[Senate Hearing 115-620]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 115-620

                      ZIMBABWE AFTER THE ELECTIONS

=======================================================================

                                HEARING

                               BEFORE THE

                      SUBCOMMITTEE ON AFRICA AND 
                          GLOBAL HEALTH POLICY

                                 OF THE

                     COMMITTEE ON FOREIGN RELATIONS
                          UNITED STATES SENATE

                     ONE HUNDRED FIFTEENTH CONGRESS

                             SECOND SESSION

                               __________

                             DECEMBER 6, 2018

                               __________


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                 COMMITTEE ON FOREIGN RELATIONS        

                BOB CORKER, Tennessee, Chairman        
JAMES E. RISCH, Idaho                ROBERT MENENDEZ, New Jersey
MARCO RUBIO, Florida                 BENJAMIN L. CARDIN, Maryland
RON JOHNSON, Wisconsin               JEANNE SHAHEEN, New Hampshire
JEFF FLAKE, Arizona                  CHRISTOPHER A. COONS, Delaware
CORY GARDNER, Colorado               TOM UDALL, New Mexico
TODD, YOUNG, Indiana                 CHRISTOPHER MURPHY, Connecticut
JOHN BARRASSO, Wyoming               TIM KAINE, Virginia
JOHNNY ISAKSON, Georgia              EDWARD J. MARKEY, Massachusetts
ROB PORTMAN, Ohio                    JEFF MERKLEY, Oregon
RAND PAUL, Kentucky                  CORY A. BOOKER, New Jersey




        SUBCOMMITTEE ON AFRICA AND GLOBAL HEALTH POLICY        

                 JEFF FLAKE, Arizona, Chairman        
TODD YOUNG, Indiana                  CORY A. BOOKER, New Jersey
JOHN BARRASSO, Wyoming               CHRISTOPHER A. COONS, Delaware
JOHNNY ISAKSON, Georgia              TOM UDALL, New Mexico
RAND PAUL, Kentucky                  JEFF MERKLEY, Oregon




                  Todd Womack, Staff Director        
            Jessica Lewis, Democratic Staff Director        
                    John Dutton, Chief Clerk        



                              (ii)        

  
                            C O N T E N T S

                              ----------                              
                                                                   Page

Young, Hon. Todd, U.S. Senator from Indiana......................     1


Booker, Hon. Cory A., U.S. Senator from New Jersey...............     7




Harrington, Hon. Matthew, deputy assistant secretary, Bureau of 
  African Affairs, U.S. Department of State, Washington, DC......     5

    Prepared statement...........................................     7

    Responses to Additional Questions for the Record Submitted to 
      Hon. Matthew Harrington by Senator Cory A. Booker..........    42

    Responses to Additional Questions for the Record Submitted to 
      Hon. Matthew Harrington by Senator Christopher A. Coons....    44


Moss, Dr. Todd, senior fellow, Center for Global Development, 
  Washington, DC.................................................    13

    Prepared statement...........................................    15


Mutizwa, Joseph, managing consultant, JSM Strategic Pathways, 
  Harare, Zimbabwe...............................................    17


    Prepared statement...........................................    27

    Responses to Additional Questions for the Record Submitted to 
      Joseph Mutizwa by Senator Cory A. Booker...................    44



              Additional Material Submitted for the Record

Statement Submitted by The Honorable Professor Mthuli Ncube, 
  Minister of Finance and Economic Development...................    37

                                 (iii)

  

 
                      ZIMBABWE AFTER THE ELECTIONS

                              ----------                              


                       THURSDAY, DECEMBER 6, 2018

                               U.S. Senate,
   Subcommittee on Africa and Global Health Policy,
                            Committee on Foreign Relations,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 10:03 a.m. in 
Room SD-419, Dirksen Senate Office Building, Hon. Jeff Flake, 
chairman of the subcommittee, presiding.
    Present: Senators Flake [presiding], Young, Booker, and 
Coons.

             OPENING STATEMENT OF HON. JEFF FLAKE, 
                   U.S. SENATOR FROM ARIZONA

    Senator Flake. This hearing of the Senate Foreign Relations 
Subcommittee on Africa and Global Health will come to order.
    We had the noms hearing just a few--well, last week, the 
week before. We thought that would be the last one for this 
subcommittee, but we liked it so much we thought we would come 
back. So we have to do hearings from A to Z or A to Zed, and I 
guess this is Zed right here with Zimbabwe. So we are glad to 
finish off for the Congress with this hearing.
    I appreciate Senator Young being here. I know he has to 
leave in a minute. And Senator Booker will give remarks and 
then leave as well. Senator Coons will be arriving. He is on 
the Senate floor right now.
    Last July, the people of Zimbabwe voted in a presidential 
election where, for the first time in nearly four decades, 
Robert Mugabe was not on the ballot. Mugabe's ouster was 1 year 
ago, and that era it ushered in held the promise of peace and 
prosperity for the people of Zimbabwe who have suffered for far 
too long.
    I had the honor of serving as an election observer where I 
bore witness to the excitement of thousands who walked for 
miles and waited in long lines to cast votes that mattered. I 
was there in a tent late at night watching them count ballots 
by kerosene lamp, and it was democracy in its rawest form. And 
it was a pleasure to be there.
    But the next day the excitement turned to horror and 
disappointment when six people were killed by the army in the 
streets of Harare after demonstrations turned violent. We then 
watched as opposition figures like Tendai Biti, who is a 
sitting member of the Zimbabwe Parliament and certainly well 
known to this committee, were arrested on charges of inciting 
post-election violence. For all of us who have been rooting for 
change in Zimbabwe, especially the Zimbabweans themselves, 
these events were crushing.
    Nevertheless, calm returned and the constitutional court 
eventually declared Emmerson Mnangagwa the winner of the 
election, an election result, I should add, that was consistent 
with reports issued by entities funded by Western governments, 
including our own.
    Since that time, President Mnangagwa has largely been 
saying the right things. Some of the reforms, however, have 
been slow to come. Zimbabwe may be open for business, as is the 
slogan now, but foreign direct investment has not flowed into 
the country as many are still wary of the investment climate 
there.
    Zimbabwe's economy has gone from bad to worse, leaving 
people with no access to cash, facing acute shortages of 
consumer goods and fuel, and opposition figures and their 
families continue to be harassed at times. And the fate of 
those, including Tendai Biti, who were arrested in the wake of 
post-election violence, remains unclear.
    But there are signs of promise. The budget put forward by 
the government in October is very encouraging. President 
Mnangagwa has pledged to push parliament to repeal two 
controversial measures passed by the Mugabe regime that 
directly contradict Zimbabwe's constitution, and for the first 
time in decades, democratic space is being opened in Zimbabwe. 
And the corrupt shakedowns that Zimbabweans faced on a daily 
basis for years under the Mugabe era have been a thing of the 
past since his ouster.
    The purpose of today's hearing is to get a better 
understanding of the course Zimbabwe is on so that in the 
months ahead Congress can evaluate U.S. policy options and play 
a constructive role.
    I have long wished to see Zimbabwe prosper in a manner that 
its people deserve. What happened in the country since I lived 
there in 1983 is nothing short of a tragedy.
    That is why I, along with Senator Coons, introduced the 
Zimbabwe Democracy and Recovery Amendment Act earlier this 
year, and the bill, which was signed into law this summer, 
reinforces the markers that the new government needs to meet in 
order to forge a better bilateral relationship with the United 
States. But it also signals that the U.S. does, in fact, want 
to have a constructive bilateral relationship with Zimbabwe. I 
hope to get a better sense today from our witnesses of whether 
the new government in Zimbabwe is prepared for that as well.
    Let me just say in closing what a privilege it has been for 
me to work and be involved with Zimbabwe. As most of this 
committee knows, I spent time in Zimbabwe 35 years ago as a 
Mormon missionary, and several years ago, I was able to 
reconnect with friends there whom I had not seen since the 
early 1980s, including one of my missionary companions there, 
Peter Chaya, who despite a severe disability brought on by 
polio as a child, has managed to raise four children and 
contribute a great deal to his country.
    I think of friends like Peter Chaya and know that they 
deserve much more than they have gotten. They deserve a 
government that represents them, one that will allow them to 
follow their dreams and realize the dreams of their children. 
And it is my hope that we in the U.S. Congress can play a 
constructive role in making that happen.
    So to my colleagues, I say, as they say in Zimbabwe, 
tatenda, thank you. Thank you for indulging my interests and 
allowing me to be involved in a country and with a people that 
I love so dearly.
    And with that, I will turn it over to Senator Booker for 
his remarks.

               STATEMENT OF HON. CORY A. BOOKER, 
                  U.S. SENATOR FROM NEW JERSEY

    Senator Booker. Thank you very much.
    I thought the last hearing was going to be our last, so I 
heaped praise and gratitude on the great Senator and the great 
Chairman Flake. I think he scheduled this one really not about 
Zimbabwe, but just to hear me again say nice things about him. 
[Laughter.]
    Senator Booker. But I am not going to say nice things about 
him. I am actually going to criticize him right now because he 
could probably give a master's class in being a father, a 
grandfather, and a great husband. But the fact that on your 
potentially last hearing, you would not point out your 
extraordinary wife is in the audience is just to me bad form. 
[Laughter.]
    Senator Flake. You are stealing my thunder. [Laughter.]
    Senator Flake. Go ahead.
    Senator Booker. And she, like you, has been such a great 
leader on issues on the continent. I did travel to Zimbabwe 
with you, but frankly, more importantly for me, I traveled 
there with her and saw her mastery of these issues and how she 
too has been a partner of yours in trying to support and help 
the people of Zimbabwe. So I just want to point her out in the 
audience right there and to one-up you.
    Senator Flake. I will add sitting next to her is my son 
Austin.
    Senator Booker. Oh, I did not realize that. The son also 
rises. [Laughter.]
    Senator Flake. Thank you.
    Senator Booker. So I want to thank the witness for being 
here. I express my apologies for having to leave in a matter of 
seconds, but I want to thank you and all for the testimonies.
    I am grateful for this hearing. Zimbabwe, again, as I said, 
has been a part of the Senator's life for 35 years, and he has 
been a tremendous leader and humanitarian in his support.
    When we visited last April, I was struck by the optimism 
and hope expressed by so many there about the country's future. 
President Mugabe we know had recently stepped down from power. 
President Mnangagwa was saying the right things about the need 
for reforms. International observers were invited to observe 
the elections and to make sure that the people of Zimbabwe had 
a true democracy.
    But Zimbabwe needs more than hope. It needs real reforms. 
And unfortunately, the election has not been a turning point 
that I think the people of Zimbabwe deserved and desired.
    According to the joint NDI/IRI international observation 
mission, incremental improvements in the electoral environment 
during the pre-election period were insufficient to establish 
the kind of broad confidence among the political competitors in 
Zimbabwe's sharply divided populace. It found that Zimbabwe has 
not yet demonstrated that it has established a tolerant 
democratic culture that enables the conduct of elections in 
which parties are treated equitably and the citizens can cast 
their vote freely.
    The immediate post-election period was seriously marred by 
the excessive use of force when the Zimbabwean defense forces 
actually opened fire and killed six individuals protesting the 
election commission's delayed reporting of the presidential 
election results. This violence was accompanied by credible 
reports of reprisals against opposition activists in certain 
parts of the country and calls for the arrest of senior 
opposition officials. These are not the actions of a government 
that has turned a new leaf.
    For decades Congress has played a key role in the U.S.-
Zimbabwe bilateral relationship, most notably through the 
Zimbabwe Democracy and Economic Recovery Act, ZDERA, which 
again the chairman has been a leader, author, and activist on. 
It passed in 2001 and amended earlier this year, thanks to, 
again, the chairman's efforts.
    ZDERA aims to address persistent human rights violations 
and governance challenges by prohibiting U.S. support for 
multilateral and bilateral debt relief and credit for 
Zimbabwe's government. A key condition for lifting these 
prohibitions under ZDERA is a free, fair, and credible 
election. It is hard for me to see how these recent elections 
met that condition.
    U.S. policy towards Zimbabwe must continue to be centered 
on human rights accountability, democratic values, and economic 
growth that benefits us all.
    I look forward to hearing the thoughts and having thoughts 
expressed for the record on how Zimbabwe can, indeed, continue 
down that path. And I say this, though Senator Flake may be 
retiring from the Senate, I know he will never, ever, ever 
retire from his efforts on making Zimbabwe a free, more robust 
democracy, and I will continue to partner with him to this end 
for years to come.
    Thank you very much.
    Senator Flake. Thank you so much, Senator Booker. I 
appreciate you being here.
    As I mentioned, Senator Coons is delivering remarks about 
Senator Corker on the floor, and he will join us shortly. Staff 
is here and obviously some will watch from their office.
    But we will have two panels today. The first panel is 
Deputy Secretary of State for African Affairs, Matthew 
Harrington. I met Ambassador Harrington for the first time when 
this committee considered his nomination to serve as Ambassador 
to Lesotho back in 2013. I am pleased to see you again before 
the committee, Ambassador. And I really appreciate you being 
here. I know you had some travel planned that had to be 
reorganized after the funeral for President Bush, but we are 
grateful for you being here and giving your expertise.
    The second panel will feature two witnesses from the 
private sector.
    Todd Moss, former Deputy Assistant Secretary of State, who 
currently serves as Senior Fellow at the Center for Global 
Development, is no stranger to this committee. Todd and I spoke 
in my office yesterday. I was wondering how many times he had 
testified before this committee on this issue and others. I am 
pleased that you could be here, especially given my last 
committee chairmanship here.
    We are also joined by Joseph Mutizwa, who flew here on 
short notice from Zimbabwe to testify today. Mr. Mutizwa is a 
seasoned businessman from Zimbabwe who is experienced in the 
private sector there and as a citizen is important for the 
subcommittee to hear. I met Joseph earlier this year with 
Senator Coons when we traveled to Zimbabwe, and we are looking 
for some good testimony there.
    I also note that Zimbabwe's new Foreign Minister Mthuli 
Ncube expressed an interest to testify here today. It is not 
the practice of the Senate Foreign Relations Committee to hear 
foreign dignitaries testify, although I appreciate his desire 
to be here. I asked him to submit testimony for the record, 
which he did, and that will be part of the record.
    With that, Ambassador Harrington, you are recognized.

