The politics of reform — Much ado about nothing

THIS is the second instalment of a report by Piers Pigou titled Zimbabwe’s Reforms: An Exercise In Credibility — Or Pretence, which was published by the South African-based Institute for Security Studies in its current issue.

Piers Pigou,Political ANalyst

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The call for political and economic reform in Zimbabwe has been a constant refrain for almost two decades.

For Zanu PF, reform necessitates the reconfiguration of the economy and ownership, centred on its controversial land reform and, more recently, indigenisation policies. It is a selective agenda wrapped in revolutionary rhetoric intended to correct discriminatory historical legacies, but that in practice has been employed to buttress Zanu PF’s political hegemony against growing opposition to misrule and to feed political patronage and self-enrichment.

Opposition formations and many civil society groups seek the removal of Zanu PF, calling for reforms that would strengthen governance and the rule of law and tackle the array of democratic deficits that underwrite Zanu PF’s incumbency. For the most part, Zanu PF has rebuffed these calls, accusing its proponents of pursuing a regime change agenda directed by external interests and has employed an array of repressive measures to undermine its opponents, culminating in a terror campaign, the illegitimate June 2008 elections and regional intervention.

The negotiated 2008 Global Political Agreement provided a framework for comprehensive reform, although this was largely avoided; many aspects of this reform were “parked” in the new constitution adopted in February 2013 and remain subject to a contested terrain of constitutional alignment. This includes the reworking of over 400 pieces of legislation and the introduction and/or reconstitution of new democracy-supporting bodies. In addition, several high-profile cases challenging existing statutes have been brought before the Constitutional Court, although numerous issues remain unattended.

The Southern African Development Community (Sadc), opposition and civil society groupings pointed to an array of reforms that should have been addressed before the 2013 polls, but Zanu PF’s victory enabled these to be pushed aside, instead elevating its own transformation agenda under the policy prescripts of the Zimbabwe Agenda for Sustainable Socio-Economic Transformation (ZimAsset) economic blue-print.

The momentum for political reform receded in the face of diminished opposition representation and debilitating internal rivalries; funded civil society has also recalibrated as the realities of the resuscitated Zanu PF incumbency prompted a move towards constructive engagement, encouraged by donors keen to re-engage. Consequently, robust critique of civil and political concerns has been stifled on multiple fronts, as economic and financial sector reforms have moved centre-stage.

Deteriorating economic conditions have exposed the limitations of Zanu PF’s campaign promises that ZimAsset and/or that government’s “Look East” policy provide realistic options to kick-start recovery. Conditions on every front have in fact worsened. Desperate for new credit lines, the government focused more on reconnecting with international creditors; it introduced a Staff-Monitored Programme (SMP) with the International Monetary Fund (IMF), intended to demonstrate a commitment to repair relations severed by payment defaults and to correct its financial delinquency.

In this regard there has been some progress, although this only lays the foundation for more fundamental reforms that are now required. Indeed, the SMP was not politically taxing, yet provided space for those promoting an incremental engagement agenda to demonstrate that the government was committed to mending its ways, albeit through this narrow lens of reform.

Zanu PF, it was argued, had no choice as economic conditions forced a reality check on its limited available options. President Robert Mugabe’s own broad endorsements for reform, outlined in a 10-point plan in his state of the nation and opening of parliament speeches in August and September 2015, were a tacit admission of his government’s policy failures.

Significantly, he delivered these speeches without his stock allegations that sanctions and Western powers were responsible for Zimbabwe’s impoverishment. His support enabled Finance minister Patrick Chinamasa and Reserve Bank of Zimbabwe governor John Mangudya to present government’s reform strategy to development partners and creditors in October 2015. The plan set out an incremental agenda that would secure funds to pay debt arrears (estimated at almost US$2 billion) by mid-2016, which would enhance prospects for accessing new lines of credit. It was well received but, curiously, not shared with ordinary Zimbabweans, until it was leaked four months later.

The timeline for arrears repayment has already shifted and is contingent on accessing new loans that creditors must have confidence will be honoured. This process must also be complemented by “bold policy reform measures aimed at debt sustainability and improving the socioeconomic environment”. The IMF acknowledges progress in some of these areas, but continues to highlight key issues that require urgent government attention. These include:

Reducing the civil service wage bill and re-orienting spending priorities;

Improving debt management and administration of revenue administration;

Improving the business environment, including clarity on indigenisation provisions and land reform (including a framework for compensation) and improved transparency in the mining sector;

Reform of state owned enterprises; and Tackling corruption.

Reform in these areas is hampered by acute resource constraints, and as economic growth slows, the government is being squeezed on every front. While trying to raise funds to underwrite payments for its debt arrears, it has been forced to borrow heavily elsewhere, simply to keep the state functioning and to finance its ballooning budget deficit, exacerbated by a worsening balance of payments crisis and an unsustainable wage bill for public servants.

Limited success in reducing expenditure in some areas belies the fact that over US$2 billion of Treasury Bills have been issued to keep the wheels in motion. This means government must now find an additional US$250 million annually to service this new debt. This deficit is also at the heart of a crippling liquidity crunch that has further undermined confidence in Zimbabwe’s shaky banking system.

