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Why Zimbabwe Is Not There Yet

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Despite the ample investment opportunities in Zimbabwe, post-election setbacks challenge its economic recovery

Zimbabwe’s long-delayed economic turnaround may have been further pushed out after the army violently crushed protests following the country’s first elections without Robert Mugabe’s name on the ballot box.

Investors sitting on the fence before the polls will most likely walk away while others may postpone any commitments until the resolution of the legal challenges launched by the opposition Movement for Democratic Change (MDC) Alliance, or take cue from international lenders, analysts say.

“It’s going to take years and not the months that we anticipated for the economic recovery,’’ says John Robertson, a Harare-based independent economist who has analyzed Zimbabwe’s economy since independence in 1980 when Mugabe first took power.

“It’s going to be very difficult to win any credibility after last week’s activities.’’

Zimbabwe’s first elections without Mugabe had raised hopes the country was on the verge of rebirth after the least violent campaigning in almost two decades. But those hopes were dashed days after the polls as Nelson Chamisa, leader of the MDC alleged “overwhelming’’ evidence of vote-rigging, and the military killed six people amid beatings in the MDC’s urban strongholds.

The Zimbabwe Electoral Commission said incumbent Emmerson Mnangagwa won 50.8% of the vote and more than three quarters of parliamentary seats while Chamisa received 44% support, a number the MDC has dismissed, and challenged at the Constitutional Court. The case, which delayed Mnangagwa’s inauguration, was still pending at the time of going to press.

Mnangagwa, who had vowed a free and credible poll, had hoped to use its outcome to campaign for international support to rescue an economy that has more than halved in the last two decades, leaving more than 90% of workers unemployed.

READ MORE: Who Will Zimbabwe Vote For?

“In the short-term, sentiment will be determined by the outcome of the MDC’s challenge of the election results,’’ says Neville Mandimika, an economist at Rand Merchant Bank in Johannesburg.

“If their application is backed by solid evidence of blatant rigging, then it is likely that regional partners and sources of capital will hold back capital while the stalemate gets resolved.’’

International acceptance is key to the country’s hopes of winning debt forgiveness or restructuring an external debt of $11.3 billion at the end of last year, more than 80% of the country’s GDP. Combined with the domestic debt, the country is in debt distress and the situation is unsustainable, according to the International Monetary Fund (IMF).

Support from the IMF and other donors is critical for any government to solve one of the country’s most immediate and intractable challenges; a liquidity shortage that has constrained economic activity and forces Zimbabweans to queue for hours for the few available US dollars. The country adopted the US currency in 2009 after its own dollar collapsed as hyperinflation reached a record 79.6 billion percent in November 2008.

“The proper reintroduction of the Zimbabwean dollar is on the agenda of the current government, but it recognizes that there are certain conditions that must be in place for this to happen,’’ Mandimika says.

“Chief among these is ensuring that there are sufficient FX reserves which would allow for the central bank to manage the volatility of the currency, which is to be expected upon the reintroduction of the Zimbabwe dollar.’’

Cognizant of this, Mnangagwa, a long-time ally of Mugabe has tried to distance himself from his former boss’s disastrous economic and political policies, promising economic reforms and reversing some of Mugabe’s key policies such as on black economic empowerment, foreign direct investment and property rights. After the elections and violence, he took to Twitter to call for calm, calling the violence “regrettable & tragic’’.

He will need to do more than that, and in particular, put together a credible cabinet and also clearly define the role of the military, according to Dianna Games, an independent analyst.

“Investors will more closely be watching the economic policies put and interventions put forward by the new government than who is actually in State House,’’ says Games.

“The choice of the cabinet will be watched closely by investors, particularly given the volatility in the past of Zanu-PF actions in sweeping aside investor agreements in the name of political expedience, particularly with regard to agriculture. A strong military presence in the executive may be a red flag.’’

The country has so much goodwill and potential to tap that a recovery is almost a matter of time, analysts say.

“Overall, I think there is little doubt that, despite an election tainted once again by allegations of rigging and violence, Zimbabwe is poised for some sort of economic recovery,’’ says Games. “There are many investment opportunities, the economy is resilient, there are many skills that could be brought back into the formal sector, there is experienced management in the private sector and Zimbabweans have proved to be innovative even in the hardest of times. These all bode well for a recovery although it may not be as swift as people hope for given the current challenges in the economy.’