    STATEMENT OF HON. MATTHEW HARRINGTON, DEPUTY ASSISTANT 
SECRETARY, BUREAU OF AFRICAN AFFAIRS, UNITED STATES DEPARTMENT 
                   OF STATE, WASHINGTON, D.C.

    Ambassador Harrington. Thank you, Senator.
    Chairman Flake, Ranking Member Booker, and distinguished 
members of the committee, thank you very much for the 
invitation to testify today. I welcome this opportunity to 
share the State Department's assessment of the current 
situation in Zimbabwe, the state of our bilateral relationship, 
and the U.S. position on future engagement.
    Chairman Flake, let me first take a moment to thank you for 
your leadership of this subcommittee. We in the Bureau of 
African Affairs have been profoundly grateful for your 
commitment not only to our efforts in Zimbabwe, but also to 
State Department engagement across the continent of Africa. So 
thank you for that.
    On July 30th, Zimbabwe held its first presidential election 
without Robert Mugabe in nearly 4 decades. The election took 
place after a nearly 40-year history of deeply flawed 
elections, serious human rights challenges, catastrophic 
economic mismanagement, and widespread corruption.
    There were some encouraging signs in the pre-election 
period, including the welcoming of credible international 
observer groups and foreign journalists, and a more permissive 
campaign environment for members of the opposition. And 
election day itself was peaceful, but that is usually the case 
in Zimbabwe.
    Ultimately, however, the process was marred by the army's 
use of deadly force against protestors on August 1st, and 
reports of supporters and state agents of the ruling party, 
ZANU-PF, assaulting and abducting members of the opposition in 
the weeks that followed. It is clear that Zimbabwe has a long 
way to go--and requires profound political and economic 
reforms--to sustainably change the path on which it has been 
for nearly 4 decades.
    Since taking power last year and since his election, 
President Mnangagwa has consistently stated his commitment to 
pursuing political and economic reforms, as well as a better 
relationship with us. We welcome the change in rhetoric from 
the Mugabe years. Since the election, we have seen some 
promising signs, including appointment of a new, more 
technocratic cabinet, announcement of an economic plan 
acknowledging the need for significant monetary and fiscal 
reform, and a budget which, if implemented, would make 
important strides in that direction. So far, however, the pace 
and scale of reforms has been too gradual and not nearly 
ambitious enough.
    A Zimbabwe that is more capable of providing for the needs 
of its own citizens and respecting human rights and fundamental 
freedoms will be a more responsible member of the international 
community. To reach that end, Zimbabwe will require 
implementation of fundamental reforms, not merely a commitment 
to do so. That is a message we have shared consistently with 
Zimbabwean interlocutors, including President Mnangagwa and 
senior members of his government. We want Zimbabwe to succeed 
and we would welcome a better relationship, but the ball is 
squarely in the government's court to demonstrate it is 
irrevocably on a different trajectory.
    There are several steps the government of Zimbabwe could 
take that would send a strong signal to its own people and to 
the international community that it is serious about taking the 
country in a new, more positive direction.
    First, it should repeal laws such as the Public Order and 
Security Act and the Access to Information and Protection of 
Privacy Act, which have long been used to suppress the human 
rights of people in Zimbabwe and which violate its 2013 
constitution.
    Second, the government should immediately end the 
harassment of members of the political opposition. It should 
drop charges against former Finance Minister and prominent 
opposition figure Tendai Biti and all those who have been 
arbitrarily detained for exercising their human rights and 
fundamental freedoms.
    Third, the government should hold perpetrators of the 
August 1st violence fully accountable.
    And fourth, the government should move quickly to ensure 
legislation is consistent with the 2013 constitution, as well 
as uphold its letter and spirit.
    Those four actions will not by themselves transform 
Zimbabwe, but would constitute significant steps in the right 
direction.
    We will continue to consult closely with Congress on our 
approach towards Zimbabwe. The Zimbabwe Democracy and Economic 
Recovery Act, recently updated by Congress, has provided a very 
important tool for us and clearly identified the reforms that 
we expect: restoration of the rule of law, a commitment to 
equitable, legal, and transparent land reform, and ensuring 
that military and national police forces are subordinate to the 
civilian government.
    In conclusion, the United States wants a stable, peaceful, 
democratic Zimbabwe that is genuinely accountable to its 
citizens and responsive to their needs. If there is real, 
concrete progress along those lines, the government and people 
of Zimbabwe will find a committed partner in the United States.
    Thank you very much, and I welcome the committee's 
questions.
    [Ambassador Harrington's prepared statement follows:]


                Prepared Statement of Matthew Harrington

    Chairman Flake, Ranking Member Booker, and distinguished members of 
the committee, thank you for the invitation to testify today. I welcome 
this opportunity to share the State Department's assessment of the 
current situation in Zimbabwe, the state of our bilateral relationship, 
and the U.S. position on future engagement.
    Chairman Flake, let me first take a moment to thank you for your 
leadership as the Chairman of this Subcommittee. We in the Bureau of 
African Affairs have been profoundly grateful for your commitment not 
only to our efforts in Zimbabwe, but also to State Department 
engagement across the continent of Africa. Assistant Secretary Tibor 
Nagy sends his regrets that he cannot be here to personally convey his 
gratitude for your strong support, but he is currently traveling in 
East Africa.
    On July 30, Zimbabwe held its first presidential election without 
Robert Mugabe in nearly four decades. The election took place after a 
nearly 40-year history of deeply flawed elections, serious human rights 
challenges, catastrophic economic mismanagement, and widespread 
corruption.
    There were some encouraging signs in the pre-election period, 
including the welcoming of credible international observer groups and 
foreign journalists, and a more permissive campaign environment for 
members of the opposition. And Election Day itself was peaceful, but 
that has usually been the case in Zimbabwe. Ultimately, however, the 
process was marred by the army's use of deadly force against protestors 
on August 1 and reports of supporters and state agents of the ruling 
party ZANU-PF assaulting and abducting members of the opposition in the 
weeks that followed. It is clear that Zimbabwe has a long way to go--
and requires profound political and economic reforms--to sustainably 
change the path on which it has been for nearly four decades.
    Since taking power last year and since his election, President 
Mnangagwa has regularly stated his commitment to pursuing political and 
economic reforms, as well as a better relationship with us. We welcome 
the change in rhetoric from the Mugabe years Since the election, we 
have seen some promising signs from the Government, including 
appointment of a new, more technocratic cabinet, announcement of an 
economic plan acknowledging the need for significant monetary and 
fiscal reform, and a budget which, if implemented, would make important 
strides in that direction. So far, however, the pace and scale of 
reforms has been too gradual and not nearly ambitious enough.
    A Zimbabwe that is more capable of providing for the needs of its 
own citizens and respecting human rights and fundamental freedoms will 
be a more responsible member of the international community. To reach 
that end, Zimbabwe will require implementation of fundamental reforms--
not merely a commitment to do so. That is a message we have shared 
consistently with Zimbabwean interlocutors, including President 
Mnangagwa and senior members of his government. We want Zimbabwe to 
succeed and would welcome a better bilateral relationship, but the ball 
is squarely in the Government's court to demonstrate it is irrevocably 
on a different trajectory.
    There are several steps the Government of Zimbabwe could take that 
would send a strong signal to its own people and to the international 
community that it is serious about taking the country in a new, more 
positive direction. First, it should repeal laws such as the Public 
Order and Security Act, and the Access to Information and Protection of 
Privacy Act which have long been used to suppress the human rights of 
people in Zimbabwe and which violate Zimbabwe's 2013 constitution.
    Second, the Government should immediately end the harassment of 
members of the political opposition. It should drop charges against 
former Finance Minister and prominent opposition figure Tendai Biti and 
all those who have been arbitrarily detained for exercising their human 
rights and fundamental freedoms. Third, the Government should allow the 
Commission of Inquiry to work transparently and independently, and hold 
perpetrators of the August 1 violence fully accountable. And fourth, 
the Government should move quickly to ensure legislation is consistent 
with the 2013 constitution, as well as uphold its letter and spirit.
    These four actions won't by themselves transform Zimbabwe, but 
would constitute significant steps in the right direction.
    We will continue to consult closely with Congress on our approach 
toward Zimbabwe. The Zimbabwe Democracy and Economic Recovery Act, 
recently updated by Congress, has provided a very important tool and 
clearly identified the reforms we expect: restoration of the rule of 
law, a commitment to equitable, legal and transparent land reform, and 
ensuring that military and national police forces are subordinate to 
the civilian government.
    In conclusion, the United States wants a stable, peaceful, 
democratic Zimbabwe that is genuinely accountable to its citizens and 
responsive to their needs. If there is real, concrete progress along 
those lines, the Government and people of Zimbabwe will find a 
committed partner in the United States.


