A guide to 2018: Zimbabwe’s turning point?

MDC President Morgan Tsvangirai and President Emmerson Mnangagwa

HARARE,– Trying to predict events in Zimbabwe is worthless when even the likes of TB Joshua and Shepherd Bushiri can actually credibly claim to have got some predictions correct in 2017.

If you had predicted that former president Robert Mugabe’s 37-year rule would end in 2017, with army tanks on the streets and him being held captive in his mansion, you would have been called a charlatan. Which, perhaps, it’s fitting that it is TB Joshua who can now gloat that he had foreseen a “Southern African leader” being detained.

For the rest of us, especially those in Zimbabwe, prophecy is dangerous game. Events in 2017 confounded critics. Few analysts can credibly claim they saw it coming.

However, instead of reading tea leaves and divining the spirt world, the best we can do is look at what is happening now and offer scenarios of what will likely happen going forward. Already, the political environment have seen some drama in the past few weeks. It will be a year unlike we’ve seen before.

The team at The Source has put together this guide on how key economic and political factors are likely to pan out this year.

Will the 2018 election be a turning point?

The term “turning point” is often used loosely each time an election comes. But 2018 does seem to fit that description.

For the first time in close to two decades, we are likely to have a ballot without either Mugabe or his long-time rival Morgan Tsvangirai on it. Both ZANU-PF and the opposition face the battle of selling their candidates internally, while also selling them to the broader electorate.

It has always been Mugabe versus Tsvangirai since the turn of the millennium. Now we must imagine an election without the two old brawlers.

At ZANU-PF, there will be no campaign speeches by Mugabe, ranting at the meddling British and other imperialists. For the main opposition, a new campaign strategy will have to devised to target this new rival whose message, and campaign methods, may be different to Mugabe’s.

The economy, as always, will top the campaign agenda.

There will be token electoral reforms, but nowhere near where the opposition wants. Too much reform would spell disaster for ZANU-PF, and the military is not yet ready to lose elections when they have just arrived at the feeding trough.

What does Mnangagwa need to do?

He needs a few quick wins on the economy. The economy cannot be turned around in just months, but he will be desperate for something to show as evidence of progress.

The corruption fight led by ZACC has so far descended into a farce, hurting the credibility of Mnangagwa’s anti-graft promises. His March deadline for people to repatriate “externalised” money will provide some political theatre. There will be high profile arrests, possibly even of members of the last ruling family. This can either hurt or damage Mnangagwa.

He is desperate for a passably credible election win, but violence and intimidation are such a long and cherished tradition in ZANU-PF that the party actually has to work extra hard to convince supporters that they can win an election without beating people up. A big job for Mnangagwa and his new commissar, the Retired Major General Engelbert Rugeje.

A new rift within the ruling party is not too farfetched. There are fault lines that they refuse to speak of; between the powerful securocrats and the politicians, and between that old guard and impatient younger members shut out of leadership positions last December.

The campaign will not be easy. Mugabe’s loyalists will launch some form of resistance campaign, especially in Mashonaland provinces. Mnangagwa will have to introduce himself to many among ZANU-PF’s rural support base, long used to Mugabe. Even in his home province of the Midlands, many still despise Mnangagwa over the alleged involvement of some of his lieutenants in violent gold dealings there.

Opposition in the opposition?

But the prospects for the opposition aren’t any better. The main opposition, the MDC-T, is now facing the prospect of heading into an election without Morgan Tsvangirai as its leader. He has hinted at an “imminent” retirement.

A heroic and much-loved fighter who stayed too long, Tsvangirai would leave his party right where ZANU-PF was not long ago; a party divided by its leader, but also only united by him. Divided if he stays, divided if he goes.

Following last Friday’s surprise visit by Mnangagwa, from which images of a jovial yet frail Tsvangirai emerged, the opposition’s own fault lines have been laid bare. Despite George Charamba and other officials saying the visit had been initiated by Tsvangirai, the MDC-T leader’s loyalists accused his deputy Nelson Chamisa of somehow engineering the visit to expose Tsvangirai’s state.

They are joined by a battalion of analysts, who have conjured up images of Mnangagwa rubbing his hands and doing that evil cartoon villain laugh, cunningly plotting to visit what they seem to suggest is a naïve Tsvangirai, to undermine his standing as a viable candidate.

And just as we saw with ZANU-PF, senior MDC-T leaders are out there taking barely disguised shots at each other online.

Should Tsvangirai step down, as is now likely, a special congress of the party will pick a new party leader.

Chamisa is a popular choice among the commentariat and the chattering classes, who say he may energise apathetic young voters. But while he is popular outside the party, Chamisa, nicknamed “Cobra”, is viewed with suspicion by some inside the MDC-T. He may struggle to win internal polls without Tsvangirai’s backing. Some have advised Chamisa, who turns 40 in February, to stand down now, bide his time, and wait for the next election. But his supporters see him as the hope of many young voters.

Other likely contenders are VPs Thokozani Khupe and Elias Mudzuri, and secretary general Douglas Mwonzora.

Whoever wins would face the immediate task of pulling together rival leaders, both in the MDC-T and in the alliance, while at the same time running a national campaign against an opponent that they are seemingly yet to figure out.

As for the alliance itself, we see further division in the shaky, ego-laden grouping over campaign strategy, candidate selection and post-election positions.

