Skip to main content

Zimbabwe: The State Of Crisis

Published 2 years ago
By Ancillar Mangena

Zimbabwe put Emmerson Mnangagwa in power hoping he would revive its battered economy. This expectation is on a downward spiral as harassed citizens take to the streets.

A mere 14 months ago, people sang and danced on the streets in jubilation. After 37 years at the helm, Robert Mugabe had finally resigned. The masses sang struggle songs saying “true independence” had finally arrived. They hoped his successor, Emmerson Mnangagwa, would bring back Zimbabwe’s dim and distant economic boom.

The optimism was misplaced. The country’s economic condition has been gradually worsening since.

On January 12, horror set in.

President Mnangagwa announced an overnight fuel hike of 150%. It now costs $3.31 (local bond note) to buy a liter of fuel. Of that, 78% goes to taxes, making fuel in Zimbabwe one of the most expensive in the world. If you drive a 40-liter petrol tank car, you will now spend $265 (local bond note) on just two tanks of petrol, per month, when an average Zimbabwean earns a mere $300 (local bond notes).

“That the fuel increase will only trigger a wave of price hikes on each and every other item on the shelves is as obvious as the incapacity of Zanu-PF to govern and lead a prosperous Zimbabwe,” says Jacob Mafume, National Spokesperson of the Movement for Democratic Change (MDC).

The shocking fuel hike comes when most of Zimbabwe’s fuel stations have been dry for weeks.

“I have to spend one day a week in a fuel queue and I lose valuable time. I spend six to 11 hours in a queue at a time. I am even forced to do some of my work while in the queue, otherwise I won’t be able to go to work or take my kids to school. What’s worse is that this fuel is not unleaded, it is actually blended with ethanol which means it doesn’t last,” says Zimbabwean resident Grace Zulu.

The fuel hike pushed citizens to the edge and drove the Zimbabwe Congress of Trade Unions (ZCTU), the umbrella body for all Zimbabwean workers, to call for people to stay home for three days, in protest.

“The government has officially declared its ‘anti-workers, anti-poor and anti-people’ ideological position by increasing fuel prices. Workers’ salaries have now been reduced to nothing and our suffering elevated to another level. We must and will mobilize and fight for our survival,” said the ZCTU in a statement.

Instead of dealing with the mounting anger of Zimbabweans, after the hike announcement, Mnangagwa jetted off on a five-nation tour that started in Russia and was expected to end at the World Economic Forum in Davos, Switzerland. At the time of going press, Mnangagwa had eventually cancelled the trip but these were the reactions of citizens prior the announcement.

“He doesn’t even care about us or what is happening in the country. He has money and his family is set for life while we all struggle to make ends meet.

“He should be here right now dealing with this and coming up with solutions that will work, instead of trying to convince countries we don’t know to put money [back] in the country. Even I know that in this state, Zimbabwe in un-investable,” she laments.

Angry citizens, like Zulu, took to the streets around the country in protest. Among them is Nomathemba Ngwenya, a 30-year-old unemployed Masters in Philosophy graduate.

“I can’t believe this is happening. I knew that Mnangagwa wasn’t going to be great but I didn’t expect things to be this bad. We are struggling and since he came into power, the situation has been worse. I am protesting today because I am tired of this and the government has to hear us,” Ngwenya says.

In Bulawayo, in southwest Zimbabwe, schools, taxi-ranks and work places were empty. Protesters had blocked roads, burned tyres and marched around the city center singing “Into’ yenzayo siyayizonda” meaning, “we despise what you are doing”.

Government responded by deploying police and soldiers armed with tear gas and guns. It caused panic, violence, looting and the protest expanded to residential areas.

“The situation is bad here. Some people took advantage of the situation and looted shops. When police came, they burned the police car and everything got worse. I could feel the tear gas in my throat and eyes from my home. Many people were wounded during this whole thing. The government just needs to act in a way that benefits its citizens,” says Bulawayo resident Mbongeni Mabhena.

With no positive response from the government, the marches spread to other cities.