– By Godfrey Mutizwa

Current Affairs

First African Elected Female Head of State Urges Women to Be Bold

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Ellen Johnson Sirleaf has an iconic status in Africa and the world. As the first elected female head of state in Africa, she served as the leader of Liberia for two elected terms.

Those terms saw Liberia’s slow and steady march from what was considered a pariah state to a country with what the Mo Ibrahim Foundation calls a “trajectory of progress” that has helped transform its economy, survive the shock of Ebola, and restructure public institutions to respond to the needs of the people.

READ MORE: The People’s President

It is only fitting that FORBES WOMAN AFRICA gets to meet the Nobel Peace Prize winner in Rwanda, a country known for its high representation of women in Parliament, and where Sirleaf is awarded the Ibrahim Prize for Achievement in African Leadership at a special ceremony.

Q. Please share your thoughts on the African Union (AU) self-funding reform goal, the Kaberuka Proposal.
The dependency of the AU on external sources has been the subject of debate for many years, and the thinking of our leaders is that it is better to finance our operations by ourselves and alleviate pressure and dictation from these external sources. On the other hand, we know that to have financial autonomy, every country must be able to contribute consistently. So, the crux of the reform is to change the payment formula and make sure everyone knows they have to pay their part.

When it comes to the Kaberuka suggestion, it meets our objective of financing our organization ourselves. However, it does place a burden on the poorer states… So, our position with the Kaberuka plan is to study it some more so when we commit, we do not fall into arrears. We want to see the reform implemented, and for it to include cost-reduction in structural aspects such as travel and positions etc., thus reducing the burden on poorer countries.

Q: Will Africa really be able to tackle illicit financial flows? And with women being conspicuously absent from financial decision-making, yet being the greatest losers on such issues, how do we tackle these discrepancies?
We have to become more accountable and pass stringent mandates in institutions, as well as instill practical capacity to understand the complexities of these financial transactions. Also, we must implement a legal system that will enforce against such flow violations.

Access for women is difficult even in the case of legitimate flows. Even with a growing manufacturing sector and agri-industrial activities usually manned by women, access is still limited, for rural women particularly.

There is a big effort being put in by different regional institutions; in Liberia’s case, GIABA, the Intergovernmental Action Group Against Money Laundering in West Africa, has been analyzing the flows and determining what is illicit.
But it is up to women to stand up and put other women in leadership roles, because the record is clear: women are more credit-worthy when it comes to financial transactions, and this suggests the more women there are heading these institutions, the more we can be assured that regulatory laws will be more effective.

READ MORE: ‘Women’s Leadership Is Under Attack Globally’

Q: What are your plans? How would you encourage young women to follow in your footsteps, or even create their own path?
We are establishing the Ellen Johnson Sirleaf Presidential Center for Women and Development. The activities will center around five themes that will promote women in business; women in leadership; women in fragile states; women in migration; and education for women and girls. We will use the life experiences of women who have excelled in these areas. For the young women, I say to all, be self-confident and pursue your goals…Let us be bold as women.

– Interviewed by Laura Rwiliriza

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Prosecution And Praise For Jacob Zuma

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It proved a day short on time in court and big on political posturing and speeches. The former president of South Africa Jacob Zuma’s appearance lasted a mere 10 minutes, on April 6, and the trial postponed until June 8 – yet he managed to make political capital out of his day in court in Durban.

On a bright sunny day in the coastal city of Durban in the KwaZulu-Natal (KZN) Province of South Africa, the former head of state stood trial in his own court. Almost 10 years ago, 10 days after this day, 18 charges on 783 counts of fraud, corruption, money laundering and racketeering were dropped against Jacob Zuma by former National Prosecuting Authority (NPA) boss Mokotedi Mpshe.

This decision was said to have been based on the recordings of the so-called ‘spy tapes’, which were presented to Mpshe by Zuma’s legal team. And almost a decade later, Zuma stands trial in the same court for the same charges which were reinstated by now NPA boss Shaun Abrahams.

The court was packed to full capacity with only 25 journalist allowed inside. Media came from all over the country, the continent and the world. Night vigils and pickets were held outside the night before the court case and on the day the case took place, led by different organizations supporting the former president. These organizations included Transform RSA, Black First Land First led by Andile Mngxitama, student groups from various KZN universities and members of the African National Congress (ANC) ruling party who claimed not to be operating under the party’s name.