Even if financing to cover debt arrears is secured — by no means straightforward or at this stage guaranteed — progress in these reform areas will determine prospects for the approval of new loans. The IMF executive board meeting with the World Bank and African Development Bank last month was expected to assess progress, but conditions are not in place to secure new lines of credit at this juncture. Unlike the SMP, there must now be substantial headway around issues such as civil service cuts that have thus far been avoided. Although technically not engaged on a political platform, progress around sensitive law and order, governance and human rights issues will be required to secure US buy-in.

But headway in these areas is patchy at best, and unlikely to be pursued with any vigour in the run-up to elections, which explains why many are sceptical and believe it is premature to discuss new funding. Government is trying to tick the requisite boxes by meeting with civil society and business groupings, but this has not arrested depreciating levels of confidence. Indeed, there is a strong feeling that the “theatre of reform” belies a political agenda to retain political hegemony.

An assessment of progress therefore requires a more robust assessment of major implementation challenges.

Civil service wage bill

The wage bill for civil servants, including those attached to the security and intelligence sectors, has grown dramatically, in turn preventing much-needed expenditure on public investments and social services. There is still considerable ambiguity about the size and make-up of the civil service and where cuts will be made.

How government addresses this challenge will be a primary indicator of its intent. But progress, even of an incremental nature, appears to have been made only glacially since the promises by the finance minister in December 2014.

In mid-April 2016, Chinamasa told the IMF that the government would retrench workers and freeze salaries as part of its strategy to reduce the wage bill to 50% of total expenditure by 2019. What this means in practice remains unclear and has already been contradicted; at Independence Day celebrations, Mugabe promised civil service salaries would be increased to match the poverty datum line. And Public Service, Labour and Social Welfare minister Prisca Mupfumira told a gathering on Workers Day that there will be no job cuts.

It is difficult to see how government will cut public spending, lay off civil servants and privatise state-owned enterprises (with accompanying job losses) ahead of the elections, leading some to suggest that progress on this front may be delayed until after the polls. But the wage expenditure, now estimated at 83% of government expenditure, continues to tighten the noose around government, as evidenced by its increasing difficulties in honouring due payments timeously. This has exacerbated tensions with what remains the country’s last bastion of formal employment.

Indigenisation

The implementation of Zimbabwe’s indigenisation and economic empowerment legislation and its regulatory framework remains a litmus test for government reform. Introduced in 2008, the controversial legislation, designed to promote and impose indigenous Zimbabwean ownership of foreign firms, has been central to Zanu PF’s economic transformation agenda and an important tool in its populist posturing. But there has been a consistent and “wide disjuncture between the law (as it is), government pronouncements of the law (as they would like the public to believe it to be) and the policy in practice”. This confusion was identified as a central obstacle by donors and international financial institutions, who have consistently called for “clarification” on key aspects of the law.

A commitment to “simplify and streamline the investment process” was included in the government’s Lima strategy for clearing debt arrears and carrying out supportive economic reform. But following his appointment in September 2015, Youth and Indigenisation minister Patrick Zhuwao who is also Mugabe’s nephew, vehemently contradicted efforts by Chinamasa to provide this clarification, at one point threatening to expel companies and seize their assets if they did not comply.

Mugabe allowed the confusion to prevail until mid-April 2016, finally reining Zhuwao in, acknowledging the confusion must be resolved and that a “one-size-fits-all” approach to indigenisation would not be adopted. He promised the confusion would be remedied, but another verbal commitment brought neither clarity nor certainty, instead highlighting “deep policy flaws and inherent confusion in government”.

How the legislation and its accompanying regulations are amended will be watched closely. Thus far, Zhuwao has sat on his hands in what several local economists have described as wilful resistance, an approach Mugabe either tolerates, endorses or is unable to control. In the current economic quagmire, repealing the indigenisation law and replacing it with a coherent framework would significantly strengthen the reform agenda, but such a move is unlikely to pass political muster.

Land reform and compensation

How issues of property rights, compensation, unresolved issues of legal and illegal occupation and clarity on beneficiaries of the fast-track land reform programme are dealt with remain key indicators of the government’s commitment to strengthening the rule of law. The government acknowledges that resolving these matters is central to prospects of boosting productivity on the land.

In mid-March 2016, Chinamasa tabled a memorandum in parliament establishing a special fund responsible for raising and administering compensation for seized land. This is an important symbolic attempt to demonstrate government’s commitment to compensate farmers evicted during the fast-track land reform programme. If successful, this could also help expedite unresolved tenure issues. The state points out it has never denied its responsibility to compensate, but for what and at what rate has never been clarified. The suggested compensation plan would entertain claims for land, improvements and equipment, signalling a major shift in government policy if adopted.

To be continued next week.

Pigou has worked for several organisations focused on human rights, transitional justice and political violence, including the South African and East Timorese truth commissions, since 1992. Between June 2009 and October 2010, he was a senior associate responsible for Southern Africa, and Zimbabwe in particular, at the International Centre for Transitional Justice. In April 2011, he joined the International Crisis Group (ICG) as project director for Southern Africa. Since November 2015, he has been a part-time consultant for ICG.

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