Mnangagwa’s first 50 days: Zimbabwe economy slides into chaos

President Emmerson Mnangagwa, pictured, who replaced long-time ruler Robert Mugabe in July ©Getty Images

PRESIDENT Emmerson Mnangagwa this week completed 50 days in office, but in that short stint, the negatives have so far outweighed the positives amid indications he faces a herculean task in his bid to revive the comatose economy.
Mnangagwa, who won the July 30 election by a wafer-thin 50,6%, was inaugurated on August 26 after a Constitutional Court challenge by his main rival Nelson Chamisa seeking to nullify the results was dismissed.

By Kudzai Kuwaza

Mnangagwa has pledged to revive the shaky economy, re-engage the international community and bring Zimbabwe out of international isolation, as part of a new dispensation which has promised to respect constitutionalism, human rights and open the country for business.

Mnangagwa, however, had the worst possible start as he entered the eye of a storm, even before the Zimbabwe Electoral Commission (Zec) had declared him a winner. He faced global condemnation after at least seven unarmed civilians were shot — the majority in the back — by soldiers on the streets of Harare on August 1.

The soldiers were deployed to quell a violent demonstration over poll irregularities.

Such was the outrage that Mnangagwa set up a commission of inquiry into the incident chaired by former South African president Kgalema Motlanthe.

The arrest of MDC Alliance principal Tendai Biti, who had sought asylum in vain in Zambia, on allegations of inciting violence, would compound Mnangagwa’s headache amid strident criticism of the state’s heavy handedness.

His attempt to douse the flames by tweeting that Biti was released on bail following his intervention only added to the fire, with accusations that Mnangagwa was blatantly meddling with the judiciary.

Mnangagwa would soon have his hands full as a cholera epidemic infected thousands and killed at least 54.

His appointment of cabinet elicited mixed reactions. Mnangagwa was praised for trimming his cabinet which was a departure from the Mugabe era where even ministers with no portfolio were appointed in bloated cabinets.

He was also praised for appointing renowned economist Mthuli Ncube as Finance minister and decorated Olympian Kirsty Coventry as Sports minister, generating optimism that his government would finally deliver after years of dismal failure by previous administrations.

Questions have, however, swirled over some of his appointments, particularly the appointment of Obadiah Moyo as Health minister. Investigations by the Zimbabwe Independent have shown that Moyo is a medical impostor, who is not a registered practitioner with the Medical Dental Practitioners Council of Zimbabwe (MDPCZ).

However, the deepening economic crisis has proved to be probably Mnangagwa’s biggest headache.

Despite promising to revive the economy, the crisis has worsened since his inauguration. The introduction of a 2% tax on all electronic transfers as well as the announcement by Reserve Bank of Zimbabwe governor John Mangudya to separate Real-Time Gross Settlement accounts from US dollar accounts has accelerated the economic chaos.

Prices of goods and services have skyrocketed drastically, reducing the disposable incomes of ordinary Zimbabweans as the parallel market rates has risen sharply.

There has also been a shortage of basic commodities such as cooking oil and sugar as a result of panic buying as well as an attempt by a cross section of Zimbabweans to preserve value given that erosion of the bond notes and RTGS value on the black market.

The shortage of foreign currency has added to the carnage on the market.

The health sector, still reeling from the devastating effects of the cholera epidemic, has been hard hit by the acute shortage of drugs. Major pharmaceutical wholesalers in the country suspended operations indefinitely recently, after running out of stocks owing to a crippling foreign currency deficit.

The crisis has also affected drug manufacturers, who import most of their raw materials. The available drugs are being sold in foreign currency which most Zimbabweans have no access to, putting the lives of millions at risk.
The shortage of foreign currency has resulted in long fuel queues countrywide.

Efforts by Mnangagwa to get a US$2 billion loan to ease the crippling liquidity crisis have been futile. Among those who have spurned his pleas for a major bailout is Zimbabwe’s close ally China. Mnangagwa’s visit to the Asian giant last month to negotiate for the bailout hit a brick wall although the Chinese kept doors of negotiation open and pledged to continue funding infrastructural projects.

Ncube has revealed that government is now seeking debt forgiveness under the Highly-Indebted Poor Countries programme as one of the measures to address the debt crisis. This was an option which Zanu PF baulked at when it was proposed during the period of the inclusive government from 2009 to 2013.

However, it has not been all gloom and doom. Ncube’s revelations that they will introduce measures to curtail government expenditure, through the curbing of Treasury Bills, have been positive.

They have been largely responsible for increasing domestic debt from US$275,8 million in 2012 to the current level of US$9,5 billion. The measures are part of government’s Transitional Stabilisation Programme blueprint.

Business consultant Simon Kayereka said the major weakness during Mnangagwa’s reign thus far has been the failure to unpeg the bond note and combat corruption.

Economist Prosper Chitambara believes that Mnangagwa’s term of office so far has been a mixed bag.

“His term of office so far has been positive in that he has come up with a number of policies which include the Transitional Stabilisation Programme, but negative in that there has been no consultation with key stakeholders before introducing it. Most programmes have failed because of lack of ownership by stakeholders,” Chitambara said.

He added that although Mnangagwa had commendably trimmed the cabinet, he should not have appointed deputy ministers.

Chitambara said the introduction of the 2% tax has eroded confidence which is critical for the economic measures to succeed. – The Indepednent

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