In Epworth, an impoverished township in the southeast of capital Harare, residents woke up to blocked roads and marches which also escalated to violence.

“A stay-away had been suggested instead of a protest because the state loves to infiltrate demonstrations and cause violence as a pretext. It is possible that it was caused by protesters themselves but there are signs that the state was involved, for example, when there is someone carrying an AK-47, which is unheard of in Zimbabwe because of strict gun control,” says Doug Coltart, a Zimbabwean political activist and lawyer.

Loud cracks echoed around Bulawayo, Harare and even relatively smaller cities like Mutare in eastern Zimbabwe. People were injured,  they had gunshot wounds and lives were lost. It marked a fast developing week of shocking news in the poor southern African country. 

“I can’t believe this is happening. The president should be here sorting this out. He even left the vice president, who was a general in the army and was instrumental in the overthrow of Mugabe, in charge. Of course, he is going to send the army. That’s the kind of language he understands,” says Ngwenya who spends hours reading about Zimbabwe’s current and historical politics.

“Soldiers are in the townships beating up people who are protesting and even getting into people’s private homes. At this time, my understanding is that over 200 people have been arrested and at least five have lost their lives.”

As the protest grew, the #ShutDownZimbabwe trended on social media. History had begun to repeat itself.

Just like in the Mugabe regime where speaking up against the government was met with censorship, Mnangagwa’s government allegedly sent an order to mobile networks to shut down the internet in an effort to silence people.

There was confirmation of this order from Zimbabwe’s largest telecommunications company, Econet Wireless.

Founder, Strive Masiyiwa, said on social media the company was issued a warrant, to disconnect internet services, by the Minister of State in the Office of the President.

“We are obliged to act when directed to do so and the matter is beyond our control,” Econet said in a text message to customers, adding that all networks and providers had suspended their services.

“Failure to comply would result in three years’ imprisonment for members of local management in terms of section 6:2 (b),” Masiyiwa said.

“I have had no network for most of the day and I’m not sure how long it will last. Mnangagwa encouraged us to speak out when he was orchestrating a coup but now that he is the one in hot water it becomes a problem,” Zulu says.

After two days of chaos, Mnangagwa finally broke his silence.

“As I have said numerous times, everyone in Zimbabwe has the right to express themselves freely – to speak out, to criticize and to protest. Unfortunately, what we have witnessed is violence and vandalism instead of peaceful, legal protests.

“There can be no justification for violence, against people and property. Violence will not reform our economy. Violence will not rebuild our nation,” he said in a statement from Russia.

He said he traveled abroad to get investors vital for the economy. He claimed the response has been positive.

“Alrosa, the world’s largest diamond company, has decided to launch operations in Zimbabwe, and we have also signed a series of important agreements that will lead to investment, development and jobs.”

Although the fuel increase was the straw that broke the camel’s back, for months leading to the protests, Zimbabwe has been facing its worst economic crisis in 10 years.

  The economy has been in meltdown since the July 30 peaceful election which turned violent. The army and police clashed with demonstrators who again took to the streets amid allegations that the ruling Zanu-PF party had rigged the vote. Six people died and hundreds were injured causing uncertainty and doubt to the investor community.

“The signs have been there from the beginning. This crisis is caused by the Mnangagwa administration in the months leading up to the elections. There was never a sign of real improvement, it’s been a disaster from day one,”  Coltart says.

Many were sceptical but hopeful when Mnangagwa took over.

Mnangagwa had previously served as Mugabe’s right-hand man. Earlier in his life, he played a role in the fight for independence. He was part of a gang called ‘The Crocodile Gang’ and was known for his ruthlessness which later earned him the nickname, Crocodile.

There have been diverse accounts of Mnangawa’s reputation. A book by Ray Ndlovu, published in 2018 called In The Jaws of the Crocodile recounts these incidents.

Mnangagwa has been accused of bringing his ruthlessness to independent Zimbabwe. He is also accused of overseeing some of the state-sponsored crimes during Mugabe’s reign. When he was fired by Mugabe, he orchestrated a coup d’état with the help of the military led by now vice president, Constantino Chiwenga.