    Thank you very much. I welcome the committee's questions.
    Senator Flake. Thank you, Ambassador.
    Can you talk a little about ZANU-PF? They are obviously the 
opposition to the MDC. But within ZANU-PF, does Mnangagwa have 
free rein or are there divisions within his own party?
    Ambassador Harrington. ZANU-PF is deeply factionalized I 
would say. One encouraging sign that we saw recently was the 
appointment of some new faces to the cabinet, technocratic 
members of the cabinet who have some experience in the private 
sector and in international development. And I think many of 
those are trying to do the right thing.
    At the same time, there are a lot of the old guard who 
remain in influential positions. And I think one of the 
challenges the reformers will face is that the political elites 
have held onto power through deeply entrenched patronage 
networks and will be threatened by some of the reforms that 
have been proposed and will do everything they can to try to 
undermine those efforts.
    Senator Flake. President Mnangagwa took over about a year 
ago, but he has only been the elected President for about 4 
months now. Is that sufficient time to carry forward or carry 
through on the reforms that need to be taken?
    Ambassador Harrington. Senator, I guess I would answer that 
in two ways.
    One, it took Zimbabwe a long time to dig itself into this 
mess, and I think it will take some time to dig itself out of 
the hole, number one.
    But two, there some things, some steps the government could 
take now to send the right message that it is trying to move 
Zimbabwe in a different direction. And these are steps that we 
have shared with the government.
    Number one, as I mentioned in my opening remarks, repeal of 
POSA and AIPPA, two very repressive pieces of legislation. It 
could be done now. It does not require support or assistance 
from the international community.
    Number two, a need to stop harassing members of the 
political opposition. You mentioned the charges against Tendai 
Biti. We think those should be dropped. There was an incident a 
couple of weeks ago of somebody being arrested in Bulawayo 
simply for criticizing the president. So that sort of stuff can 
be stopped now and would send the right message that things are 
changing.
    The commission of inquiry that was convened by the 
president to investigate the violence on August 1st has now 
completed its work and submitted its report to the president. 
It has not yet been made public. We would encourage the 
president to make the findings of that commission public and, 
if the recommendations are credible, to implement those 
recommendations. Ultimately we are looking for those who are 
responsible for what happened on August 1st and in the 
aftermath to be held accountable.
    And the fourth step we would ask them to take is to begin 
to align a number of pieces of legislation with the 2013 
constitution. These are steps that they could take in the short 
term without a whole lot of assistance from the international 
community and would send the right messages I think.
    Senator Flake. Can you talk a little about the opposition, 
MDC? There are factions within the MDC. Mr. Chamisa does not 
have a seat in parliament. Tendai Biti does. What has been 
their response? Are they still holding protests or disputing 
the election results?
    Ambassador Harrington. The MDC has long been factionalized, 
as you know. The biggest part of the MDC now is the MDC 
Alliance led by Nelson Chamisa. The MDC Alliance and Mr. 
Chamisa himself have not moved beyond the election. I think 
they continue to challenge the legitimacy of the election. Mr. 
Chamisa led a protest last week in downtown Harare challenging 
those results.
    I think clearly the election was not a level playing field. 
There were major issues with the election. It was better than 
past Zimbabwean elections, but granted, the bar is low in that 
respect.
    What we would like to see from the opposition: one, we 
encourage dialogue between the MDC Alliance and government. We 
think that is important. We would like to see the opposition 
play a role in defining what the important reforms are moving 
forward to move Zimbabwe in a different direction and to play a 
role in determining how those will be implemented.
    And so we would encourage the opposition to engage in that 
kind of dialogue and also begin to present an alternative 
vision for where it wants to lead the country and build public 
support for that.
    Senator Flake. U.S. representatives in the international 
finance institutions are prohibited from voting in favor of new 
loans to Zimbabwe under the rules that were put in place by the 
U.S. Congress until rule of law, transparent land reform, all 
these things that we have talked about. How far do you think 
the Zimbabwean Government is right now from meeting these 
goals? What is a realistic timetable, and what should the 
posture of the U.S. Congress be in the meantime?
    Ambassador Harrington. I think, as I noted in my 
introductory remarks, I think the tone is different. The budget 
that was recently submitted in late November by the finance 
minister, who you mentioned in your remarks, contains some 
important steps that, if implemented, would begin to lead 
Zimbabwe in a good direction on the economic side. I think one 
of the things that we have stressed in our interactions at all 
levels of the Zimbabwean Government--those meetings often start 
on their side with the statement, Zimbabwe is open for 
business, as you indicated. And that is fine, but we have 
reminded our interlocutors that the political reforms are just 
as important and inextricably linked to the economic reforms as 
well.
    So a lot of promises have been made. Not a whole lot of 
action has been implemented. And I think the steps that I laid 
out, some of the steps they could take to send the right 
messages, could be done in a matter of months.
    Senator Flake. Well, thank you.
    Senator Coons has arrived. As I have noted before, we have 
traveled a number of times to the region and to the country of 
Zimbabwe. Memorably a few years ago, we sat down for a very 
long dinner with Robert Mugabe that we really did not ask for, 
but it got done nonetheless. And later Chris led a memorable 
CODEL where we met with President Mnangagwa before the 
elections and heard some of the commitments that were being 
made at that time, some of which have been followed through on, 
some of which still need to make progress on. But I want to 
turn this over to Chris Coons.
    Senator Coons. Thank you, Senator Flake. Thank you for 
being a tremendous chairman of the subcommittee and for the 
opportunity to travel with you and work with you.
    Zimbabwe, as I am sure we all know--it was an important 
place that helped shape a young Jeff Flake. And he and I are 
just about the same age, and I spent a similar amount of time 
in Kenya and South Africa as he did in Zimbabwe and South 
Africa and Namibia. And to have the chance to work with you on 
these issues, to travel with you has been a great blessing.
    That trip in February of 2016 that resulted in the 
unscheduled tea with Robert Mugabe--you know, some day, should 
either of us write a book, I bet you that deserves a chapter 
right there. It was a fascinating insight into the dynamics at 
the time and the challenges that our ambassador faced and that 
our relationship faced.
    And when we got to return this past April, to meet with a 
whole series of Zimbabwean leaders, it was a reminder just how 
much potential and promise there is in Zimbabwe, just how badly 
the people of Zimbabwe need reforms in the economy and in the 
governance. We did, indeed, have encouraging conversations with 
President Mnangagwa and a wide range of civil society and 
economic leaders.
    We worked hard to pass ZDERA, the Zimbabwe Democracy and 
Economic Recovery Amendment Act, together, updating the 
framework for U.S.-Zimbabwe relations. And four months after 
elections and after the passage of the ZDERA Amendment Act, I 
am looking forward to hearing more about where is our strategy, 
where are we going, and what is most likely to achieve the 
results we have worked so hard to see. And I look forward to 
our second panel of witnesses.
    Let me start, if I might, Mr. Ambassador, by just asking 
about the nature of China's engagement with Zimbabwe at this 
point and how it has changed since Mnangagwa assumed the 
presidency. China played a significant role in the liberation 
struggle, supported a lot of the efforts of groups that were 
fighting against the Rhodesian state, and so they have enjoyed 
a long and close relationship with Zimbabwe post-independence. 
But I am concerned about rising indebtedness. I am concerned 
about security cooperation and would just be interested in your 
views on how China, which is active in virtually every country 
on the continent, is active in Zimbabwe and what direction that 
might take and whether there is any room for cooperation or 
partnership or whether there is inevitably some conflict in 
terms of our values in approaching Zimbabwe.
    Ambassador Harrington. Thank you, Senator. As you point 
out, this is a challenge we face across the continent. It is 
certainly a challenge that we face in Zimbabwe. The 
relationship goes way back to the liberation era. I think since 
President Mnangagwa's assumption of power after the departure 
of President Mugabe, he has visited. He has conducted a state 
visit to China. He is looking for investment from China as 
well. So that relationship is active. It is a major trade 
relationship.
    I think one challenge Zimbabwe will face going forward--if 
we reach the point where we think about debt forgiveness or new 
lending, we are not anywhere close to that yet--I think we will 
have to deal with the fact that about a third of Zimbabwe's 
debt is owed to non-Paris Club creditors with the lack of 
transparency that comes with. So that will complicate the way 
forward economically, should we reach that stage.
    Senator Coons. Well, so let us talk about that because 
ZDERA prohibits U.S. support for multilateral and bilateral 
debt relief and credit for the government pending free and fair 
elections, adherence to the rule of law, other economic and 
political reforms. And we heard directly from the president and 
some of his senior leaders and close allies a commitment to 
making progress in these areas, which I found very encouraging.
    I would like nothing more than to see the reforms in 
Zimbabwe that would support our lifting all restraints and to 
see Zimbabwe back to being an open and healthy economy.
    Just review--forgive my delay. I was actually speaking 
about Chairman Corker on the floor and his great leadership of 
the Foreign Relations Committee.
    To what extent has the government actually made progress on 
meeting the conditions laid out in the ZDERA Amendment Act? And 
what advice, if any, would you give, to the extent that is 
appropriate, to President Trump on supporting arrears clearance 
by certifying Zimbabwe has met any of these conditions or 
invoking the waiver that he has access to under ZDERA?
    Ambassador Harrington. As I noted earlier, there has been a 
change in tone. There has been a change in access. Our 
engagements with senior government officials, including 
President Mnangagwa, were much easier than they were during the 
Mugabe years, and that is a positive. We are hearing lots of 
commitments on the political and economic reform front. 
President Mnangagwa made a number of commitments in his 
inaugural speech and in his state of the nation speech. And we 
have seen a positive budget introduced on November 22nd by the 
new finance minister, which identifies a number of steps on the 
economic side that, if implemented, would have an impact.
    We are seeing some positive changes on the tone and the 
rhetoric side. We are not seeing a whole lot of action. And I 
think we have a ways to go until we would be comfortable coming 
to the table and making the case for any kind of debt relief or 
new lending.
    I mentioned a bit earlier we have avoided giving the 
government a long laundry list of steps we want to take. I have 
seen that not work very well in other countries. It gets bogged 
down in internal discussions about what ought to go on the 
list, and then the government does 50 percent and say they have 
done 100 percent.
    So the approach we have taken, in close coordination with 
likeminded international partners, is to say here are some 
steps that you can take without much assistance from the 
international community that would send the right message that 
you are serious about reform. I mentioned repeal of two 
repressive pieces of legislation, dropping charges against 
Tendai Biti. We see those as spurious charges. Holding people 
accountable for the August 1st violence. We are waiting to see 
the results of the commission of inquiry. All of those steps, 
if they take them, they could take them in the near term. They 
could take them without a lot of cost. Then I think that sends 
a message that we are serious, and then we can begin to talk 
about a different kind of engagement than we have had in the 
past.
    Senator Coons. To what extent has there been any success in 
disentangling the finances of ZANU-PF from the state finances? 
And the question I am really getting at is, if Zimbabwe were 
able to clear its arrears and get new loans from the IMF, from 
international institutions, what confidence do you have those 
loans would actually go to their intended purpose and would 
help accelerate the development of Zimbabwe and opportunities 
for its people?
    Ambassador Harrington. At this point, not a great deal of 
confidence. Corruption has been a major problem in Zimbabwe. 
The president has indicated, among other political and economic 
reforms, a desire to focus on rooting out corruption. There 
have been steps taken to arrest or to file charges against some 
pretty prominent figures, but they all fall in the camp of 
President Mnangagwa's political opponents. We would like to see 
that effort broadened to include everyone who is suspected of 
corruption regardless of political affiliation.
    Senator Coons. Thank you. Mr. Ambassador, thank you for 
your service in an exciting, challenging, difficult post, a 
great nation. One of the things that has always impressed me is 
the level of education and sophistication of Zimbabwe's people 
and political culture and robust environment for political 
dialogue and enormous potential. It is my hope that working 
together in the years ahead, we can really make a difference in 
advocacy.
    And thank you again, Mr. Chairman, for the chance to 
question. I look forward to our second panel.
    Senator Flake. Well, thank you.
    I might add how proud we are have to have Ambassador 
Nichols there. He was thrown into it just a couple of weeks 
before the election, a real baptism by fire, but he has done a 
great job. And he keeps in regular touch with us to keep us 
informed about what is going on, and that is appreciated.
    When I was there, I noted to President Mnangagwa that the 
government of Zimbabwe would be well served to have regular 
contact with the Ambassador before issues come up or as they 
come up rather than afterwards. And I believe that that is 
happening, and that is a good thing.
    Tendai Biti has been raised a couple of times here. I can 
say and I hope that you will take back to the Zimbabwe 
Government, if they are not listening in now to this, that it 
would be difficult to move forward with any type of 
relationship with Zimbabwe and progress on some of these issues 
while charges are still leveled against him. He is not allowed 
to travel freely. His passport has been revoked, I believe. He 
is a friend of this committee. He has been here a number of 
times, and I was pleased to see that you had that among your 
list of things that they could do. That would be a pretty 
visible, outward sign that they are ready to move forward 
beyond the past.
    So thank you. With the thanks of the committee, I 
appreciate again your willingness to stay here and readjust 
your travel plans. But I appreciate it.
    And we will now move to the second panel and just recess 
very briefly while the second panel pulls up. [Pause.]
    Senator Flake. Well, thank you. And having already 
introduced this panel, we will go ahead and turn to you, Mr. 
Moss. Thank you for being here.

          STATEMENT OF DR. TODD MOSS, SENIOR FELLOW, 
        CENTER FOR GLOBAL DEVELOPMENT, WASHINGTON, D.C.

    Dr. Moss. Thank you, Chairman Flake, Ranking Member Booker, 
Senator Coons, other members of the subcommittee committee.
    First, if you will permit me, I would just like to express 
my gratitude to you, Senator Flake, for your public service, 
for your leadership in promoting bipartisan solutions, for 
protecting the rule of law both abroad and here at home, for 
standing up for American values, and for being a consistent 
example of dignity and integrity. The Senate will be a less 
august chamber without you, sir.
    After nearly 30 years of working on and in Zimbabwe, I 
hoped, like many, that the July elections would put the country 
on a positive path. I had the great fortune of visiting 
Zimbabwe with a delegation of other former U.S. diplomats prior 
to the election. I came away from that trip deeply pessimistic 
that the election and the promised reforms were anything more 
than a poorly disguised charade.
    Events since the election have, unfortunately, only 
reinforced that pessimism. We have heard plenty of rhetoric on 
democracy, national reconciliation, and economic reform. And 
while we can point to a few token gestures, very little, if 
any, meaningful change has occurred.
    First, on the election, the electoral commission was very 
far from independent. As in the past, ZANU-PF and the security 
forces used intimidation and violence to sway votes. The 
military was openly and deeply involved in the election. The 
ruling party even weaponized food aid for votes. Despite having 
months of advance warning, almost none of the evident problems 
in the electoral commission were resolved. Both the EU mission 
and the U.S. mission, led by IRI and NDI concluded that the 
election did not meet the mark. The chance for a free, fair, 
and credible election was, unfortunately, missed.
    Second, accountability for violence and past abuses. Mugabe 
may be gone, yet the government is still largely the same old 
actors. The government says the country should move on. Yet 
there has been no genuine attempt to deal with past atrocities. 
These include the Matabeleland massacres, the violence and 
murders after the 2008 election, and even the recent 
disappearance and presumed assassination of human rights 
activists like Itai Dzamara. Even the August 1st murder of six 
civilians in full view of the world has been whitewashed. The 
government even tried to blame the opposition for the violence 
when the TV cameras show soldiers shooting civilians in cold 
blood.
    Third, the economy. Food, fuel, and even U.S. dollars are 
all in desperately short supply. The new budget has some 
reforms, at least on paper. But fixing Zimbabwe's economy is 
not about tweeking the budget deficit by a percentage point or 
two. It is not about employing more accounting gimmicks. Until 
the government deals with the dominance of the military in the 
economy, the ongoing rackets by predatory elites, and the 
flouting of basic rule of law, Zimbabwe's economy cannot be 
fixed. The roots of the economic crisis are political. The 
solutions must start with genuine political reform.
    And we can see the government's state of denial in their 
passive language. The government says people died on August 
1st. No. Civilians were murdered by the military in plain sight 
of the world. The government says we are suffering from food 
and fuel shortages. No. Government mismanagement and 
profiteering elites have destroyed the markets for food and 
fuel. The government says hard currency is suddenly 
unavailable. No. The country has no U.S. dollars because they 
have been lying to the population about what is really in the 
bank.
    The shallowness of the touted reforms are embodied in the 
shameful treatment of Tendai Biti. I am grateful that he has 
been mentioned several times already. Mr. Biti is one of 
Zimbabwe's most important legal scholars, a patriot, and the 
country's most effective finance minister ever. He testified 
here in this very room almost exactly a year ago. But he could 
not join me today because the government has taken away his 
passport. Since July, he has escaped at least three attempted 
abductions, and he was illegally repatriated from Zambia. Mr. 
Biti and his family face constant harassment and death threats 
from the security forces, from mysterious groups of thugs, and 
from a sham court case. If the regime is this brazen against a 
respected opposition leader, it only hints at the persecution 
of wider civil society.
    Finally, I want to raise an issue that I am sure will come 
up today, which are sanctions, which are a complete red 
herring. The government blames U.S. sanctions for their 
economic troubles rather than grappling with their own 
mismanagement and corruption. There are about 70 people and 
about 70 entities on the U.S. sanctions list. Zimbabwe's 
leaders cannot borrow not because of U.S. sanctions, but 
because they have not paid their bills and are now more than $5 
billion in arrears. Blaming the U.S. is just another example of 
this government failing to take responsibility.
    In this context, the U.S. should be extremely cautious in 
its reengagement. We should exercise strategic patience. 
Fortunately, we have a road map to guide U.S. policy. The ZDERA 
Amendment of 2018 sets out very clear conditions for American 
support. These include concrete steps toward respect for the 
rule of law, the opposition, human rights, and getting the 
military out of politics. ZDERA provides a road map to a 
sustainable economic recovery that does not make the U.S. and 
other donors complicit in preserving the status quo. Until 
ZDERA criteria are met, the United States should withhold 
support for debt relief and new loans.
    Instead, we should speak out about what is really happening 
inside the country, and we can be far more aggressive in our 
support for embattled civil society and human rights defenders 
who are, quite literally putting their lives on the line. The 
least we can do is stand with them, amplify their voices, and 
help strengthen their resolve. They have proven worthy of our 
support. The Government of Zimbabwe has not.
    Thank you.
    [Dr. Moss's prepared statement follows:]


