Zimbabwe is suffering from capital flight, a liquidity crunch, regular power outages, falling commodity prices and other manifestations of an economic crisis.
But beyond these well-documented woes, there are several “mysteries” that throw up searching governance questions for the regime of Robert Mugabe, the 90-year-old president.
It’s a 15,000-word document setting out how the government will “prioritise its programmes… and address the country’s socio-economic challenges.” It’s one of the few substantial documents that analysts can get hold of to look for insights into an opaque administration’s intentions.
No, this is not China. It’s Zimbabwe, with this week’s publication of a document titled Zim Asset (Agenda for Sustainable Socio-Economic Transformation). So Robert Mugabe has also set out his stall for Zimbabwe’s next stage. What’s in it?
Despite a coalition government achieving some stability since 2009, the poor state of the economy is a pressing issue for voters and investors as Zimbabweans await the results of their first election since a disputed ballot five years ago, says the FT’s Southern Africa bureau chief Andrew England.
As Zimbabweans prepare to vote in Wednesday’s fiercely contested election, their neighbours in South Africa will be watching closely. Its outcome will set the scene for the development of trade and investment between the two countries.
Zimbabwean president Robert Mugabe’s plan to hold a general election by June 29, when the current parliament will be dissolved, looks increasingly like a pipe dream. Do the maths and you’ll see that it is impossible for the country to hold a vote before the end of July at the earliest, the country’s finance minister Tendai Biti said.
“It’s a processing issue which will determine the date of the election,” he told beyondbrics from the sidelines of a talk at Chatham House, the think tank. “It is not possible to have elections before at least the end of July”.
On its own, the overwhelming “Yes” vote in Zimbabwe’s referendum on a new constitution means little.
Indeed, it is no more than the first act of a drama that will unfold over the next few months as the country moves towards presidential and parliamentary elections that will determine whether the economy maintains its recovery momentum or slides back into political-driven stagnation.
Zimbabwe’s beleaguered indigenisation policy has been dealt several big blows in the last few days. Alleged corruption, arguments over deal fees, calls for a parliamentary probe – and to top it all, even president Robert Mugabe criticising the process.
The controversial black empowerment policy, which forces foreign firms to divest 51 per cent of equity to locals, is one of Mugabe and his party, Zanu-PF’s key strategies. But is it falling apart?
For years Zimbabwe politicians have been prone to extravagant forecasts of the country’s economic prospects, embellishing projections with references to vast unexploited mineral wealth, limitless agricultural potential and dazzling opportunities in tourism and manufacturing.
But on Thursday Finance Minister Tendai Biti injected a note of stark realism into his 2013 budget. He downgraded GDP growth estimates for 2012 from 9.4 per cent in his budget a year ago and 5.6 per cent in mid-year to just 4.4 per cent.
Zimbabwe hosted its inaugural diamond conference on Monday and Tuesday to promote the industry, but instead has become embroiled in fresh controversy around the country’s diamond sales and tax revenues.
There are conflicting reports around diamond sales. While the Zimbabwe Mining Development Corporation (ZMDC) and Ministry of Mines lament that sales are being hit by sanctions, critics argue that the companies are actually making huge sales but looting is rife.
Who knew insurance could be so toxic? Two British insurers have pulled out of an agreement to offer cover against political violence in Zimbabwe, in a curious turn of events.
Earlier this year, insurance broker RK Harrison Group approached Harare-based Champions Insurance about offering cover from Lloyd’s of London against political violence. In October, Champions said that a deal had been agreed for an undisclosed amount. But the plan is now off. What happened?
Since dollarisation in 2009, policymakers in Zimbabwe have failed to solve the problems created by weak banks in a bankrupt econokmy with an overcrowded financial sector. Policy – driven by politicians not technocrats – has been decidedly populist.
It is familiar bank-bashing (over excessive charges, punitive interest rates and a reluctance to lend to SMEs) and politicians demanding rescue packages for banks that get into trouble. Four banks including the country’s biggest have turned to the government for help in the last two years. Now there’s a new plan to set up a fund for bad loans with a Dubai investment company’s help.
The Zimbabwe government’s latest threat to foreign business – this time foreign banks – is seen in Harare as bluster rather than substance. The instruction by Saviour Kasukuwere, minister for indigenisation (pictured), to a handful of foreign-owned banks to reduce their ownership to a maximum of 49 per cent by July 2013 has more to do with his political party’s dismal electoral prospects than serious restructuring of Zimbabwe’s financial system.
For two years Robert Mugabe’s Zanu-PF has been ratcheting up the pressure on foreign-owned firms demanding that they dispose of a minimum of 51 per cent of their shares to indigenous Zimbabweans. This week’s agreement (in principle) for the localisation of majority ownership of Zimbabwe’s largest exporter Zimplats has the potential to be a gamechanger, economically and politically.
With elections due in the next 18 months, the Zanu-PF will be keen to push on with the programme. So which companies are next in line?