HomeBusiness DigestEconomic revival: Mnangagwa needs a delicate balancing act

Economic revival: Mnangagwa needs a delicate balancing act

The ascendency of Emmerson Mnangagwa as President of Zimbabwe has rekindled hope for our resilient neighbours for a future anchored on human rights, democracy, economic growth and jobs.

Vuslat Bayoglu,Business executive

The question that many investors are asking themselves in corporate boardrooms, investor tours and risk assessment plans is whether the hope is misplaced or valid.

Given many years of false promises, economic isolation, governance collapse and erosion of investor confidence, the question is justifiable.

However, Mnangagwa did not waste time to inspire confidence. He has courted both allies and foes of his Zanu PF, quickly presenting an image of a unifier and of progressiveness.

He knows better than anyone that he and his fledgling administration have much to do to convince the world that Zanu PF has abandoned its penchant for the Big Man politics of villainising all dissent and violating the tenets of effective economic management.

He is on track to doing just that, giving himself the opportunity to cast himself as a transformational leader. Apparently unconstrained by what many would regard as a controversial rise to the top, Mnangagwa has announced a raft of policy reforms that have set Zimbabwe on the right footing.

He has moved to fix broken relations with business both in the country and abroad. This is important because positive business sentiments at a domestic level tend to rub off to potential international investors, some of whom look to forging partnerships with local counterparts.

He has also taken practical steps to recover monies lost to looting as well as assets that were externalised. All those implicated in such activities have 90 days in which to admit guilt and return the proceeds of their crime to take advantage of a blanket amnesty Mnangagwa has offered. In so doing, he has demonstrated his willingness to rebuild Zimbabwea’s balance sheet.

Consistent with this message, the new administration has placed a ban on first class air travel for all but the president and his deputies. This is clear acknowledgement of the need for government to pull back on spending, ensure fiscal discipline and to focus all efforts on the country’s economic recovery.

One of the causes of Zimbabwe’s socio-economic crisis was over-indebtedness when the government tried to maintain public expenditure while state revenues were declining as a result of negative economic growth. Mnangagwa seems to have figured out that to put the country back on track requires a comprehensive review of economic policies across the value chain.

Ending the decades of government ministers and bureaucrats living large while the country’s economy floundered and its people heaved under the pressure of hardship is a top priority.

He has not shied away from addressing the very policies that thrust the erstwhile bread basket of Africa into controversy: land reform and indigenisation law.

Zimbabwe cannot be faulted for pursuing land reform. It is an important part of redressing the injustices of colonialism, a blight on Africa’s past and development. However, it is the manner in which land reform was pursued that caused consternation.

During the latter parts of the Mugabe years, Zanu PF presided over a tumultuous land reform programme. White-owned farms were forcibly taken whilst farmers were left stranded with no compensation for their investments and assets. Mnangagwa has pledged his government to honour property rights including compensating farmers.

In a bid to rationalise the country’s policies on land, land ownership is now stratified into categories. Government has introduced a 99-year lease tenure for agricultural land and leases are transferable. Ownership of non-agricultural land remains freehold.

Clarification of land policies and a commitment from government to honour and respect property rights is evidence that Mnangagwa values the rule of law which is important to re-assuring investors.

Mnangagwa is restoring certainty. Certainty is what investors want. It is what they need to take risks and make long-term investments in the country’s economy.
Together with the political stability that Mnangagwa is working to establish, the agricultural sector is once again a viable option for commercial farmers and investors.
It is not only the agricultural sector that is getting a new lease on life. Mnanagawa is a man on a quest to court the favour of local and international business and this can only be good for the Zimbabwean economy.

Indigenisation law, the thorn in the side of international and domestic investors and corporations who are invested in Zimbabwe, has been relaxed. Under the indigenisation policy, all enterprises had to cede majority stakes of their businesses to locals. Foreign ownership of local businesses was not allowed to exceed 49%. This made starting a business in Zimbabwe very challenging.

The lifting of this impediment is an invitation to investors and entrepreneurs. It is more evidence of goodwill on the part of Mnangagwa’s administration.
Making the economy work rests on the stability of the political environment. It also rests on friendly relations both at home and further afield. Whilst Mugabe will be remembered for burning bridges, Mnangagwa is the bridge builder. Although Mnangagwa has been part of the Mugabe administration, he has shown that in politics, a leopard can shed its spots.

He extended a hand of mutual co-operation to the opposition — a necessary tone for peace. It is small gestures that can either cause violent conflict or reconciliation. The relationship between Zanu PF and the opposition has been volatile at worst and antagonistic at best.

It was uncharacteristic of the Mugabe regime to reach out to the opposition whose leaders he disparagingly labelled puppets of Western governments.

Mnangagwa’s visit to ailing former prime minister and leader of the MDC-T Morgan Tsvangirai marked the turning of a page on a history and culture of intolerance towards the opposition.
This is the beginning of creating an atmosphere for co-operation in the interests of the Zimbabwean people. It is a good foundation upon which to build the political stability that can restore confidence in the economy. This is all the more important with elections just around the corner.

Mnangagwa has re-introduced Zimbabwe onto the world stage by attending the World Economic Forum in Davos, addressing economic and trade issues. This after nearly two decades of avoidable isolation.

It is apparent to him and his government that for Zimbabwe to get back on its feet, it needs to urgently regain access to the lines of credit it lost due to the sanctions placed on the country by the United States, United Kingdom and European Union.

The East, especially China, has been a good friend of Zimbabwe during the years of isolation as Mugabe pursued what he called a “Look East” policy.

But rebuilding relations with the West does not necessarily mean abandoning our Eastern friends. After all, the East is doing business with the West.

What Mnangagwa needs is a delicate balancing act of keeping new friends whilst winning back old ones. If he uses the post-Mugabe political honey money with the necessary deft, Mnangagwa is well placed to carry out this dual strategy.

Reaching out to Britain, the European Union and the US to repair strained relations is a step in the right direction. Zimbabwe will need their support to convince the IMF and World Bank to extend significant development finance. It is about restoring trust.

Image and perception are paramount in politics. So important is perception that sometimes it supersedes the weight of reality. Mnangagwa’s most difficult task is revamping Zimbabwe’s image and changing perceptions about the country.

His first few days in the presidential office have demonstrated that he has what it takes to put Zimbabwe back on track. Smelling the arrival of spring, neither Zimbabwe nor its neighbours have room for disappointment.

Bayoglu is executive chairman of Menar Capital and Canyon Coal.

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