                 Prepared Statement of Dr. Todd J. Moss

    Thank you Chairman Flake, Ranking Member Booker, and other members 
of the subcommittee. I appreciate being invited to testify again before 
the Subcommittee on recent events in Zimbabwe and how the United States 
can more effectively promote democracy, good governance, and economic 
recovery in this deeply troubled country.
    I would first like to express gratitude to Senator Flake for your 
public service and for your leadership in promoting bipartisan 
solutions, for protecting the rule of law both abroad and here at home, 
for standing up for American values, and for being an example of 
dignity and integrity. The Senate will be a less august chamber without 
you.
    After nearly thirty years of working on and in Zimbabwe, I was 
hopeful, after the long nightmare of misrule by Robert Mugabe, that the 
July 2018 election was an opportunity to put the country on a positive 
track. I had the good fortune of visiting Zimbabwe with a delegation of 
former U.S. diplomats prior to the election to assess conditions. I 
came away from that trip deeply pessimistic about the prospects for a 
free, fair, and credible election, unconvinced that economic reforms 
were real, and skeptical of the intentions of Emmerson Mnangagwa and 
the ruling ZANU-PF. It all appeared little more than a poorly-disguised 
charade.
    Events since the election have only reinforced that pessimism. We 
have heard lots of rhetoric on democracy, national reconciliation, and 
economic reform. We can point to a few token gestures of change. But 
below the surface, very little, if any, meaningful structural change 
has occurred. ZANU-PF, the party which has ruled the country for the 
past 38 years, continues to behave like a military junta in denial 
about the serious challenges it faces.
    First, the election. It was clear to independent domestic and 
international observers months prior to the election that the Zimbabwe 
Electoral Commission (ZEC) was far from independent and wholly 
incapable of delivering a fair poll that would reflect the will of the 
people. ZANU-PF and their allies in the security services were using 
intimidation and violence to sway votes. The military was openly and 
deeply involved in the election; polling showed that nearly half the 
electorate believed the military would refuse to accept an opposition 
victory. The ruling party even weaponized food aid for electoral 
purposes. Despite having months to rectify multiple flaws--including an 
accurate and transparent vote register that doomed the 2013 election--
almost none of the evident problems were resolved. This lack of good 
faith fundamentally undermined the credibility of the election. Both 
the EU mission and the U.S. mission led by IRI and NDI found major 
shortcomings. IRI/NDI concluded that ``incremental improvements. were 
insufficient to demonstrate the broad confidence in the process needed 
to convince the populace that citizens are actually free to make 
political choices through a ballot that is secret and a process that 
respects the will of the people.'' The American mission concluded that 
the election ``did not meet the mark.'' The chance for a free, fair, 
and credible election was missed.
    Second, accountability for violence and abuses. Mugabe may be gone, 
but otherwise the Government is largely the same actors from the past. 
The Government repeatedly claims the country should move on and let 
``bygones be bygones,'' yet there has been no genuine attempt to deal 
with past atrocities. These include the Matabeleland massacres in the 
1980s known as Gukurahundi, the violence and murders after the 2008 
election, and the more recent disappearance and presumed assassination 
of human rights activists like Itai Dzamara and others. Even the August 
1 murder of six civilians in full view of the international press and 
international election observers has been whitewashed. The Government 
has, incredibly, even tried to blame the opposition for causing the 
violence when the TV cameras show soldiers shooting civilians in cold 
blood. This is not a government facing its mistakes or changing its 
behavior.
    Third, the economy. Food, fuel, and even U.S. dollars are all in 
desperately short supply. The new finance minister is a respected 
professor and his new budget has some notable reforms, at least on 
paper. But none of the structural problems in the economy are being 
tackled. Zimbabwe's economy cannot be rescued by tweaking fiscal policy 
at the margins. Fixing Zimbabwe's economy is not a technical exercise 
about moving the budget deficit by a percentage point or two or by 
deploying more accounting gimmicks. The roots of the economic crisis 
are political. The solutions also must start with political reform.
    For these reasons, the United States should be extremely cautious 
in its re-engagement with the Government of Zimbabwe. It is far too 
early for the United States or other international creditors to give 
the Government any benefit of the doubt on economic reform or to 
provide debt relief or new loans. Until the Government deals with the 
dominance of the military in the economy, the ongoing rackets of 
predatory elites, and the flouting of basic rule of law, Zimbabwe's 
economy cannot be fixed. Absent meaningful reform, any aid from the 
United States or others is throwing good money after bad.
    We can see the Government's state of denial in their passive 
language. The Government says people died on August 1. No, civilians 
were murdered by the military, in plain sight of the world. The 
Government says we are suffering from food and fuel shortages. No, 
government mismanagement and profiteering elites have destroyed the 
markets for food and fuel. The Government says that hard currency is 
unavailable. No, the country has no U.S. dollars because they have been 
lying to the population about what's really in the bank.
    The shallowness of touted reforms are embodied in the shameful 
treatment of Tendai Biti. Mr. Biti is one of Zimbabwe's most important 
legal scholars, a patriot, and the most effective finance minister the 
country has ever had. He testified here in this very room almost 
exactly one year ago today. Mr. Biti could not join me today because 
the Government has taken away his passport. Since July's election, he 
has escaped three attempted abductions, he was forcibly and illegally 
repatriated from Zambia, in direct violation of international law and a 
Zambian High Court ruling. Now, Mr. Biti and his family face constant 
harassment and death threats from the security forces, from mysterious 
groups of thugs, and from a sham court case. If the regime is this 
brazen in its actions against a known and respected opposition leader 
with close ties to the U.S. and other donor governments, it only hints 
at the persecution and suffering of less visible civil society 
activists.
    In this context, the United States must exercise strategic 
patience. Through patience and speaking truth to power, the U.S. can 
continue to provide leadership on democracy and human rights.
    Fortunately, we have a roadmap to guide U.S. policy. The original 
bipartisan Zimbabwe Democracy and Economic Recovery Act of 2001 (ZDERA) 
has long been the foundation of U.S. policy and remains relevant as 
U.S. objectives and conditions on the grounds have not significantly 
changed since its original passage. The Zimbabwe Democracy and Economic 
Recovery Amendment of 2018, introduced by the leadership of this 
Subcommittee and signed by the President, updates the law and sets out 
very clear conditions for U.S. support. These include concrete, 
tangible steps toward respect for the rule of law, the opposition, 
human rights, and the removal of the military from politics. ZDERA 
provides a roadmap to sustainable economic recovery that does not make 
the U.S. or other donors complicit in preserving the status quo.
    A final word on why sanctions are a red herring. The Government 
constantly complains that economic difficulties are the result of U.S. 
sanctions rather than their own mismanagement and corruption. It is 
true that since 2003, the United States has imposed a modest program of 
targeted bilateral sanctions on those who have undermined democracy. 
There are currently 141 specific people and entities on the list, which 
is available on the U.S. treasury website. This includes the President, 
Vice President, and four members of the cabinet. There are no trade 
sanctions against the country. There are no bans against financial 
transactions with any Zimbabwean not on the list of 141. The reason the 
Government cannot borrow from international financial institutions is 
not because of U.S. sanctions but because the Government has not paid 
its bills since 2001 and is now more than $5 billion in arrears to 
international creditors (about $2 billion to the IMF and World Bank and 
roughly $3 billion to the U.S. and other Paris Club creditors). Blaming 
the U.S. is just another example of a government failing to take 
responsibility for its own actions.
    Sadly, the Government of Zimbabwe did not use the opportunity of 
the 2018 election to get the country back on a democratic path. Until 
the Government of Zimbabwe has met the ZDERA criteria and unequivocally 
shown that it is on an irreversible path to true reform, the United 
States should withhold support for debt relief and new loans. At the 
same time, we should speak out about what is happening inside the 
country and implore our allies and friends to do the same. The United 
States can also be far more aggressive in our support for Zimbabwe's 
beleaguered civil society and human rights defenders who, quite 
literally, are putting their lives on the line. The least we can do is 
to stand with them, amplify their voices, and help strengthen their 
resolve. They have proven worthy of our support. The Government of 
Zimbabwe has not.


    Senator Flake. Thank you, Mr. Moss.
    Mr. Mutizwa, thanks again for traveling all this distance 
and for rearranging your schedule because we rearranged ours. 
Thank you.

       STATEMENT OF JOSEPH MUTIZWA, MANAGING CONSULTANT, 
            JSM STRATEGIC PATHWAYS, HARARE, ZIMBABWE

    Mr. Mutizwa. Chairman Flake, members of the committee, I 
thank you very much for inviting me to make this presentation 
today. I was most privileged to have the opportunity meet 
Senator Flake and Senator Coons and members of the committee in 
Zimbabwe.
    I am here as a representative of the Zimbabwe private 
sector, which for long has been an absent partner in this 
process. We have not had the opportunity to have our voices 
heard in this committee. I am here not as a politician. I am 
not a politician. I am a businessman. I lead the 63 members of 
the Zimbabwe Stock Exchange Listed Companies Forum, which are 
the bulk of the private sector in Zimbabwe.
    Mr. Chairman, fellow members of the committee, I have 
already deposited my written submission, which is quite 
substantial. Not being familiar with the proceedings here, I 
will summarize my remarks over and above the submission I have 
already made.
    I would like first to paint the picture in Zimbabwe as we 
see it from the private sector point of view.
    First of all and very critical to us, Zimbabwe has embarked 
on a difficult and very painful road of transformation. For the 
first time in 38 years, Zimbabweans can express themselves 
freely. It was unheard of to experience the kind of freedom of 
expression that we see in Zimbabwe today during the time of 
Robert Mugabe.
    But what we observe, Mr. Chairman, is that there is a 
crisis of expectations. People, having been in bondage for 38 
years, now want everything today. There is a palpable sense 
that in fact solutions must be proffered now, today, or 
yesterday, if possible. We submit, Mr. Chairman, that from a 
private sector point of view, we know how difficult it is to 
change things and to transform Zimbabwe.
    Now, for the first time in 4 decades, we are seeing that 
fundamental issues confronting the economy are being 
confronted, and there are many fundamental issues that are 
distortions in this economy, fiscal indiscipline, current 
account imbalance, and sustainable domestic and international 
debt, corruption, infrastructure decay, unemployment, deepening 
poverty, and lack of economic competitiveness across the 
economy, and many more other challenges. These are well known. 
These are not denied. They are a reality.
    The fact of the matter, though, is that they are being 
tackled today. Our observation is that the president, with his 
new administration, has taken a number of very bold measures to 
correct things.
    First of all, he has put in place a new team, a new 
cabinet, a trimmed one, a cabinet dominated by technocrats, 
including the minister of finance, the minister of transport, 
the minister of industry, and indeed the minister of roads. 
These people have been in office for 3 months. We submit that 
it is too early to judge them. We want to give them more time 
to, in fact, deliver.
    Mr. Chairman, members of the committee, we also note that 
there has been a very unambiguous stance taken by the president 
of Zimbabwe to rejoin the international community of nations 
and to remove Zimbabwe as a pariah state. That is very clear 
and very unambiguous. We note, Mr. Chairman, a shift of 
leadership in Zimbabwe from a narrative of politics and hate 
speech that dominated the Mugabe era to a narrative of economic 
engagement and economic progress. We noted an articulation of a 
vision, Vision 2030, with very clear timelines and targets to 
get Zimbabwe to become an upper middle class economy by 2030.
    Subsequent to that articulation of a vision, Mr. Chairman, 
the minister of finance has articulated a transitional 
stabilization plan, the TSP, which gives very clear guidelines 
as to how Zimbabwe will emerge in the next 2 years from where 
it is today to the desired destination.
    And subsequent to that on the 22nd of November, the 
minister of finance has put together a budget that has been 
dubbed Austerity for Prosperity, which is also showing very 
aggressive targets in terms of fiscal balance and current 
account balance.
    Mr. Chairman, we have observed from the private sector a 
desire by government to aggressively reform state enterprises, 
which have for long been a burden on the fiscals in Zimbabwe.
    And we have seen an aggressive time table for aligning 
Zimbabwe's laws to the 2013 constitution of Zimbabwe. Today, 
Mr. Chairman, it has got 299 statutes on its books. Of the 299 
statutes, 206 have already been aligned to the constitution, 
and there is a remaining 49 statutes that remain to be aligned 
to the constitution. Among those 49 are the two controversial 
pieces of legislation, AIPPA and, of course, the legislation to 
do with the restriction of freedoms in Zimbabwe. I am advised 
very authoritatively that both legislations will in fact be 
appearing before parliament for review and possibly for repeal 
in the latter part of the life of this parliament.
    Mr. Chairman, I would like to share with this house the 
challenges that face Zimbabwe post elections in Zimbabwe, 
political polarization, the current volatility, persistent 
shortages of foreign currency, the inflationary pressures that 
are underway currently, and of course, issues pertaining to 
land reform.
    We note that our government has taken some fairly bold 
measures with regard to land reform. First of all, bringing in 
a sustainable land tenure system through the introduction of 
the 99-year lease program which will see land being 
transferable and which will see security of tenure among the 
land-owning classes. Contrary to Mugabe's previous practices, 
farmers of all color and creed have been allowed to come back 
into Zimbabwe to form joint ventures with existing landowners 
so that they can put land to progressive use. We have seen, in 
fact, a number of white farmers coming back into Zimbabwe as a 
result of that consequential reform.
    Mr. Chairman, a large part of the reform that we have seen 
recently is also the revision of indigenization laws. This has 
taken the private sector in Zimbabwe by surprise because they 
were bold, they were unexpected, and they were substantial. 
Today as we speak, the law requiring any investor to cede 55 
percent of their equity to locals has been removed. And what we 
have now is a situation where investors can come into any 
sector of the economy except for two, platinum and diamonds, 
and have a majority shareholding in those sectors.
    Mr. Chairman, I would like to conclude my remarks by making 
a number of comments.
    The first is that Zimbabwe is on the cusp of major economic 
transformation. We believe that the president shows resolve, 
shows courage, shows determination, in fact, to push those 
reforms forward. We do not believe that at any time since 
Zimbabwe's independence we have had a leader of that fortitude 
and resolve. He is fully aware, in fact, that the road ahead is 
going to be very painful, but I think we believe that he is 
probably the person that can push those reforms to fruition in 
the period ahead. We are aware, Mr. Chairman, that there is no 
quick turnaround. The transition will probably take anything 
between 12 to 18 months and that transition will be a very, 
very painful one, indeed.
    Mr. Chairman, there are challenges, hurdles that we think 
the current administration is facing as it embarks on this road 
of transformation.
    The number one hurdle is, of course, the sanctions. The 
sanctions are real. We hear talk that they are targeted 
sanctions, but the net impact of the sanctions on the economy 
of Zimbabwe is large. We are aware, of course, of the country 
risk, which is associated with a negative image that is painted 
as a result of sanctions. The risk premium in Zimbabwe today is 
anything between 20 and 25 percent. We are aware of the trade 
restrictions. Zimbabwe is not able to access AGOA, for example, 
which many African countries are accessing at the moment to 
their benefit while Zimbabwe is being left behind. We are aware 
of economic sanctions where Zimbabwe is not able to access 
lines of credit, support from the IMF and the World Bank. And 
these are very serious hindrances for the ability of Zimbabwe 
to move forward with the transformation program that we have.
    Mr. Chairman, we in the private sector have taken a view, 
and our view is that we have got to work with the government in 
power. We are not politicians. We give constructive criticism. 
We constantly engage with the president. Only 2 weeks ago we 
met with the president. And I stood up to offer criticism to 
the president openly, and that is unprecedented. It is the 
first time that has happened. The president has opened his 
doors to us to offer ideas, to work with him and his team. 
There is only one country we have, and that country is 
Zimbabwe.
    At the age of 21, I was a political prisoner myself in 
Rhodesia. I know what it means to have a bad political 
situation.
    In 2008, after the elections, when I was the CEO of the 
largest company in Zimbabwe, I took the initiative myself to 
bring the government and opposition together to begin the 
negotiations on a government of national unity. We committed, 
Mr. Chairman. We wanted Zimbabwe to succeed. That is why I am 
here today. Thank you.