For independents, it will be a tough ride as we see voters once again coalescing around the two main parties once the election campaigns heat up. Even with Mugabe and Tsvangirai out, it will not quite be the end of “big man” politics yet, and definitely not the end of “party first” voting.

No miracle economic turnaround

Just two days after the army action against Mugabe last November, a report appeared on the Dow Jones news wire: “Within 24 hours of the military seizing control in Harare, investment firms say their phones have been ringing with client inquiries about the chances of a turnaround in Zimbabwe from decades of decline and bouts of financial chaos under Mugabe”.

The name “Mugabe” was the biggest hurdle to Zimbabwe’s economic recovery, but no instant turnaround is possible. Both Mnangagwa’s supporters and his critics are competing in this delusion; the latter are fast to point to any economic trouble as a sign of his failure, while the former overplay any bit of good news as an earthmoving triumph of the “new dispensation.”

Zimbabweans are demanding immediate results. After decades of crisis, this is an understandable demand. The problem is Mnangagwa doesn’t have a magic wand to make the impact of close to four decades of economic blundering disappear in one flick of a wrist.

Unlike in 2009, when inflation disappeared virtually overnight because Zimbabwe switched to the US dollar, there are no instant results this time round. And unlike the unity government of 2009, Mnangagwa does not have the high commodity prices that cushioned the economy then.

Commodities have had a strong start but the outlook for the year is mixed, with Goldman, for instance, even predicting gold prices to fall to $1,200 this year. The World Bank sees metal prices down 0.7 percent this year but platinum up four percent. Minerals account for over half of Zimbabwe’s export earnings.

It would take a real shock to the world economy for us to see the spike in prices that Zimbabwean producers really need. Something like North Korea’s Kim Jong-Un sending a stray nuke or two across the ocean.

Just to get new financial support, Mnangagwa must clear $1.8 billion of arrears with multilateral lenders such as the World Bank. GDP has halved since 2000, and only some unprecedented act of economic wizardry can create millions of jobs in months.

“These things don’t happen overnight, and they have to really show they will implement what they say they will do. That is key,” according to Christian Beddes, the Zimbabwe representative for the IMF.

Political parties and their sympathisers like to imagine that they can cause a flood of foreign investment once in power. But that’s peddling false hopes. Zimbabwe has to compete with many other more attractive and less brand-damaged markets, and it will take a while, and lots of work, to push Zimbabwe to the front of the queue.

“There are 200 countries to risk my money in right now. And for now, Zimbabwe still has a lot of proving to do,” says Peter Major, director of mining at Cadiz Corporate Solutions.

Mnangagwa will be tested. The rains have been poor, and this will put pressure on the Government, especially in an election year. This may throw his widely praised spending cuts off course.

He opposes price controls, but the temptation to go that route will grow for Mnangagwa as price hikes continue. Inflation is officially projected at just over 3 percent in 2018, but it is more realistically going to rise much quicker given the trend of price hikes and the new and real threat of poor harvests.

Economy: Slow progress, but progress

There is one thing that the economy has now, that it didn’t have a year ago; optimism, even if it is of the cautious kind. A survey of Zimbabwe’s mining executives, after the Mnangagwa takeover, showed that the Business Confidence Index moved from minus 6.6 to plus 21.9, meaning they have moved from pessimism last year to optimism.

This week, a survey by the Investment Professionals Association of Zimbabwe, a grouping of market analysts, showed 80% of investment managers believe the economy will perform better than in 2017.

Key mining investors such as Vast Resources have expressed confidence and ramped up investment plans. The new order “heralds more favourable prospects for the Group’s Zimbabwean assets”, according to group chairman Brian Moritz.

Zimbabwe is the world’s fifth largest producer of lithium, in demand for use in rechargeable batteries. Prospect Resources is now considering a new chemical plant in Zimbabwe, and has recently discovered new deposits.

A mining investment conference in Harare this February, to be attended by 300 investors according to organisers, will be one to watch as it will gauge global investor appetite for Zimbabwe’s resource assets, especially after proposed changes to the indigenisation law.

This is not something that Mnangagwa’s critics want to hear, but it’s true. Investors are finally giving Zimbabwe a second look, albeit with a cautious side eye.

Hasnain Malik, head of equity research at Exotix Capital in Dubai says “many of the ingredients of a great frontier market are in place in Zimbabwe.” There is a lot of work to be done yet, Malik says, but “the starting point for investor expectations is very low”. This low expectation need not be a bad thing; we can do better by setting even a low bar. We had no bar at all.

“I have done a few road shows in Dubai. For the first time in years, investors are interested in hearing Zimbabwe’s story. This is goodwill that Mnangagwa should build on,” a Zimbabwean investment manager, also in Dubai, told The Source on Tuesday.

It’s up to Mnangagwa to either grab or squander that small window of opportunity. The many long hours at work that his propagandists talk about will be a waste if he cannot get results from his Cabinet, which he stuffed with many proven failures. How he reacts to ministers’ 100-day plans will be an item on his own report card.

Still, with Zimbabwe getting a leader who at least stays awake during the day and appears to know how an economy works, the economy can’t surely be worse than it was. There will be no investment flood, but we will see some new projects from existing firms and new ones, especially in resources, retail and agro-processing.

Growth will be slower than what we need; certainly slower than Patrick Chinamasa’s 4.5 percent 2018 projection. But Zimbabwe may avoid recession, which on its own would be good progress.

Whichever way you look, 2018 will be a different year to any we have seen before. And it doesn’t take a prophet to see this. – Source

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