Zimbabwe Lesson for Venezuela: Fixing Broken States Is Hard

HARARE (Capital Markets in Africa) – Simukai Tabvura knew nothing other than Robert Mugabe’s strongman rule in Zimbabwe until his ousting little more than a year ago. The promise of change that accompanied the end of Mugabe’s near-four-decade reign has long since withered for the used clothes seller.

“It’s like a year of being able to speak freely never happened,” said Tabvura, 41, sitting on a home-made wooden stool at her second-hand stall on a broken sidewalk in the capital, Harare. “One day we were able to support who we wanted and the next they came back like before with guns and whips and batons.”

The bitter reality of Zimbabwe’s political transition offers lessons for countries such as Venezuela, where Nicolas Maduro is clinging to power in the face of mass protests and economic collapse. For if you think it’s easy to fix a broken state after the decades-long reign of one brutal leader, Zimbabwe shows that’s not the case.

“They say one thing, talk of freedom and openness, let it happen for a while, then with no warning, it’s back to the old tactics they always used,” said Tabvura.

Hollow Pledges
When Mugabe was deposed by the military in late 2017, citizens spilled onto the streets in celebration. Yet pledges of economic recovery and political freedom made by their new leader, Emmerson Mnangagwa, have come to nothing.

Fifteen months into his rule the economy is in the worst state since 2008. Fuel prices are the world’s highest, basic goods such as bread are scarce and Mnangagwa has presided over the most brutal suppression of urban protests since independence in 1980. Mugabe, now 95 and in ill health, has left a legacy of a dysfunctional economy and a ruling party at war with itself.

Protesters gather near a burning tire during a demonstration over the hike in fuel prices in Harare.

It could all have been so different. When Mugabe, the schoolteacher who led a guerrilla army in the 1970s, spoke after winning elections at independence, he preached reconciliation with the white minority that had ruled the nation since 1896.

He took over a country that, like Venezuela, was blessed with resources. Zimbabwe produced grain surpluses, tobacco rivaling the quality of that produced in Virginia, had Africa’s second-largest industrial sector and a functional road and rail network, a rarity on the continent. Where Venezuela boasted oil, Zimbabwe’s potential was boosted by platinum and chrome reserves second only to South Africa and a host of other metal and mineral deposits.

“It had a phenomenal agricultural industry and had Zimbabwe kept that pace of development and growth you would probably have seen it develop into a significantly powerful neighbor for South Africa,” said Aditi Lalbahadur, a researcher at the South African Institute of International Affairs.

Currency Crisis

Mnangagwa has adopted the mantra of “Zimbabwe is open for business” and has attempted to lure investment from the west as well as the country’s traditional partners, Russia and China. But his attempts have been stymied by a currency crisis that’s triggered a resurgence of inflation and is causing many of the few remaining businesses to close.

Complicating his job is resistance from within the ruling Zimbabwe African National Union-Patriotic Front. Many of its leaders, some of them influential members of the military, are opposed to changing the status quo.

In addition to being distrustful of the west, which the party blames for helping to orchestrate last month’s fuel-price riots, some in the leadership benefit from preferential access to hard currency, control of the lucrative fuel-import trade and opportunities to smuggle diamonds, party officials said, asking not to be named discussing sensitive political matters.

Mnangagwa, who appointed former armed forces leader Constantino Chiwengaas his deputy, was caught unaware as soldiers, or men in military uniform, killed six people in August and 12 last month when they fired live ammunition, the officials said. Both times the president condemned the use of excessive force but hasn’t followed through by punishing the perpetrators.

Mnangagwa’s allies blame Chiwenga and other military officials for the violence. Repeated calls to Chiwenga’s office have gone unanswered, and he hasn’t spoken publicly about the issue.

The Crocodile
The conundrum the former spy chief, known as the crocodile, faces is that Chiwenga led the coup that put him in power and the military ultimately guarantees his position. Even so, that means his trips to Davos and New York to kick start an investment drive and win support from lenders such at the International Monetary Fund have achieved little.

“The international community is not convinced that Zimbabwe has changed,” Lalbahadur said.

Mnangagwa himself faces credibility problems when he speaks of openness and chastises the military. He was minister of state security in the mid-1980s when a military crackdown saw an estimated 20,000 people from the Ndebele minority killed. And in 2002 a United Nations panel urged that he be slapped with sanctions because of his alleged involvement in looting in the Democratic Republic of Congo, where the Zimbabwean army had been deployed.

Mugabe turned a blind eye to the activities of military leaders who operated money-making schemes under his rule, including securing one of the world’s biggest diamond fields in eastern Zimbabwe and spiriting away most of its output.

Economic and political reform would end such operations, but the current situation isn’t sustainable. Zimbabwe abandoned its currency in 2009 after inflation reached 500 billion percent and now mainly uses the dollar. Hard currency is scarce with little foreign exchange coming in after Mugabe’s violent land reform program decimated the farming industry and threats of nationalization, or local control, halted mining investment.

The issuing of so-called bond notes, securities the government insists are tied to the dollar but aren’t accepted outside the country, has created a black market that’s stoked inflation. Up to a quarter of the population has left the country.

Fanning Unrest
Mnangagwa’s Oxford-trained finance minister, Mthuli Ncube, faces the choice of paying off $2 billion in arrears that need to be settled before the country can win new loans from multilateral lenders or purchase essential imports such as gasoline and wheat. Talks are ongoing to secure a $1.2 billion loan from South Africa, but it doesn’t have cash to spare.

As in Venezuela, the increasingly desperate situation is fanning unrest — teachers on Tuesday began a strike following earlier industrial action by state doctors — and confronting the leadership with hard choices. Mnangagwa can purge his opponents from government and risk a coup, or he can stick with the status quo and face further protests and a deepening economic crisis.

After 25 years of turmoil, “the problems in Zimbabwe are long-term systemic,” said Lalbahadur. “Zimbabwe’s pressing concern is an economic one, but it is intertwined with a political one.”

Source: Bloomberg Business News