  “Zimbabweans were just pawns in a fight between Mugabe and Mnangagwa. I don’t believe he ever had an intention to fix the problems we have in this country. If I see a queue, I just get in it before I even ask what it is for because there is a shortage of even cooking oil,”  Zulu says.

The Currency Crisis

One of the problems the president inherited from Mugabe is a currency crisis.

Zimbabwe abandoned its currency in 2009 and adopted foreign currencies like the South African rand and the United States (US) dollar. Amid foreign currency shortages, in 2016, it introduced the bond note which the government claims is equivalent to the US dollar.

“There was a lot of hope for a lot of Zimbabweans not because they thought the new administration would do much better but they were just so desperate for change. You would think that any administration that came after that would have its ear to the ground in trying to fix the issue for the ordinary citizen but there is no evidence of that,”  says citizen Kukhanya Ndlovu.

Hyperinflation worsened.

The bond note is being sold on the black market for $3 and inflation is at nearly 21%. Problems are compounded by the high unemployment in the country, but even those who have jobs are not paid enough. Zulu, for instance, is a secretary who earns about 450 bonds per month.

“When you are on the ground, you understand how Zimbabweans are suffering and have been suffering for a long time. For some reason, the government doesn’t get it. At some point, something gives and something has to break,” says Dr Nkosana Moyo, a politician, economist and former Zimbabwe Minister of Industry and International Trade.

It gets worse.

Companies continue to shut their doors or demand hard currency. Bulawayo, once the country’s industrial hub, has closed a significant number of its factories. The spaces are now used as places of worship.

One of the latest companies to put a seal on its doors is National Foods, one of the largest manufacturers and marketers of food products. There is also Olivine Industries, which manufactures soap and cooking oil. It has suspended its production and put workers on indefinite leave because it owes foreign suppliers $11 million.

“The company has struggled to restart its manufacturing operations in January 2019 for lack of imported raw materials. As such it remains closed,” says Olivine Industries in a statement.

There is more.

As of January 4, Zimbabwe’s largest brewing company, Delta Corporation, started selling only in hard currency to keep its doors open.

“Our business has been adversely affected by the prevailing shortages in hard currency, resulting in the company failing to meet your orders,” it says also in a statement.

It is clear that for money to work, people have to believe in it. No one believes in the bond note or its 1:1 valuation. The government itself doesn’t seem to believe it.

“When the president announced the new fuel prices, he implied an exchange rate of 1:3 between the dollar and the bond note. It signals that there is no honesty in how the government is communicating with the population. This crisis is more painful and almost unforgivable because it indicates no lessons were learned from 2008,” Moyo says.

In 2008, Zimbabwe suffered a staggering inflation rate of 80,000,000,000%, printing notes up to 100 trillion. When the Zimbabwean dollar tanked, life savings vanished from the banks; shops were empty and ATMs dry. In 2019, the panic and kneejerk reaction has seen people holding on to their US dollars and moving them out of the country.

“People have forex but it’s not with the government structures because people don’t trust banks because of what happened in 2008 where there was a shortage of everything and hyperinflation was terrible. Part of the crisis is exaggerated, people have the forex,” says former Deputy Information Minister in Robert Mugabe’s cabinet, Bright Matonga. 

The government is encouraging people to bank their foreign currency. It says it has now started foreign currency bank accounts which it claims are safe.

“The legislation protects your account. Back then, they used to be able to raid your account but now they can’t. You can bank your US dollars and can go to the bank and withdraw all of it,” Matonga says.

According to Finance Minister Mthuli Ncube, the country also plans to bring back the Zimbabwean dollar in the next 12 months. Many Zimbabweans think it won’t work.

“Currency is a symptom, not the cause. It doesn’t matter what currency we adopt, we are going to end up right at the same point as long as we don’t have a government that understands what needs to be done. Our problem is the irresponsible behavior of government. How do you run a country which has a budget of more than 90% which is in recurrence expenditure? How do you run a country with a government that doesn’t understand that taxes should be a small fraction?” Moyo asks.

