Why Mugabe is headed for a fairy-tale exit

By Justice Zhou

Robert Mugabe is about to encounter his worst fears. He faces the looming possibility of losing the contest for presidency to his bitter rival Morgan Tsvangirai in the elections billed for July 31, something his backers will unfortunately not be able to prevent.

It’s fairly precise to say that not even a supernatural force will rescue the 89-year-old veteran politician because he couldn’t figure out in time that the reason behind the electorate’s desire to show him the door stems mainly from his poor handling of the economy.

The omens are not encouraging for the wily geriatric. The bottom line is that Mugabe hasn’t a clue about how to fix the country it took him and his party colleagues more than a decade to bring to its knees.

Whereas job creation, the fight against corruption and stuff like that have formed the heart of Tsvangirai’s election campaign, on the other hand Mugabe focused on cheap politics, digging into the annals of history for the same anti-Western propaganda that has for donkey’s years diverted him from the real bread and butter issues ordinary Zimbabweans are grappling with.

Given Mugabe’s track record, a scenario where Zanu PF eventually returns to power is not a promising one. The party already has an irreparable sour relationship with international donors and investors, just when estimates of the cost of rebuilding Zimbabwe’s economy run into tens of US billion dollars.

Those who fancy Mugabe's chances have thrown Tsvangirai’s private love life blunders into the mix, arguing that this has dealt a blow to the former trade unionist’s approval ratings. They are missing the point; love life issues have never had any electoral bearing at all in the history of Zimbabwean politics. Instead, the economy had and it still has even today.

Yes, his indigenisation crusade is also fine-sounding. It’s a remarkable policy on paper, but the moment one begins to see the politically-connected elite being the only recipients, the whole objective of the idea becomes irrelevant and subject of suspicion.

The immediate tasks of a new government will be to revive the productive capacity of industry, rebuild the rundown infrastructure, create jobs and reduce the country’s stock of external debt among others. Zimbabwe’s total external debt has soared to US$10.7 billion, accounting for 113 percent of GDP. Zanu PF doesn’t have the capability to solve these problems.

Nevertheless, Mugabe’s willpower to extend his rule is very clear, judging from his latest outbursts against the regional SADC bloc and others. If he had any surprise that would help him avoid falling by the wayside, he had about four years of the unity government’s tenure to pull it out of the hat, but alas.

For someone whose calibre is a sheer throwback to the bygone era, it wouldn’t be simplistic to imply that he isn't only completely out of touch with how modern economics operates, but the larger voting public as well.

In the true sense of the word, Zimbabwe is in this mess because the government which ruled prior to the coalition administration had completely lost its moral compass. Mugabe should have been aware of this and corrected it rather than spend most of his energy trying to set up his MDC opponents for failure.

The coalition was formed in 2009. This was after Tsvangirai defeated Mugabe in the first round of the disputed 2008 elections and later withdrew from contesting the second round amid violence by Mugabe's supporters and some security forces.

Once MDC entered into a power-sharing agreement with ZANU-PF,  the uneasy coalition left Prime Minister Tsvangirai holding the baby, when it came to cleaning up the economic mess created during the course of the previous government's term.

Prime Minister Tsvangirai’s intentions were apparent when he named Tendai Biti as finance minister in February 2009. His was to revive the economy and Biti proved to be the ideal picking for the MDC leader from the onset.

Obviously, Biti inherited an economy that was literally in paralysis, given that inflation was at 500 billion percent, without any jobs to even talk of. After he scrapped the worthless local currency and adopted the greenback and other foreign currencies to fend off hyperinflation, the move resulted in the immediate revival of economic activity and food and other basic necessities reappeared on supermarket shelves.

Four years down the line the economic growth momentum that had come along in response to Biti’s reformist approach has begun to fade away.

Mugabe actually began preparing his own political obituary in the late 1990s, when he responded to disgruntled independence war veterans by instructing the reserve bank in 1997 to parcel out hefty compensation benefits to them as a means of preventing a revolt against him.

As a result, interest rates spiralled out of control and the Zimdollar fell by almost 50 percent at a time when foreign currency reserves were already taking a slump due to depressed exports, thereby presenting an acute balance of payments problem.

His fortunes turned for the worst following his 2000 chaotic land reforms, the source of the Agriculture sector’s destruction and ensuing economic collapse.

Mugabe’s strategy of keeping the international community at arm’s length has been successful but he still will find himself out of power come July 31.His anti-Western rhetorical stance has been of little comfort to millions who have had to put up with 33 years of corruption, autocracy, broken promises and survival on a bare minimum or less. Rather than solve these problems, he has helped deepen them.

