once the rate is freely floated, it will lead to price increases and that has political ramifications for Mnangagwa’s ruling party at a time elections are just around the corner.”