    [Mr. Mutizwa's prepared statement is located at the end of 
this hearing transcript.]


    Senator Flake. Thank you both. Thank you.
    Mr. Mutizwa, it is nice to have the perspective of the 
Zimbabwean business community here. That is something that I 
think we have lacked. If the Zimbabwean people who are going to 
enjoy a standard of living that they deserve, it is going to 
depend on the business community flourishing. And that is why 
we want to play a constructive role and ensure the reforms that 
have been outlined are actually carried out.
    One thing. Many believe that it is going to be difficult, 
Mr. Moss, to move forward if there is not some kind of 
reconciliation between the parties. What would you advise Mr. 
Mutizwa and others in the MDC to do? What should their posture 
be at this point with regard to the government? And what should 
be our posture?
    Dr. Moss. I think the U.S. posture is that we need to 
listen to Zimbabweans and what kind of process they want to 
have going forward. There is a significant portion of the 
population that still remembers what happened in Matabeleland 
in the early 1980s. It is not up to the U.S. or the Europeans 
or, quite frankly, the government in Harare to tell the 
Matabele when it is time to move on. We should listen to civil 
society groups in that part of the country about what their 
expectations are and what kind of process they want to see 
going forward. There is a national reconciliation process on 
the books. It is a total joke. It has not done anything. That 
is not seen as credible.
    In terms of what the MDC should do, look, this is a party 
that has gone through several rounds of trauma. It has had at 
least three elections stolen out from underneath it. It has 
lost its founding leader, Morgan Tsvangirai, and it has been 
thoroughly and repeatedly penetrated by the security forces--by 
the intelligence services. So it is a party that is still 
trying to operate within a very, very narrow space, and I think 
that they are understandably very wary of getting into any kind 
of power sharing agreement again because of their experience 
with the GNU between 2009 and 2013 where they were given some 
kind of paper authorities, but all of the real control was 
maintained by ZANU-PF. I do not think that they will make that 
mistake again.
    The process going forward. I do not know what the ideal 
process is, but clearly bringing some of the expertise--if you 
look at the capabilities within the MDC, if you look at people 
that understand how the health care system works, education, 
finance, there is a lot of knowledge and capability there that 
should be brought into some kind of dialogue and particularly 
the diaspora. We could come up with a long list of things that 
the Zimbabweans should do and what would get Zimbabwe going. We 
could probably guess at most of those things, but until the 
diaspora starts moving back into Zimbabwe, putting its money 
back into Zimbabwe, investing back home, that is a sign that 
there is no confidence regardless of the rhetoric we are 
hearing out of Harare.
    Senator Flake. Mr. Mutizwa, can you talk about the 
challenges with regard to the currency faced by businesses 
operating in Zimbabwe, and what is the prospect of some reforms 
there in the short term?
    Mr. Mutizwa. Mr. Chairman, I think the short answer is that 
everybody would like to see a big bang kind of approach to 
reforms because of the time it has taken for Zimbabwe to come 
out from the deep hole it has dug itself into. It will not be 
possible to have a big bang kind of approach.
    We fully appreciate the fact that you have to take a series 
of measured steps to bring back economic stability, and those 
series of steps would indicate a path like the following. 
First, to establish a fiscal balance, which the minister of 
finance is trying to do now. That will take a while, but our 
observation is that in fact that is taking effect already. The 
printing of money is slowly stopping. The issuance of treasury 
bills willy-nilly has stopped. The resort to the overdraft 
facilities that is a bank of Zimbabwe has been curtailed, and 
the targets that have been set in budget indicate discipline 
coming back.
    On the business of that discipline being established, I 
would expect that our government would aggressively go out to 
build confidence that would allow Zimbabwe to engage in 
currency reforms. There has been a lot of debate in Zimbabwe. A 
lot of people have said let us have currency reforms done now. 
Let us have a liberalization of the exchange rate. Let us have 
banishment of auctioning of allocation of foreign currency so 
that a free system comes into place. We do not think that can 
be done overnight. In fact, if was done overnight, there could 
be very serious unintended consequences that could, in fact, 
put the economy in a much more perilous position than it 
currently is.
    So my own conviction and the conviction of the bulk of the 
members of the private sector is to move very gradually, very 
slowly, very purposefully towards reform because a big bang 
approach would cause more chaos precisely because of what we 
have heard already, Mr. Chairman, that there is very fragile 
confidence in Zimbabwe at the moment, and because of that 
fragility, it is dangerous, in fact, to take precipitous action 
which is not well thought out.
    Senator Flake. Thank you.
    Senator Coons?
    Senator Coons. Thank you, Chairman.
    Well, Mr. Mutizwa, I respect and recognize you are here not 
as a representative of the government, but of the private 
sector. And I will share with the chairman the view that that 
is a perspective we welcome.
    But in response to the question about sort of how slowly or 
how diligently those actions might be taken, there is political 
reform and there is economic reform. And given the very deep 
hole that Zimbabwe is going to dig itself out of in terms of 
being a pariah state, both of them have to move.
    I was encouraged to hear you say you recently met with the 
president and that there is some intention to move on aligning 
with the constitution. But I will just say that I believe in 
our meeting with Mnangagwa, we were told that the Public Order 
and Security Act and the Access to Information and Protection 
of Privacy Act would be very soon moving to parliament for 
repeal or reform in order to ensure that they align with 
constitutional priorities.
    Is it not the case if the president wanted that done, it 
could be done quite expeditiously, not 6 months, not a year and 
a half or 2 years? It is possible for parliament to move 
swiftly to align statutes that are significantly misaligned 
with the constitution. Is that correct?
    Mr. Mutizwa. Senator Coons, if I can respond to your 
observation. I think the Parliament of Zimbabwe has been in 
place now post-elections for slightly less than 3 months. 
Within that period, it has tackled a number of deals. And my 
view, my own observation is that perhaps the 3 months is too 
short. I expect that there should be some movement. We want 
that done so that in fact Zimbabwe can move forward. It is in 
the interest of the private sector, in fact.
    Senator Coons. I was encouraged, Mr. Mutizwa, by what you 
had to say about the indigenization statute.
    Dr. Moss, is it your sense that there is deliberate 
movement in parliament to make the sort of economic system and 
political system reforms? Or as you mentioned in your fairly 
stirring or pointed remarks, I should say, you suggested 
strategic patience because you have seen no substantive action 
to align with compelling rhetoric.
    Dr. Moss. Thank you for that.
    Look, there have been a couple of steps. Indigenization has 
been partially rescinded. It does not apply to the major parts 
of the mining sector. Why would that be? That is because the 
military is involved in those sectors. If you look at land, 
yes, on paper there are going to be 99-year leases. When I last 
checked, none had been issued. I do not think that if you were 
a bank, that you would be issuing loans against those given the 
history and confidence that you would have in being able to use 
land as collateral.
    And I think when you step back, you can look at a couple of 
paper reforms, but when you say why is it not moving, there is 
usually a very important political reason. There is either a 
powerful ally of the president, who is being protected by that, 
or there is something fundamentally wrong. And I would point to 
agriculture as a good example of that.
    Agriculture has, for 100 years, along with mining, been the 
foundation of the economy. The Agriculture Minister is a former 
general who believes in command agriculture. He is one of four 
cabinet members on the U.S. sanctions list. He is not there 
arbitrarily, as you know. The sanctions list is from very 
detailed information. That does not speak well about a revival 
of agriculture, even if they can entice a couple of former 
farmers to come back to the country.
    Senator Coons. So my impression on the political side is 
that real accountability for the murder of six civilians by 
troops immediately following the election would be a 
significant step. If the government were to take that 
significant action, what would it look like. Do you think the 
president is in any way serious about holding perpetrators 
accountable for that action? And I understand doctors in 
Zimbabwe have alleged state agents are pressuring medical 
officers to falsify diagnoses in order to cover up violence by 
security services. What is your assessment of the credibility 
of the commission of inquiry led by former President Motlanthe 
of South Africa?
    Dr. Moss. So we do not know what is in the report. It has 
not been released. It is supposed to be released. We will see 
what happens there.
    I would say the conduct of the commission has not been 
encouraging. I would say that the likelihood--we do not know 
what will happen, but the likelihood that the real people 
responsible for that being held accountable is next to zero. It 
is possible that some low level actors will be sort of hung out 
to dry.
    But I think what is important about this is this only the 
tip of the iceberg. The August 1st killings are just the most 
prominent, and it is because the correspondent for the 
``Financial Times'' was standing right there. And the violence 
after the election was far worse in the east in Manicaland 
where we saw--it was like 2008 all over again where troops and 
un-uniformed groups were invading the homes of opposition 
supporters. They were attacking electoral workers. And that was 
all out of the sight of cameras.
    And so I do not know how the commission will come out. It 
does not look very good, but it does not bode well for overall 
reconciliation and accountability.
    Senator Coons. Last, if I might. Mr. Mutizwa, what have you 
seen in terms of any changes in capital flows, and what are the 
reforms that you think are most critical for the government to 
take in order to stabilize and strengthen the economy? You have 
recently had the chance to express that opinion directly to the 
president. What were the things that you said, Mr. President, 
you have to make progress on these in order for the economy to 
stabilize again?
    Mr. Mutizwa. Thank you, Senator.
    I think that in addressing your observations, I would point 
out a few things.
    We have seen very dramatic changes in agriculture. For 
example, when we look at the output in agriculture this year 
compared to last year, if I single out tobacco, for example, 
there has been a 34 percent increase in tobacco output from 188 
million kilograms to 252 million kilograms in 2018, the highest 
ever tobacco crop produced in the history of Zimbabwe and 
Rhodesia. The last-ever such peak was in 2000 when 252 million 
kg's of tobacco were produced. Dramatic. And that is due to the 
actions of the new minister of agriculture who has banished 
lawlessness on the farms and encouraged production.
    Cotton production has increased 95 percent in 2018 compared 
to 2017. It is a dramatic increase again in agriculture 
production.
    But coming back specifically to your question, Senator, 
what we have urged the president to do is to move as quickly as 
possible to ensure that Zimbabwe's competitiveness is restored 
by taking very determined and bold actions on the ease of doing 
business, setting up a one-stop investment center, making sure 
that the regulatory environment is conducive to foreign 
investors coming into the economy.
    We are unhappy about the progress. We think it is slow. We 
are pushing very hard to ensure that there is much more rapid 
progress there. We would like to see, for example, the 
president appointing a very high level international panel of 
advisors to keep him on track with the expectations of the 
international business community. He has given us a categorical 
assurance that he will do so shortly. He is also assembling a 
domestic panel of advisors from local businesses. I expect that 
that could be announced anytime soon.
    But by far, the most important reforms that we are calling 
for is fiscal stability. And the recent budget and the recent 
transitional stabilization plan are indicative of very strong 
determination to take that action. We will keep the president 
on notice. We will pressurize him. We will talk to him. We will 
urge him to ensure that those things in fact do happen.
    Thank you, Senator.
    Senator Flake. Thank you. There was an article that just 
came out today. Mnangagwa says, ready to seize idle land owned 
by top allies. Some of the land, when it was redistributed, 
accumulated with some of the top officials, with some owning, 
the article notes, up to 20 farms despite a one person or one 
family/one farm policy, including Mr. Mugabe owning several 
himself.
    Do you see that as a serious effort, Dr. Moss? And how far 
do we need to go there? I mean, this is obviously land reform 
in Zimbabwe in southern Africa, all over Africa is extremely 
important. Is the government taking the right moves here?
    Dr. Moss. The short answer is we will have to wait and see.
    I think that the mantra, ``we are open for business''--what 
it has not meant is what we think of as being open for business 
in United States, which is that we are going to have an open 
rules-based economy. What that has meant so far is that 
political elites and the military are open to do deals with 
outside investors. If that is what is going to happen with 
land, with mining, with industry, then I do not see anything 
other than a very transactional economy that a very small cabal 
of people around the president controls the vast majority of 
the economy. If that is what we are looking for, it is not 
going to be the kind of economy that is going to be doing 
business with Americans.
    Senator Flake. Mr. Mutizwa, I want to ask a kind of variant 
of that.
    It is easy for us to sit here in Washington or elsewhere in 
the world and say here is what Zimbabwe needs, here are the 
reforms that need to take place for people to have a better 
standard of living, to feel that they are representative of 
their government. Are the things that we say here aligned with 
what Zimbabweans need? And what are the most urgent needs in 
your view? You noted some of the reforms that you want to move.
    But I just want to see, is there a schism between what the 
world wants or what we or policymakers in Washington want, the 
State Department or others and what you feel Zimbabwe needs? I 
think we could stipulate that we have not been pleased with 
what Zimbabwe has gone through for the past 37 years, nor have 
Zimbabweans. And that was reflected in the change in government 
that we saw. But give us a perspective as someone who was born 
and raised in Zimbabwe and does business there. Is there a 
difference between what we want and expect and what Zimbabweans 
do?
    Mr. Mutizwa. Thank you, Senator, for that question.
    There is a great deal of puzzlement in Zimbabwe 
particularly among the ordinary people and the private sector 
as to how it can be that the world sees sanctions as being 
targeted and having no impact on the economy when we in the 
private sector know that sanctions actually have a very 
fundamental impact on our businesses, that we cannot access 
affordable lines of credit, that the country perception is very 
negative, that there are a lot of institutions who are risking 
out of Zimbabwe, correspondent banks, terminating relationships 
with Zimbabwean banks. So we see the impact of sanctions as 
being much wider and not just affecting the few people or few 
institutions that are specifically cited in the sanctions. So 
that is the first disconnect that we see.
    I think the second large disconnect is that there is a 
perception here that the Zimbabwean private sector is moribund, 
is nonexistent, it is not there. It is just the politicians 
calling the shots all the time, whereas, in fact, what is 
keeping Zimbabwe afloat is the private sector, and that over 
the last 2 decades, we in the private sector have gone out of 
our way to do everything we can, under very difficult 
circumstances, to keep our companies afloat and to keep the few 
people who are in employment employed. And that recognition is 
not there. It is as though we are manipulated by the government 
all the time. And it puzzles us that the world thinks like 
that, that in fact, they are not men of good will, of honor, 
kind of honest and honorable and want to get their businesses 
to thrive, whereas, in fact, that is what we do every day, 
Senator. That is what all the business people in Zimbabwe do. 
And so this characterization I sometimes hear about a few 
people calling the shots, a few people and their cronies doing 
these deals, it puzzles us and we find it quite unsettling 
actually in a way. So there is a big disconnect I think between 
the characterization that I am hearing here and the truth on 
the ground.
    Senator Flake. Thank you for that. I have to say I spent 
time there in the early 1980s and did not return for a long 
time. When I did, after all that we knew about what was going 
on and heard about from afar, when I arrived there and saw 
still things functioning as well as they were was a testament 
to what you are talking about, the resourcefulness of the 
Zimbabwean people to work around the issues that they dealt 
with on a daily basis and a government that was not responsive 
to their needs or concerns. That rings true what you were 
talking about, and so I appreciate that greatly.
    You mentioned that you believe the business community will 
be more active and more vocal about what is needed in Zimbabwe 
and what the impact of actions that we take here have on the 
business community and the ability of Zimbabwe to grow and 
prosper. And I think that that would be welcomed.
    Senator Coons, do you have any----
    Senator Coons. I will make some concluding remarks, if I 
might, Mr. Chairman.
    My gut hunch is that, to some extent, the difference in 
your testimony is a difference in perspective. There is, 
indeed, a significantly more open society and economy than 
there was under Mugabe, but it is significantly short of what a 
free, fair, and open society looks like where rule of law 
dominates, where elections happen regularly, the opposition is 
free to speak, where a press is truly unhindered. And if there 
is a gap here, it is a gap between--and this was your phrase. 
There is a crisis of expectations. Those who have worked 
diligently many years to try and keep moving what there is of a 
functioning modern economy I think deserve respect for their 
efforts.
    Given the opening, one of my concerns is that the civil 
society space that now exists be widened, not narrowed. If you 
read a transcript of our meeting with President Mnangagwa, if 
you read transcripts of his speeches, if you read the editorial 
he wrote in the ``New York Times,'' he is saying all the right 
things. Our challenge is the doing.
    I would agree with you that sanctions have an impact, but I 
would agree with Dr. Moss that there a whole series of things 
that the government can and should do to move towards an 
economy that is genuinely the sort that investors would be 
attracted to not on the basis of access relationships, but on 
the basis of open tenders and fair competitions. There is very 
hard work to be done.
    I would welcome the kinds of changes in Zimbabwe that would 
support the removal of sanctions. I would be thrilled to see 
that. I think that is in everyone's interest. But a few good 
speeches and actual change in parliament, in the economy, in 
governance--there is a big gap there.
    And I recognize that it has been 6 months since the 
elections, roughly. There is almost certainly an intense energy 
in the country of expectation, when will things get better, 
when will the economy move, when will I find your recitation of 
crop reports at least encouraging. My concern is that there is 
much more fundamental work to do and that remains undone.
    So let me simply say to you, Mr. Chairman, between us, we 
have chaired this subcommittee 8 years, and you have been 
terrific to work with. I have really enjoyed our work on 
Zimbabwe, our travel there. We have been to 12 countries 
together this year around the world. I will deeply miss the 
opportunity to work closely and regularly with you on U.S.-
Africa relations, a country that touched your heart deeply when 
you were a young man. You have had the opportunity now to 
engage in actively and effectively as a Senator, and that is 
just one of many, I think, chapters in the story and legacy of 
your service here in the Senate. But I want to thank you for 
that opportunity.
    And I hope you will continue to goad and push me in the 
next Congress to make sure that I remain engaged in the very 
hard work of trying to help support and sustain a multi-party 
democracy, free and fair elections, and open society, and a 
transition towards a market economy. This is very hard work, 
very difficult work.
    But if I thought that by the United States simply waiving 
everything, those results would happen immediately, I would do 
so. I do not. I believe the opposite. I believe only by 
sustaining pressure, only by continuing to say we want you to 
succeed, Mr. President and nation, but it is only going to 
happen with changes and not dictate a specific, narrow menu but 
say here is the general framework. It is the things that the 
president himself laid out in his editorial now some 9 months 
ago I think.
    I look forward to our continued dialogue and work together. 
I expect we will stay in regular touch, and I look forward to 
finding ways that we can continue to work together on making 
sure that the United States remains not just a nation of 
interests, but a nation of values and where our foreign policy 
is rooted in putting our values first.
    Thank you, Mr. Chairman.
    Thank you to our witnesses.
    Senator Flake. Thank you, Senator Coons, for everything.
    And thank you, Dr. Moss, for your long commitment to a 
better Zimbabwe. You have appeared before this committee many 
times and have always brought a perspective that is needed.
    And, Mr. Mutizwa, thank you for adding a new perspective 
that we have missed here and that we should hear in the future. 
And I hope you will continue to speak loudly. Thank you for the 
good work you have done and for the sacrifice you made to be 
here.
    I want to just say before I stop, I thank my staff, in 
particular Colleen Donnelly, for encouraging us to know we have 
a couple of weeks, we can still have another hearing. 
[Laughter.]
    Senator Flake. I did not think it would be possible, but 
she made it possible by working with people like Sophia Lalani, 
Brian Voight, Jake Gutman on the Booker staff and also Tom 
Mancinelli, Allie Davis on your capable staff. And this is very 
much a bipartisan subcommittee. We work that way and enjoy it, 
and I appreciate all those who have done such good work and for 
allowing me to be chairman here. So thank you all.
    The hearing record will remain open until the close of 
business tomorrow.
    With the thanks of this subcommittee, this hearing stands 
adjourned.
    [Whereupon, at 11:24 a.m., the hearing was adjourned.]