We can fast-forward to August 2013, by which time a new government would have been voted into office. If countervailing forces would have had their way, Zimbabweans who languish in record 80 percent unemployment, with no hope whatsoever for a brighter future could see off these challenges courtesy of pragmatic supply-side economic policies adopted and implemented in due course.

The next government hence should focus on rebuilding the economy to its full potential, as well as accord the masses the democracy and living standards that have eluded them over the decades; it’s as simple as that.

Conspiracy theories and the tendency to play the victim will not prevent Mugabe from bowing out anymore. This blogger certainly hasn’t a crystal ball, but would self-assuredly put  his neck on the block and forecast a new beginning and prosperity in the times ahead once Mugabe’s fairy-tale end has come to pass.

Zimbabwe aid:Can Japan step into the breach?

By Justice Zhou

Japan has kicked up a bit of dust by employing the controversial quantitative easing policy, showing all and sundry that it can no longer afford to confine itself in that little vicious cocoon of deflation and slow economic growth.

Following his return to government after a five year hiatus, Prime Minister Shinzō Abe is also reaching out to Africa this time around with plenty of fire in his belly—increasing development aid and investment pledges to Africa in particular, and Zimbabwe in general.

It seems the wheels of “Abenomics” are starting to turn, at a time when Japan was already being viewed as a missing link in the global economic recovery efforts. This perhaps marks the end of two decades of deflation for an economic and technological miracle that was once the envy of the entire world, and so much for the yen’s troubles.

Abenomics refers to the economic policies advocated by Japanese premier Abe, meant to fix his country’s macroeconomic problems.

Even so, analysts and economists are still at variance on whether it’s eventually crack of dawn in the “land of the rising sun”, with some of its most acerbic critics still regarding Japan as an also-ran, a no-hoper on the world economic and financial arena.

But the Asian economic giant’s promise to fork out about US$32billion to support the building of infrastructure, spurring of growth and to encourage Japanese firms to invest in Africa over the next five years is rather superb, if not of monumental significance.

Abe announced the package at the just-ended Tokyo International Conference on African Development (TICAD), in which Zimbabwean President Robert Mugabe also partook among other African leaders.
TICAD) ended with Zimbabwe also expected to benefit considerably from renewed Japanese support programmes.

Zimbabwean Ambassador to Japan Stuart Comberbach was quoted in the media as having said Japanese officials pledged to invest in different sectors of Zimbabwe’s economy.

State media reports have implied that Mugabe’s visit could mean the start of Zimbabwe’s break out from “Western-imposed isolation”.

Will Tokyo step into the breach?

Will Tokyo step into the breach? Will it fall over its back, straying from its foreign policy—which is anchored on the belief that peace and prosperity at home contributes to peace and prosperity abroad—simply to cater for the whims of a few crooked Zimbabwean politicians?

I doubt if Japan will stoop so low, or its policymakers’ minds be clouded by their country’s appetite for natural resources to such an extent that they would ignore their earlier pledge to rally round Africa by bolstering inclusive growth which trickles down to the poor.

However, Zimbabwe has ample natural resources for its part, while on the other hand Japan’s commitment and relations with Zimbabwe have been cordial over many years until late 2000, for obvious political goings-on in the southern African country.

Japan’s overtures should be welcomed with both hands, but right now the greatest challenge facing Zimbabwe is its rather cryptic election poser. Who knows what the outcome of the upcoming polls would be? Who will be in charge of government after the much-anticipated elections?

If the answer to the latter is that the next government will be that which relishes international trust, upholds good governance, looks after its poor and unemployed people and adheres to the tenets of constitutionalism, fights corruption and political cronyism, then Japan’s aid or investment will come in handy.But if it’s exactly the opposite of that, then we can as well kiss good bye to economic recovery in Zimbabwe.

Lukewarm presence

Even as Japanese involvement in Zimbabwe has noticeably been characterised by a lukewarm presence in the last decade or so, what the Asian country has done for us is beyond measure.

Growing up in a remote rural part of southern Zimbabwe in the late 90s, it wasn’t difficult to notice even at my schooling age the enormity of Japanese presence in many aspects of social and economic development—road and dam construction, sinking of boreholes, financial and technical assistance to small-holder farmers, health and educational support, you name it.

If you were in Zimbabwe at the time you can recall vividly the many DDF (District Development Fund) trucks emblazoned with the Zimbabwean and Japanese flags, the record speaks for itself.