The protests came just days before the World Economic Forum gathering in Davos. Mnangagwa was set to appear under the banner of his “Zimbabwe is Open for Business” mantra. This year, he also visited Azerbaijan, Kazakhstan, Belarus and Russia in a bid to attract investments. Prior the cancellation of the trip there was public pressure, as citizens felt aggrieved about his decision to attend.

“Instead of accepting its gross failure to turn the economy around, the cartel now basks in the pretence of ‘mega deals’in curious corners of the forgotten world such as Uzbekistan, Kazakhstan, and other places you may have never heard of,” Mafume says.

Moyo believes nobody is going to invest money in Zimbabwe until Zimbabwe shows a behavior that is conducive for investment and that it can manage its own finances.

“These mega deals are not coming. What people are talking about are indications. People are interested in Zimbabwe but investors will look for certain signals, without which they will not put money in the country,” Moyo says.

“What product is he taking to Davos? Does he really think investors around the world are stupid enough not to see that they shouldn’t put their money into the country? Last year, he shouldn’t have even gone to Davos. I don’t know why he is even going to all these countries. It’s totally nonsensical.”

Gaining people’s trust is one of the few things Matonga and Moyo agree on.

“The leadership should come from the top so people see the seriousness of the mantra that Zimbabwe is open for business. We need to get trust with our own people here at home and then get trust from Zimbabweans in the diaspora, because they bring in a lot of foreign currency, then we can go out,”  Matonga says. 

In fact, Moyo believes, with this government, there is no sector that is safe to invest in.

“At a country level, there is stupidity. If all you see is irrationality and kleptocracy, how can anything survive under it?”

Moyo argues that Mnangagwa should first build an environment that is conducive for investment  before wasting money on travel to sell a product that won’t be bought.

“In terms of investment, if I was the president, I would have approached two categories of investors. One would be someone who is already invested in Zimbabwe and then regional investors who are primarily South African. These are people who understand the environment and would help the economy to begin to take off.”

On the other hand, Matonga blames the economic sanctions, and not the government, for Zimbabwe’s downfall.

“Whoever wants to bring money into Zimbabwe has to get clearance from the United States government. As long as the sanctions remain, it’s going to be difficult to effectively deal with business challenges. The root of all our troubles is the sanctions,” Matonga says.

Coltart, who lived in SA and the US for eight years before returning  to Zimbabwe to be an activist and human rights lawyer, sees the errors in policy as the biggest culprits for lack of investor confidence.

“As Zimbabweans, we want stability and investment but what is clear is that the government doesn’t know how to do that. Their policies are wrong, they waste government funds and the wrong cabinet is in charge,” Coltart says.

Matonga, who now has a company that assists people looking to invest in Zimbabwe, maintains that Zimbabwe is open for business.

“We are currently going through a process of trying to put our house in order. It is a very difficult process but the new minister is trying to put in systems to make sure business is done properly. This process is painful but it will take time for us to see results,” Matonga says.

Coltart encourages the government to fix policy issues, hire people dedicated to reviving the country’s economy and to find reputable investors in mining and agriculture.

“We need credible investors in mining and agriculture but a government like ours attracts the worst kind of investor, like sharks who go into a crisis situation in order to make a huge amount of money because no one else will go there. Typically, that kind of investment is not good for the country,” Coltart says.

Matonga shares a similar sentiment about investment focus areas.

“Yes, we need to invest more in agriculture so we can start importing to the region; we need to invest more in mining so  we have enough gold reserves to support our currency. The tourism sector is doing very well,” Matonga says.

He, however, believes it’s unfair to say Zimbabwe isn’t attracting investors and that the government isn’t doing its job.

“There are a lot of massive deals that have come into the country. For one, there is an electricity deal that happened and soon Zimbabwe will be selling electricity throughout the region. Our tourism sector is also doing very well. This December, it was booked 90%. The investors are listening to us because also our new minister is credible. He is being invited all around the world to speak about opportunities in Zimbabwe,” he says.