                              ----------                              



              Additional Material Submitted for the Record

                  Prepared Statement of Joseph Mutizwa

         articulating perspectives of zimbabwe's private sector
Preamble 
    This opportunity to address the Senate Foreign Relations 
Subcommittee on Africa and Global Health Policy to offer the 
perspectives of the private sector in Zimbabwe on the situation 
prevailing in Zimbabwe in the post-election period is greatly 
appreciated. This dialogue is long overdue. On behalf of the private 
sector in Zimbabwe, I would like to thank Senator Jeff Flake and 
members of his Committee for this rare opportunity accorded to us.
    As this invitation came at short notice some of my colleagues from 
the private sector in Zimbabwe were unable to travel to Washington to 
participate in today's proceedings. In the short time available to me I 
was able to solicit the contributions of some-not all -business sector 
leaders in the private sector in Zimbabwe. The outcome of this 
consultation is, I believe, a balanced assessment of the state of the 
macro challenges facing Zimbabwe today as outlined in this written 
submission.
    Zimbabwe is a nation that has experienced economic volatility for 
the greater part of its post-independence history from 1980 to today. I 
can say, without hesitation, that the people of Zimbabwe are extra-
ordinarily resilient. Over the last two decades they have experienced 
all manner of deprivations such as; political polarization and 
violence, record beating hyperinflation, infrastructure decay, 
staggering unemployment levels and economic decline accompanied by 
deepening poverty. In recent times we have even been visited by 
medieval diseases such as cholera.
    Despite all these challenges the people of Zimbabwe have largely 
remained peaceful, hardworking, God fearing and honest. Our work ethic 
as a nation is second to none on the African continent. Our literacy 
rates remain among the best in Sub-Saharan Africa. Zimbabwe business 
leaders occupy positions of high responsibility in iconic corporations 
across Africa and beyond.

    I make this submission in my following capacities:

 1. As the former CEO (2002-20120) of one of Zimbabwe's largest listed 
        companies.

 2. As the current Chairman of the Zimbabwe Stock Exchange Listed 
        Companies Forum (ZSE Forum)--representing all the 63 companies 
        listed on the Zimbabwe Stock Exchange.

 3. As a Leadership Consultant working with more than 30 private sector 
        companies since my retirement as CEO of Delta Beverages in 
        2012. This consultancy role gives me unparalleled access to 
        Chief Executive Officers, their boards and executive 
        committees. This puts me in a position to have an in-depth 
        appreciation of private sector perspectives across Zimbabwe.

 4. As Chairman of the boards of several private sector companies in 
        Zimbabwe.

 5. As an independent non-executive director on the Board of the 
        Reserve Bank of Zimbabwe. In this capacity i also chair the 
        important Bank Stability Committee which is charged with 
        supervision of the banking sector in Zimbabwe. I am, therefore, 
        fully cognisant of the challenges facing the private banking 
        sector in Zimbabwe.

    The ushering in of the new political dispensation following the 
resignation of President Robert Mugabe in November 2017 has had a 
seismic impact on the nation of Zimbabwe. The private sector is a 
significant stakeholder in the process of building a new Zimbabwe in 
the post Mugabe era.


    This submission will address four key issues which Senator Flake 
has requested me to focus on. These are:

 1. What is the current state of Zimbabwe's economy and its impact on 
        Zimbabwean people? n .mbn ,mvxx

 2. What is the private sector's evaluation of the impact of the July 
        30, 2018 elections on Zimbabwe's economy?

 3. How does the private sector evaluate of the progress made to date 
        on economic and political reforms by the Government of 
        President Emmerson Mnangagwa?

 4. What alternatives does Zimbabwe have should the USA fail to take 
        action to support Zimbabwe's economy?


    I will tackle each question in turn.

    In preparing this submission for the Sub-committee on Africa and 
Global Health Policy I am guided by a number of considerations that the 
private sector in Zimbabwe embrace. These are:


 1. The over-riding desire for stability in terms of both the economic 
        and political environments. A stable operating environment is 
        conducive to business growth. The converse is true.

 2. A desire for economic reforms that recognize the role of the 
        private sector as the engine for economic growth.

 3. The need for an investor friendly environment that encourages and 
        makes it easy for both foreign and domestic investors to 
        conduct business.