It’s therefore disingenuous for Zimbabwe government officials to seethe with dissatisfaction and blast Japan for having not helped enough or having withdrawn most of its aid. There’s just  lots of corruption and bad governance to go around. Who would want to risk throwing money into a bottomless pit?

Green-Fuelling Zimbabwe against high inflation

By Justice Zhou

If ever there was something too ghastly to imagine for most Zimbabweans, it would be the prospect of the local economy sliding back into hyperinflation. We all still have a terrible recollection of how people in this country have had their hands full, trying to deal with a local currency whose loss of value had literally spiralled out of control.

During the peak of the hyperinflation period, the Zimdollar had lost almost every characteristic of what could be described as money, as people laboured with bagfuls of the worthless currency in pursuit of too few goods and services which were mostly obtained on the black market.

The net result was of life eventually becoming harder for the jobless and pensioners, while creditors and those who had savings accounts at banks could only watch helplessly as their real money went up in flames.

Foreign exchange became gold—a preserve for speculators who by any chance had connections in the financial and political spheres, unless one had relatives sending it from the diaspora.

The electronic calculators were rendered useless in no time and the local currency went through different exchange rates each day, whereas consumer prices changed every now and then. Almost every hour price adjustments were made on supermarket shelves.

What central bank authorities could merely do in response to that was inexplicably print more money on a regular basis and then rebase on occasion when the currency’s zero digits re-multiplied, a measure which didn’t— and was never going to— solve the underlying problem anyway.

But if that was any lesson, what ammunition is there at our disposal to make use of in the event a problem of that sort recurs in future? Perhaps the starting point would be to weigh our options around the so-called Green Fuel. And I'm sure this isn’t mere hyperbole.

While experts have reflected on the pros and cons of blending locally-produced ethanol with imported petrol, I hardly hear any debate to do with its impact on inflation rate. But I have a very strong conviction that this could come in handy for us, to a certain extent.

Sadly, this whole Green Fuel issue is currently mired at the centre of a turbulent political storm as greedy individuals have, for some reason, done a hatchet job on the Chisumbanje ethanol project. In actual fact, they have made a travesty of a national strategic scheme that could immensely contribute in changing the economic fortunes of this country.

Notably, liquid-fuel imports have for a long time in the past been some of the major guzzlers of foreign exchange and have been a source of pressure on the Zimdollar and the balance of payments account.

But it’s self-evident that since the economy began to recover in 2009, demand for petrol has dramatically peaked again, pushed up by the booming markets for imported Japanese cars, and petrol-powered generators—owing to frequent power cuts.

Our multicurrency/US dollar regime has spared us the vagaries of high inflation, and maybe stagflation as well. Economists define stagflation as an economic condition that is characterised by slow economic growth, rapidly rising consumer prices, and relatively high unemployment.

The most unfortunate dynamic is that non-oil producing Zimbabwe can’t do without these fuels, yet when the spot price of Brent Crude oil climbs at the slightest geopolitical alarm or other OPEC factors, there’s little we can do about it.

We won’t escape the fact that the cost of petrol at the service station pump is based on the import parity principal. In a nutshell, the final pump price of fuel is made up of international and domestic price elements. These include the cost of fuel at the refinery, transportation at sea and on land, wharfage charges at seaports, insurance, and so on.

Zimbabwe— which at present imports fuel through the 287 km oil pipeline from Beira in Mozambique to the Feruka Oil Refinery at Machipanda on the Zimbabwean border near Mutare— blends10 percent ethanol with 90 percent unleaded petrol to produce Green Fuel. But its use is currently not legally binding for motorists.

To make matters worse, there hasn’t been a meeting of minds between the rival political parties in the coalition government concerning the ownership structure of the Green Fuel-producing company, which is a partnership between the government and a private company, a development which has thrown the future of the project into disarray.

However, the widespread calls by some experts for the blending ratio of ethanol-to-petrol to be increased may just be one thing worth looking into, if indeed we are to reduce the effects of imported petrol on the rate of consumer price changes in the coming years.

Let’s take a cue from Brazil, where this method has been successfully applied. Certainly, what's sauce for the goose is sauce for the gander.

Of course, one would as well understand that the government is dealing with competing ends. That the much needed tax revenues from fuel imports can’t be forfeited is a forgone conclusion.

If the likelihood of Green Fuel having the potential to provide a home-grown petrol alternative and to act as a firewall against inflation were to be closely explored, I am pretty convinced the outcome wouldn’t be as unsatisfactory.