Event

On 21 November, 93-year old President Mugabe inelegantly left office after 37 years of authoritarian rule, greeted by mass public celebrations. His forced yet non-violent departure followed the sacking of Vice President Emmerson Mnangagwa earlier this month, aimed at Grace Mugabe’s ordinary take-over of the presidency from her 41 years older husband. Obviously, she overplayed her hand, not taking into consideration how despised she is within the ruling Zanu-PF party and the army. The military intervened and armoured troops rolled into Harare on 14 November to reinstate Mnangagwa, ending the era of one of Africa’s most notorious ‘presidents-for-life’. The 75-year-old Mnangagwa, who served under Mugabe as minister of state security and of justice, is also known as ‘the crocodile’ dreaded for his record of fearsome repression and persecution of the opposition. He was sworn in on 24 November as Zimbabwe’s interim president and declared to tackle corruption, protect foreign investments and rebuild the economy. It remains to be seen whether these promises will be left hanging or will be actually fulfilled.  

Impact on country risk

Mugabe’s incompetence and ruinous policies caused the economy to collapse and impoverished the people of what was once one of Africa’s most prosperous countries. After corruption scandals in the 1990’s blew large holes in the budget, the IMF decided to withdraw all support. At the turn of the century, Mugabe set off a reckless campaign of land grabs (‘indigenisation law’) and started confiscating land without compensation from white farm owners at a raging pace. As a result, Zimbabwe’s GDP started tumbling down while government and export revenues collapsed and failed to recover ever since. At the same time, violent oppression and poverty drove a large part of the population into exile. As the government ran out of money, it simply started printing it, leading to a period of hyperinflation which lasted until 2009, when the US dollar became legal tender. Today, Zimbabwe is bankrupt while acute cash shortages – partly resulting of low trade returns – paralyse the dollar-based economy. The country needs the IMF, World Bank and creditors to restructure debts and supply new loans. However, aid of multilaterals will be strictly conditional on political and policy reforms and properly supervised elections, something Mugabe never agreed with. Henceforth, organising credible elections in 2018 will be the foremost priority for the new government. For the time being, Zanu-PF is expected to consolidate its power as the opposition is weak and fragmented. Credendo classifies Zimbabwe on the worst category for more than 15 years and the challenges confronting the country remain rife. Hence, the outlook can only improve when for starters proper elections are organised, the huge outstanding unpaid debts (around USD 9 billion) are treated and investors are reassured by repealing the harmful ‘indigenisation law’.

Analyst: Louise Van Cauwenbergh, l.vancauwenbergh@credendo.com