 4. Macroeconomic policy consistency and predictability.

 5. A stable currency and affordable cost of money.

 6. Access to affordable international lines of credit to enable the 
        recapitalization and modernisation of plant and equipment for 
        productivity and competitiveness.

 7. A regulatory framework that is facilitative of business and that 
        improves the ease of doing business and makes Zimbabwe a 
        desirable investment destination.


    In concluding this preamble, I wish to state that the private 
sector in Zimbabwe endeavours to be apolitical. We work with any 
government in office regardless of its political leanings.
    We offer support to ensure success of desirable policies and 
programs but we also offer constructive criticism to Government where 
we believe that policies or measures are not in the best interests of 
the economy.
    This submission is guided by the above considerations.


Question 1


What is the state of Zimbabwe`s economy and what is the impact it is 
having on citizens?


    1 Current state of the economy from a business perspective


           1.1 The Challenges

                  Zimbabwe's economy is currently in distress 
                exhibiting stress in the following areas;

                  Fiscal distress with the budget deficit projected at 
                11.6 percent of GDP in fiscal year 2018. The consensus 
                target within the SADC region is for a fiscal deficit 
                around 3 percent of GDP.

                  Current account imbalance with imports projected to 
                exceed exports in fiscal year 2018.

                  80-90 percent of the economy is informal--reflecting 
                high levels of unemployment in the formal sector.

                  Large public debt burden standing at US$18bn and 
                split 54 percent to 46 percent between domestic and 
                international debt respectively.

                  Currency volatility reflected in multi-tier pricing 
                distortions in the market with significant loss of 
                value of the local currency over the last two months.

                  Rising annual inflation climbing to 20.9 percent as 
                at October 2018--the highest in the SADC region.

                  Infrastructure constraints affecting road, rail, 
                power, water and sanitation among other needs.

                  Very high country risk discouraging Foreign Direct 
                Investment. The country risk premium currently stands 
                at over 20-25%. Only US$470m FDI inflows in 2018.

                  Deteriorating standards of living for ordinary 
                citizens as savings and earnings have lost value while 
                costs are escalating.


           1.2 The Positive Developments in the economy


                  i. Rise in Manufacturing Sector capacity utilization

                          Expansionary fiscal measures by government 
                        have stimulated recovery in capacity 
                        utilization in the manufacturing sector from a 
                        low of around 34 percent three years ago to 
                        around 60 percent before the October 1,2018 
                        policy pronouncements caused a major foreign 
                        currency crisis.

                          The adverse impact of this rise in capacity 
                        utilization has been the "overheating" of the 
                        economy as demand for production inputs and 
                        consumer products has outstripped the economy's 
                        capacity to generate foreign currency earnings 
                        to service the increasing appetite for foreign 
                        currency.

                          The above situation reflects the fact that 
                        Zimbabwe's productive sector is highly import 
                        dependant--thus contributing to the Current 
                        Account Deficit.


                  ii. Recovery in Agriculture Production

                          There has been significant recovery in 
                        Agricultural production as evidenced by the 
                        following:

                          A 34 percent increase in tobacco production 
                        from 188.6 million kilograms in 2017 to 252.5 
                        million kilograms in 2018 (the highest output 
                        in the history of the tobacco industry in 
                        Zimbabwe-exceeding the previous peak of 238 
                        million kilograms reached in 2000).

                          A 95 percent increase in cotton output from 
                        73 086 tonnes in 2017 to 142 761 tonnes in 
                        2018.

                          Zimbabwe has achieved food security through 
                        the government`s intervention in agriculture 
                        during the 2017/18 agricultural season. 1.2 
                        million tonnes of maize are now in the 
                        country`s strategic grain reserve putting 
                        Zimbabwe in a secure position even if the 
                        current rainy season is adversely by El Nino.


                  iii. Mining Sector Output Growth

                          Gold output has increased substantially and 
                        could end the year at 34 tonnes or 42 percent 
                        up on the 24 tones achieved in 2017.

                          Platinum output is set to expand on the back 
                        of a new mine commissioned by Zimplats--the 
                        country's largest platinum producer.

                          Diamond output is set to reach three million 
                        carats in 2018 up 67 percent from the 1.8 
                        million carats achieved in 2017.


                  iv. Reform of Indigenization Laws

                          A major step forward implemented by the new 
                        government has been the repeal of the 
                        indigenization laws which required all 
                        businesses to have a 51 percent equity interest 
                        in the hands of indigenous Zimbabweans. This 
                        made Zimbabwe unattractive to foreign 
                        investors. This requirement has now been 
                        removed save for the platinum and diamond 
                        mining sectors.


                  v. Closure to Land Tenure

                          Significant progress has been made on the 
                        contentious issue of land tenure with bankable 
                        and transferrable 99 year leases close to 
                        finalization.
                          Another major change has been the decision by 
                        the government discontinue the Mugabe era 
                        prohibition of leasing arrangements between 
                        white farmers who desire to lease and farm 
                        productively on farms allocated to black 
                        farmers. Joint ventures and leasing 
                        arrangements are now in place allowing a 
                        significant number of white farmers to return 
                        to farm in Zimbabwe.


           1.3 Impact of Macroeconomic Developments on the Populace



                  Since 2016 there has been a significant erosion in 
                the welfare of citizens. This erosion has been 
                transmitted through higher cost of living, erosion of 
                value of savings and deterioration in service 
                provision. There has been a real fear that the country 
                was heading towards the volatility experienced in the 
                hyperinflation period of 2007-2008. Foreign currency 
                shortages have had a severe adverse impact on the 
                availability of essential goods and services in 
                particular, essential medical drugs, fuel and machinery 
                spares and raw materials.

                  The cumulative impact of all these developments has 
                been to erode the quality of life of most, it not all 
                Zimbabweans.

                  Since October 2018, there has been a deterioration in 
                macroeconomic stability as parallel market rates of 
                exchange skyrocketed leading to speculative price 
                increases that saw prices of basic food items as well 
                as the cost of transport and rentals soaring out of the 
                reach of ordinary citizens whose disposable incomes 
                have been severely reduced by inflation and increased 
                taxation.
                          The current level of trust by most citizens 
                        in public institutions is still very low given 
                        past experiences with hyperinflation ( 2007-
                        2008) when savings were wiped out. As a 
                        consequence of this experience confidence is 
                        very fragile in Zimbabwe leading to panic and 
                        over-reactions when there is any hint of 
                        possible loss of currency value.


Question 2


How did the July elections impact Zimbabwe`s economy? 


     1. Overview

          In the run up to the elections there was a surge of optimism 
        across Zimbabwe generated by a number of developments among 
        which were the following:


                  Ushering in of a new national leadership after the 
                resignation of President Robert Mugabe--in power for 37 
                years.

                  A very peaceful and relatively open election campaign 
                period.

                  Expressions of support for Zimbabwe from broad 
                sectors of the international community.


     2. Post-Election Violence

          The optimism that swept across Zimbabwe was shattered by the 
        discord around the announcement of election results and the 
        post-election violence on August 1, 2018. Confidence was 
        severely undermined and country risk escalated. The expected 
        FDI inflows did not materialize as expected although there are 
        significant numbers of potential foreign investors visiting 
        Zimbabwe to make inquiries. A few key investors have now made 
        commitments.


     3. Post-Election Political Polarization

          The legal challenges against the election results at the 
        Constitutional Court and the refusal ty the main opposition to 
        accept the legitimacy of Presidentelect Emmerson Mnangagwa has 
        resulted in deep political polarization which has severely 
        dented business confidence for both foreign and domestic 
        investors. While the polarization is a reality it is also a 
        fact that the ruling party emerged from the election with a two 
        thirds majority in Parliament thus giving it a strong mandate 
        to carry out the required legislative reforms particularly 
        those needed to align existing laws to the 2013 constitution.


     4. Impact on Value of Local Currency

          In the period following the resignation of President Mugabe 
        and the July 2018 elections the depreciation of the local 
        Zimbabwe currency (the RTGS or ``Real Time Gross Settlement'' 
        balance and the ``Bond Note'') was around 30-40%. The local 
        currency has significantly lost value in the post-election 
        period--at one point in October 2018 reaching a low of around 
        500 percent devaluation before stabilizing at around 340 
        percent devaluation in the parallel (or unofficial) market. 
        This is despite an official position putting the local currency 
        at parity with the United States Dollar.


     5. Deepening Foreign Currency Situation

          The post-election period has seen a deepening of the foreign 
        currency shortage as United States Dollars continue to 
        disappear from the formal markets. The consequence of these 
        shortages have had severe adverse impact on the availability of 
        imported raw materials, fuel and medical drugs. The most severe 
        impact has been felt in the area of medical care as hospitals 
        and pharmacies have run out of imported medical drugs thus 
        putting the lives of many ordinary Zimbabweans at risk


    6. Tightening Liquidity and Cash Shortages

          Zimbabwe has been experiencing cash shortages in the banking 
        sector since the introduction of a local currency (bond notes) 
        in November 2016. These cash shortages remain in place four 
        months after the July 2018 elections.


     7. Significant Increase in Tourist Arrivals

          Following the July 2018 elections there has been a surge in 
        the number of tourist arrivals in Zimbabwe. Tour operators and 
        resort hotels are reporting increases of around 25-30 percent 
        compared to the same period last year. Hotel operators in the 
        Victoria Falls resort area are reporting occupancy levels last 
        seen in the 1997-98 period for the forthcoming festive season 
        with average occupancies around 65%.


     8. New Mining Investments

          Some long term investors have come on board including two 
        Australian mining companies who have projects in oil and gas 
        exploration in Northern Zimbabwe and a Lithium mining operation 
        near Harare, respectively. A Chinese investor is considering 
        setting up a major steel plant in the Midlands area while 
        another company is planning opening a major platinum mine.


     9. Financial Commitments by UK Financial Institutions

          Of note has been the financial commitment made by The CDC 
        (The UK Government`s Commonwealth Development Corporation) to 
        make lines of credit available to the private sector in 
        Zimbabwe. Although of limited amount given Zimbabwe`s 
        significant requirements for financial support, this commitment 
        is symbolic as it represents the first such financial 
        commitment by the CDC in almost two decades.


     10. Delegations from EU Governments in the Post-Election Period

          The post-election period has also witnessed the visit to 
        Zimbabwe by high powered delegations (combining political and 
        business leaders) from China, Germany and Belgium among others.


Question 3


 Is President Emmerson Mnangagwa making any Reform efforts, and if so, 
what progress is being made? What are some for the hurdles to making 
economic reforms?


     1. Overview

          My considered view is that there is a crisis of expectations 
        in Zimbabwe.

          The ordinary person expected a very quick turnaround of the 
        economy following the July 2018 elections. These expectations 
        are misplaced. Zimbabwe has been in the grip of misrule for 37 
        years and the damage done to the economy to the country's 
        reputation and its institutions will take many years, if not, 
        decades to repair.

          It is from this perspective that I evaluate what President 
        Mnangagwa has achieved since the July 2018 elections.


    2. Evaluation of Progress


           2.1. What has been achieved to date?


                  i. Cabinet Composition

                          There was wide support for President 
                        Mnangagwa's decision to let go long-serving 
                        party loyalists and bring in fresh talent into 
                        a significantly trimmed cabinet. Key new 
                        appointments were made in the ministries of 
                        Finance, Industry, Mines and Transport-all now 
                        headed by technocrats. The private sector in 
                        Zimbabwe welcomed these appointments.

                          This cabinet has only been in office since 
                        September 2018. It is too early to objectively 
                        evaluate their performance after just three 
                        months in office.


                  ii. Opening up of Political Space

                          The Political Space has been opened up 
                        significantly. Zimbabweans now express 
                        themselves much more openly than during the 
                        Mugabe era. Press freedoms are in place for the 
                        print media while the state electronic media is 
                        still to be reformed and liberalized.

                          Political demonstrations are allowed and the 
                        recent demonstration by the main opposition on 
                        November 29, 2018 is a case in point.
                          The move to open to the public and to 
                        broadcast live on national television the 
                        proceedings of the Constitutional Court 
                        electoral challenge hearings as well as the 
                        public hearings held by the Commission on the 
                        post-election violence of August 1, 2018 are 
                        both major milestones in establishing 
                        transparency in Zimbabwe.


                  iii. Anti-corruption drive

                          Several prosecutions of high level people are 
                        currently underway. While there is perceptions 
                        in some quarters that there is political bias 
                        in the selection of those to be targeted--the 
                        prosecutions indicate a toughening of the 
                        President's stance against corruption.

                          Legislation has recently been passed to 
                        toughen measures against money laundering and 
                        illicit transactions on the parallel markets.


                  iv. Change of leadership narratives from focus on 
                politics to focus on the economy

                          The current government has moved sharply to 
                        refocus on economic matters. The mantra 
                        ``Zimbabwe is Open for Business'' is now the 
                        mantra of government. However, the private 
                        sector wants to see more action than rhetoric 
                        on the ground and continues to press government 
                        for accelerated reforms especially in the areas 
                        of fiscal reforms and ease of doing business.


                  v. Articulation of a National Vision and Economic 
                Road Map for Zimbabwe.

                          The President has articulated Vision 2030 
                        whose goal is to turn Zimbabwe into an Upper 
                        Middle Class Economy by 2030 with a per capita 
                        GDP exceeding US$3 500 per annum. Zimbabwe is 
                        currently a lower middle class economy.

