Germany hesitant to re-start cooperation with Mnangagwa a year after Mugabe ouster

Emmerson Mnangagwa

When the military axed Zimbabwe’s long-time ruler Robert Mugabe last year, Germany’s political scene breathed a short sigh of relief. But one year on, Berlin seems to have lost hope that Mugabe’s exit has put the country back on the road to democracy after decades of authoritarian rule.

“We were hoping that President Mnangagwa would introduce major political and economic reforms,” a diplomatic source in Berlin told DW. “So far we are seeing little progress.”

In the eyes of western observers, Mnangagwa’s government has so far failed to reform the judicial system or the country’s security forces, both key pillars of Mugabe’s authoritarian rule. Critics say that oppression of opposition politicians, journalists and civil society organizations continues. Controversial presidential elections in late July marred by fraud claims and violent protests also did little to increase German confidence. Security forceskilled six people in protestsagainst delays in election results in early August.

A woman stands in front of empty shelves in a supermarket (picture alliance/AP Photo/T. Mukwazhi)Empty shelves have once again become a reality in Zimbabwean supermarkets

Positive signals, little action

“[President Mnangagwa’s] government has sent a number of positive signals and has indicated that it’s willing to implement political and economic reforms, but in reality, little has happened. But I think that’s what the international partners are waiting for,” David Mbae, Zimbabwe Country Director of the Konrad-Adenauer-Stiftung, a German political foundation with close connections to Germany’s ruling CDU party, told DW.

Zimbabwe’s new government on the other hand has repeatedly tried to woo both private investors and western nations to make a come-back. Mnangagwa has repeatedly touted his “Zimbabwe is open for business” slogan and publicly promised to restore relations with western countries such as Germany or Britain. Rhetorically, at least, that’s a noticeable departure from Mugabe’s “look east” policy. Zimbabwe’s long-time ruler had sought closer ties with China in recent years, after relations with western parties soured in the early 2000s.

Germany had suspended all bilateral development assistance in 2002, following an ever authoritarian grip on power by Mugabe, which included the seizure of white-owned farms and increased attacks on opposition politicians, civil society and independent media houses. Berlin has since reduced support to humanitarian aid and assistance to various civil society organizations and multinational funds.

Hard times in Harare

That’s a chapter that Zimbabwe’s new government would like to close. “We have agreed that we should intensify re-engagement,” then finance minister Patrick Chinamasa told reporters after a visit by German development minister Gerd Müller to Harare in late August. Chinamasa was replaced as finance minister by Mthuli Ncube in September 2018. “We also discussed the need for Zimbabwe to create jobs. In other words, we want to expand and incorporate vocational training colleges. We also discussed lines of credit,” Chinamasa said.

Zimbabwe is in desperate need of financial assistance, the Konrad Adenauer Foundation’s David Mbae told DW. “The economic situation is dire. Inflation has risen drastically while salaries and wages have stagnated. The price of basic commodities has risen dramatically. There were shortages with bread supply, cooking oil, people had to sometimes queue for hours to get petrol. For poor Zimbabweans the situation has become extremely dire,” he told DW.

Arrears of more than 11 billion US Dollars

But diplomatic sources in Berlin told DW that conditions for credit lines have not yet been met. Germany insists on first getting concrete proposals from the Mnangagwa government for political and economic reform. Zimbabwe’s arrears currently amount to more than $11 billion (€9.6 billion). Restoring bilateral development assistance is also not on the cards for now.

A delegation led by representatives from Germany’s Ministry for Economic Cooperation and Development is expected in Harare for talks later this month. But a ministry spokeswoman told DW that the ministry was not planning to make any commitments for this year or the next at this stage. “The implementation of political and economic reforms by the Zimbabwean government is a prerequisite for the resumption of bilateral development cooperation,” she said.

Germany’s political opposition is calling for more international pressure on the government of President Mnangagwa. “I do not see genuine political change with regards to the development of democratic structures. There are still many questions remaining with regards to human rights,” Uwe Kekeritz, the opposition Green party’s parliamentary spokesman for development cooperation told DW.

“Development assistance should be resumed, but in close cooperation with the civil society, as far away from the government as possible,” Mr. Kekeritz said.

Zimbabwe’s economy is in dire straits. President Emmerson Mnangagwa has promised to stabilize the economy ‘soon’ but not everyone is optimistic.

Inflation and prices are on the rise, there is a shortage of foreign exchange and supplies of fuel, food and pharmaceuticals are drying up. The opposition is calling for a transitional government to resolve the worsening economic and political crisis hitting Zimbabwe. President Emmerson Mnangagwa is increasingly under pressure to act swiftly.

On Monday, October 29, 2018, Mnangagwa met with the country’s business community. The president assured them that he was “working day and night to stabilize the economy.” Signs in Zimbabwe are pointing to a possible rerun of the massive crisis that engulfed the country about a decade ago. Among them is a sudden surge of the country’s stock exchange’s industrial index in October, which now stands at the relatively high market valuation of $22 billion (€19.3 billion), a sudden gain of more than 50 percent in a matter of days.

Betting on the stock market

According to the market’s spokesperson Tapiwa Bepe, the surge is a consequence of the country’s profound crisis. “The political and economic environment is volatile. The heightened activity on the stock market was therefore investors scrambling to take positions in real assets by disposing of cash and bank balances,” Bepe told DW. Foreign investors and national investors believe that stocks and shares offer more security.

Zimbabwe's President Emmerson Mnangagwa President Emmerson Mnangagwa is increasingly under pressure to improve the ecnomy

But brokers like Itai Chirume say it has become extremely difficult to take out money locked in electronic bank balances from the stock exchange. “What we have seen is that foreigners have been taking their money out through the medium of fungible shares,” investing them in foreign companies, he said. That way the money is leaving the country through legal means.

Mnangagwa promises to act

The situation was acknowledged by President Mnangagwa: “The fear to lose wealth and savings as happened during the 2008 economic meltdown is current but unnecessary. I greatly appreciate and understand all your concerns and anxieties,” he told the business community.

The 76-year-old leader said that Zimbabwe would continue using the multi-currency system which the country adopted in 2009 after abandoning its worthless currency. But the hard currencies – mainly the US dollar and South African rand -, making up the system together with government issued so called bond notes, have been hard to find lately on the formal market. And many in Zimbabwe believe that the time has come to scrap bond notes altogether. Economist John Robertson explains why it is a mistake not to: “The existence of the bond notes caused the US dollar to go out of circulation.” An end to the bond notes would bring back in the US dollar, which would be good for the economy, Robertson told DW.

Blaming the private sector for the shortages

Cars lining up at a fuel station in the capital HarareThe shortage of fuel is only one of many aspects of the Zimbabwean economic crisis

Bond notes, a currency Zimbabwe started printing about two years ago to ease cash shortages and help fight hyperinflation, have been losing value lately. They were supposed to trade at par with the US dollar, but are now almost four against the greenback.

Some aspects of Monday’s meeting displeased the business community. Sifelani Jabangwe, president of the Confederation of Zimbabwe Industries, was upset by Mnangagwa’s claims that manufacturers are hoarding stock so as to be able to increase prices. “If anyone is holding back his stock, it is probably because they are waiting to understand the direction (of the economy),” he told DW. Jabangwe went on to explain that many companies have run out of raw materials themselves. “And the panic buying did not affect only customers, it also affected industrialists. Just recently, there was panic buying even of cars.” – Source: DW