The National Executive Committee (NEC) of the ANC made an announcement a week before the trial that members of the party who liked to support Msholozi, as Zuma is affectionately called, could do so in their own personal capacity and not wear any party regalia. However, ANC members who attended actually did the opposite and when asked if they were defying their own party, countered “you cannot have an ANC without Jacob Zuma”.

Thousands of supporters in front of the Durban High Court chanted struggle songs and praised Zuma.

Zuma addressed the crowds after spending close to 15 minutes inside the court room.

“I keep asking them what have I done for them to keep trying to bring me down but they have no answers but one day they will,” he said.

Among the top-ranking ANC officials in KZN was the province’s MEC for Economic Development and Tourism Sihle Zikalala who vowed to aid in defending the former president.

What is clear is that the ANC in KZN is still divided, with its members committing to prove Zuma’s innocence and unseating current president Ramaphosa before the 2019 elections. On the other hand, some others are calling for his prosecution by the court of law.

This case may take years to be concluded and political wars in the province may not augur well for the ANC.

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Zuma’s gone. Let’s go!

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Jacob Zuma

Africa’s most robust and developed economy is on the cusp of an economic revival after the long-awaited change of guard at the top.

South Africa’s economy has struggled against downgrades by the ratings agencies and a flight of foreign investors in several difficult years that have left the country with miniscule growth.

The big obstacle to change was President Jacob Zuma whose unpopularity and poor management of the economy, amid clouds of corruption allegations, threatened to bury the once all powerful African National Congress (ANC). In the good times, a decade ago, when the economy was growing at a healthy 5%, the leaders of the ANC boasted they would rule until Jesus came back. The penny slowly dropped for the party faithful that if economic times got steadily harder, feeding a rising opposition, the party may struggle to rule until the end of the next elections in 2019.

Pressure for change came from even the most die-hard ANC members for Zuma to resign. He refused; the party bigwigs gave him a deadline and at the eleventh hour, just before midnight on February 14, he did so live on TV. In many ways, he had little choice; his party comrades were plotting to throw him out through a humiliating vote of no confidence in Parliament, in Cape Town, also live on TV. He would also have lost his pension, security and benefits in the process.

READ MORE: Zuma’s time is up – but does it mean for South Africa

For a former head of intelligence, Zuma appeared strangely out of touch with what people were thinking.

“What have I done?” was his reaction to the decision by the ANC to recall him. A cursory flick through the business pages of the newspapers would have told him: Job losses and unemployment running at more than one in four; falling business confidence and tales of millions of taxpayers’ money slushing into private pockets rather than public projects.

Into the breach stepped Cyril Ramaphosa, the former deputy president who was sworn in as the country’s new leader, in Cape Town on February 15, with a promise to clean up and pep up the economy. He is seen as the business friendly president and a pragmatic negotiator with vast experience from the picket line to the boardroom.

“Issues to do with corruption, issues of how we can straighten out our state-owned enterprises and how we deal with ‘state capture’ are issues that are on our radar screen,” says Ramaphosa as he was elected as president, unopposed, in Parliament.

READ MORE: What the lack of accountability for Marikana says about Zuma’s government

Many of the business leaders I have spoken to, from Davos to Johannesburg, agree that if Ramaphosa turns his words into action they will invest with confidence.

“You are going to see millions of dollars flooding into this country in the next six months,” says Gary Booysen of Rand Swiss in Johannesburg.

The markets appeared to agree and surged with the rand. The currency reached highs not seen since May 2015, the last halcyon days of the economy. Three days of madness, in December 2015, put paid to that when Zuma sacked respected finance minister, Nhanlha Nene, replaced him with rookie Des Van Rooyen the next day and him, under duress, with former finance minister Pravin Gordhan the day after. The president sacked Gordhan in March 2017 and replaced him with another rookie Malusi Gigaba – the rand and confidence plunged, as did the ratings.

Ramaphosa – a multi-millionaire who has made his money from black empowerment and shrewd business decisions – wants a legacy of being the man who helped his country out of the mire. He has deep roots in the liberation movement and anyone who knows him will tell you he would want to be remembered as the best leader of his country since Nelson Mandela.

Anyone who has their money and pension tied up in South Africa will hope that he does so.

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