The challenge so far has been that if investments are made, it becomes a struggle to retrieve money because of cash shortages in Zimbabwe.

“I had planned to expand my farming logistics business into Zimbabwe but the problem is that I would have invested in rands and people would have paid me in bond notes and I wouldn’t have been able to use that money anywhere outside Zimbabwe, which is where I actually need to use it,” says South African entrepreneur Mark Zondo.

To make matters worse, even the bond note is scarce. According to Reserve Bank governor, John Mangudya, in 2017, 96% of transactions in Zimbabwe were electronic. So if you are a business operating in Zimbabwe, you would have money in a mobile money account or bank account but not in hand.

Matonga says this is not the ideal situation but things have improved.

“Doing business in Zimbabwe is easier than it was in the past. For example, the government removed the indigenisation law that demanded that a foreign investor had to partner with a local to start a business. If you are a company that imports and exports, you can also get at least 50 percent of your foreign currency in hand to be able to continue running,” he says.

Although that’s the case, investors will have to take the remaining 50% cutting into their profits.

Matonga insists the government is doing well. “The minister of finance has closed the loopholes and even the rate on the black market is going down. He has also introduced a two percent tax in mobile transactions and has collected more than $550 million which means we are able to fund government projects, road construction, infrastructure development,” he says. He blames the current fuel shortages on the increase on car imports.

“This time last year, we had about one million cars on the road and now we have about 1.7 million. In the last six months, Zimbabweans imported about 700,000 vehicles which has now put a strain on the forex,” Matonga says.

He, however, agrees that there is a currency strain crippling the country.

“When you don’t have your own currency, it is extremely difficult. If you want to import necessary raw materials or equipment, it’s difficult to get foreign currency. You have to get it on the informal market where the rates are three times higher,” he says.

Moyo, who ran against Mnangagwa during the presidential elections, says he was called by Mnangagwa to help boost the economy, but their relationship was short-lived. 

“I allowed myself to be invited into government and I joined. I then realized I couldn’t work for this government. The way the land issue was handled and the way occupation of industries was taking place in a similar manner, I just felt it was going the wrong way. The policy positioning of Zanu-PF was unstrategic so I told the president I wasn’t going to work for an administration like that,” Moyo says.

“He said he brought me in to make those changes but I had enough evidence because of the number of times I had gone to him and asked him to do certain things which he would agree with and never do them.”

According to Moyo, the evidence to date shows Mnangagwa is not capable of taking a step back and actually fixing the country. It is up to the people to fix Zimbabwe.

“There is desperation. Young men are spending their days playing board games while drunk on alcohol or high on drugs. When I asked them about it, they would tell me that’s the only way they could retain their sanity because there are no jobs. People are doing things they would otherwise not do. We as a nation have committed a crime against our youth,” Moyo says.

Last year, for the first time in 37 years, the country went to the polls to choose a leader and 133 parties took part in the elections, and 23 candidates ran for the presidency. Mnangagwa won by 2,460,463 votes (50.8%), followed by the MDC’s Nelson Chamisa with 2,147,436 votes (44.3%).

“Zimbabweans need to learn what democracy really is. We need to learn that elections mean choosing the person who will solve the problems that are confronting the country at that point in time. We need to take responsibility for our actions, ” Moyo says.

Taking responsibility places the burden on the people to drive change towards the direction they want it. This has been done before. Perhaps another 37-year wait might be too late.

Sign Up for Our Newsletter Daily Update

Get the best of Forbes Africa sent straight to your inbox with breaking business news, insights and updates from experts across the continent.
Get this delivered to your inbox, and more info about about our products and services. By signing up for newsletters, you are agreeing to our Terms of Use and Privacy Policy.
Related Topics: ##ShutDownZimbabwe, #bond note, #Emmerson Mnangagwa, #Featured, #Jacob Mafume, #Mthuli Ncube, #Robert Mugabe, #Zimbabwe.