                          President Mnangagwa's Government in October, 
                        2018, launched the Transitional Stabilization 
                        Plan (TSP) which provides a road map to 
                        economic recovery for the next three years. 
                        Subsequent to the launch of the TSP the 
                        government put together a National Budget under 
                        the theme ``Austerity for Prosperity''. This 
                        budget--announced on November 22, 2018 puts the 
                        attainment of fiscal balance as the centre-
                        price of the recovery plan. The key goals are 
                        well-articulated and include:

                          Reducing the fiscal deficit to 5 percent of 
                        GDP by 31 December 2018 from a projected 11.6 
                        percent by 31 December 2018. The intention is 
                        to achieve this through cuts in Government 
                        expenditure, drastically curtailing issuance of 
                        Treasury Bills and desisting from resorting to 
                        Central Bank Overdraft Facilities.

                          Expanding revenues through taxation measures. 
                        Two very significant taxation measures have 
                        already been implemented.

                          Reducing the current account deficit by 
                        compressing imports and collecting import 
                        duties on luxuries in hard currencies.

                          Shifting expenditure from consumption to 
                        capital or productive spending.

                          A GDP growth target of 3.1 percent in 2019 
                        down from a projected 4 percent growth in 2018.

                          An average inflation of 10 percent by end of 
                        2019 down from 20.9 percent in October 2018.

                          An aggressive timetable for reforming state 
                        owned enterprises has been announced.

                          Implementation of Debt Resolution Program 
                        with international lenders before the end of 
                        2019.

                          The Government has embraced the proposal for 
                        an IMF Staff Monitored Program ( SMP) which is 
                        about to commence.


                  vi. Aligning Zimbabwe`s Laws to the 2013 Constitution

                          The perception of most observers is that 
                        Zimbabwe is moving too slowly on the road to 
                        aligning its statutes to the new constitution.

                          My investigations revealed that of Zimbabwe`s 
                        299 pieces of legislation 255 of these needed 
                        to be aligned to the constitution. To date, I 
                        am told, 206 of these statutes have been 
                        aligned to the new constitution with only 49 
                        outstanding. Among the outstanding ones are the 
                        two controversial pieces of legislation namely, 
                        POSA (Public Order and Security Act) and AIPPA 
                        (Access to Information and Protection of 
                        Privacy Act) which are widely regarded as being 
                        curtailing civil liberties.

                          On enquiring what the way forward is with 
                        these statutes I learnt that the reform of 
                        these statutes is on the agenda of the current 
                        Zimbabwean Parliament.


           2.2 Where has progress been less than expected from a 
        business perspective?


                  i. Reduction in Government Bureaucracy

                          While the size of the cabinet was reduced, it 
                        is the private sector`s view that much more 
                        needed to be done to reduce head-count at the 
                        top--at both ministerial and civil service 
                        levels.

                          Although the President, Cabinet and senior 
                        civil servants and executives of state 
                        enterprises will take a 5 percent pay cut from 
                        January 2019, the public wants to see more 
                        sacrifices borne by top government leaders than 
                        is currently the case. This is necessary so as 
                        to make the hardships endured by the ordinary 
                        citizen more bearable.


                  ii. Implementation of measures to improve Country 
                Competitiveness.

                          Very high operating costs driven by currency 
                        distortions, high cost of utilities and 
                        generally high cost of doing business still 
                        prevail.

                          Although the Government has established a 
                        one-stopinvestment authority (ZIDA--Zimbabwe 
                        Development Agency), its operationalization is 
                        still unclear to the private sector.

                          Policy co-ordination across Government 
                        agencies requires optimization so as to 
                        minimize frustration for prospective investors 
                        due to regulatory bottlenecks.


                  iii. The Sequencing of Policy Measures has been less 
                than optimal.

                          The implementation of taxation measures ahead 
                        of government expenditure cuts was very badly 
                        received by an already overtaxed population 
                        that wanted to see the benefits of the 
                        privileged elites in the public sector reduced 
                        first before new taxes were imposed.

                          The private sector understands the need for 
                        Government to create fiscal space through 
                        taxation if it is to curtail printing of money. 
                        However the sequencing of the measures could 
                        have been handled better.


                  iv. Anti-corruption Drive needs to be more vigorous

                          The private sector views both private sector 
                        and public sector corruption as cancers that 
                        need to vigorously attacked otherwise they will 
                        frustrate economic reform efforts.


                  v. Currency Reforms

                          There is a significant section of the private 
                        sector that wants to see currency reforms done 
                        immediately so as to remove the current pricing 
                        distortions as well as the system of allocating 
                        foreign currency which is prone to abuse.

                          Another view, however, is that currency 
                        reforms cannot be undertaken without two major 
                        issues being tackled first. These two issues 
                        are; the need for fiscal discipline on the part 
                        of government, and the need to have in place a 
                        Foreign Currency Stabilization Fund to 
                        stabilize any domestic currency which may be 
                        introduced as part of the currency reforms.


          2.3 What are some of the hurdles to making economic reforms?

          There are two major categories of hurdles that face the 
        Government of Zimbabwe as it embarks upon economic reforms. The 
        first category is that of Economic Sanctions imposed on 
        Zimbabwe by the USA (ZIDERA Act of 2001 as amended in 2018); 
        Canada and the European Union. The second category is to do 
        with the potential adverse consequences of Economic Reforms. 
        Let me address each in turn.


                  2.3.1 The Impact of Economic Sanctions on the Post-
                Election Economic Reform Agenda in Zimbabwe Sanctions 
                continue to retard economic recovery in Zimbabwe in a 
                number of important ways.


                          i. Trade Sanctions

                                  In Zimbabwe, trade sanctions impact 
                                negatively on economic growth through 
                                denying the country access to foreign 
                                lines of credit, which ordinarily 
                                finance external trade and access to 
                                markets, particularly the USA market, 
                                through exclusion from AGOA. 
                                Furthermore, the country's export 
                                competitiveness is adversely affected 
                                by negative perceptions of the country 
                                resulting in high country risk profile 
                                translating into higher country risk 
                                premiums.

                                  Due to the above the private sector 
                                in Zimbabwe finds it very difficult to 
                                access affordable external financing to 
                                retool and modernize plant and 
                                equipment and access technology.


                          ii. Financial Sanctions

                                  The Zimbabwe Democracy and Economic 
                                Recovery Act (ZIDERA) has proved to be 
                                a great obstacle for Zimbabwe to access 
                                foreign finance. USA financial 
                                institutions are not at liberty to 
                                provide well-structured financial 
                                support against Zimbabwe's minerals 
                                (gold, platinum, cobalt, lithium, 
                                etc.,) due to OFAC compliance rules. 
                                The same it for banks in Europe due to 
                                compliance, reputation and association 
                                risks.

                                  As a result of the impact of ZIDERA 
                                on the financial sector, the Zimbabwe 
                                banks have lost more than 100 
                                corresponding banking relationships 
                                over the past 10 years.

                                  The strong view of the private sector 
                                in Zimbabwe is that the imposition of 
                                sanctions on Zimbabwe by the US and the 
                                EU have branded Zimbabwe and its entire 
                                financial linkages with the rest of the 
                                world as representing high risk thereby 
                                making the country a compelling target 
                                for de-risking interventions by leading 
                                correspondent banks in the USA and 
                                Europe.


                          iii. Economic Sanctions

                                  Due to a combination of sanctions and 
                                its own bad track record of debt 
                                servicing Zimbabwe is unable to access 
                                balance of payments support and credit 
                                and technical support from most of the 
                                major multi-lateral Financial 
                                Institutions (MFIs).

                                  The private sector's view is that the 
                                country's failure to access long term 
                                concessionary funding from 
                                developmental institutions such as the 
                                World Bank and the African Development 
                                Bank (AfDB)--among others, has created 
                                an unsustainably large deficit in 
                                infrastructure development in 
                                Zimbabwe--in particular the rail, road 
                                and water related infrastructure. The 
                                dilapidated state of all these 
                                constitutes a real tax on business by 
                                hard-wiring inefficiencies into the 
                                entire economy.

                                  Businesses in Agriculture, 
                                Manufacturing, Mining, Tourism, 
                                Financial Services and others all 
                                desire to see sanctions removed so that 
                                country risk is reduced and access to 
                                affordable long-term credit is restored 
                                while access to global markets is 
                                opened up.

                                  The private sector's strong view is 
                                that sanctions--although they are 
                                supposed to be targeted at certain 
                                individuals and entities--have the 
                                unintended effect of pulling down the 
                                entire economy of Zimbabwe and the 
                                welfare of all its citizens. Sanctions 
                                do constitute a real stumbling block to 
                                the efforts of the current Government 
                                to get the country's economy moving 
                                forward again.


                  2.3.2 The Unintended Potential Consequences of 
                Economic Reforms

                          In embarking upon Economic reforms that are 
                        driven by a desire to restore fiscal and 
                        current account balance, and to liberalize the 
                        economy through currency and regulatory 
                        reforms, the government is caught between a 
                        rock and hard place.

                          While tough economic reforms are unavoidable 
                        and long overdue, their impact will cause 
                        significant pain on the intended 
                        beneficiaries--the citizens--at least in the 
                        short to medium term.


                  Four potential unintended risks stand out:


                          Recession Risk

                                  Will the Government's reversal of 
                                expansionary fiscal policies (printing 
                                money to support agriculture, for 
                                example) tip the country into a 
                                contraction phase? If so, for how long?

                                  Will increased taxes (2 percent on 
                                financial transactions and increased 
                                fuel duties) suck out too much from 
                                people's disposable incomes 
                                precipitating a form of recession?


                          Inflation Risk

                                  If market forces are allowed to 
                                prevail in the allocation of the scarce 
                                foreign currency will there by a deep 
                                devaluation causing local prices to run 
                                and pushing the country into an 
                                inflationary spiral?

                                  To some extent this has already 
                                happened as informal markets took a 
                                position on the currency. Should the 
                                Government mobilize a stabilization 
                                fund to support a local currency first 
                                before introduction currency reforms. 
                                Where does this stabilization fund come 
                                from given the current international 
                                isolation of the country and the 
                                existing sanctions?


                          Will the reforms cause socio-political 
                        instability?

                                  There is no doubt that in the short 
                                term (12-18 months) the reforms will 
                                cause a great deal of hardships among 
                                Zimbabwean citizens--particularly the 
                                vulnerable. Will this cause civil 
                                strife in the form of riots and 
                                escalating political tensions.


                          Will the reforms lead to increased company 
                        failures?
                                  As the reforms begin to bite there is 
                                every possibility that some companies 
                                may fail as disposable incomes drop, as 
                                liquidity tightens and as interest 
                                rates rise.

                                  All the above pose a significant 
                                hurdle to the policy makers in 
                                President Mnangagwa's administration.

                                  The observation of the private sector 
                                is that because of the above risks, the 
                                proper sequencing and pacing of the 
                                reform programme becomes crucial.

                                  A ``big bang'' approach to economic 
                                reforms may have dire unintended 
                                consequences given the fragility of the 
                                economy. In the absence of significant 
                                international financial support, a 
                                gradual and nuanced reform process may 
                                be more appropriate.


Question 4


What alternatives does Zimbabwe have should the USA fail to take action 
to support Zimbabwe's economy?

    Overview

          It is our view that Zimbabweans are now desperately impatient 
        for real economic advancement. Unless the populace sees 
        progress the pressure on the politicians will be relentless. 
        This can lead to desperate actions on the part of Zimbabwe 
        should the USA and EU fail to respond to Zimbabwe's request for 
        urgent economic support and removal of sanctions.


    4.1 Options Available to Zimbabwe

          As private sector observers we note that the Government of 
        Zimbabwe is not without options--if it fails to secure USA and 
        EU financial support. We make no comment on the advisedness or 
        otherwise of these options--but simply to state that these 
        options do exist.


                  i. Embrace China's BRI initiative for Africa.

                          China has placed on the table a potential 
                        US$60bn investment package for investment 
                        across Africa as part of its Belt and Road 
                        Initiative (BRI). Many African countries are 
                        scrambling to get a share of these resources. 
                        Shunned by the USA and The EU it would be 
                        reasonable to assume that Zimbabwe will 
                        consider making a strong attempt to access this 
                        large pool of investment funds even if this 
                        entails mortgaging substantial share of its 
                        natural resources to achieve this.


                  ii. Develop Closer stronger economic ties with Russia

                          There have already been a number of Russian 
                        delegations to Zimbabwe in the recent past--
                        which is indicative of a desire by Russia to 
                        forge economic ties with Zimbabwe.


                  iii. Closer Economic ties with Eastern European 
                Countries such as Belarus.

                          Our observation is that should the USA and 
                        the EU fail to support Zimbabwe these fledging 
                        relations will become stronger.


                  iv. Embrace investors of questionable credentials.

                          When a government is pushed into a corner 
                        there is every reason to believe that it will 
                        take any action necessary to enable it to 
                        respond to the popular demands of its citizens 
                        if the traditional or normal avenues fail to 
                        yield results.


                  v. Revert to ruinous populist policies of the Mugabe 
                era

                          It is not inconceivable that if the present 
                        government fails to secure Support from the 
                        international financial institutions despite 
                        its commitment to reform it may, in 
                        frustration, revert to populism catastrophic 
                        consequences for a country with so much 
                        promise.


          Our view as the private sector is that Zimbabwe's government 
        desires to strengthen its relationship with its traditional 
        business partners which include the USA and EU. Zimbabwe has 
        already applied to re-join the Commonwealth--a strong indicator 
        that it wants to improve relations with the UK-led grouping and 
        with the West in general. Sanctions present a formidable 
        obstacle blocking the way to the resumption of these 
        partnerships. w


    Conclusion

          Zimbabwe is at cross roads. The Government of President 
        Mnangagwa looks determined to make some tough economic and 
        political reforms. To us in the private sector the President 
        comes across as being sincere in his quest for taking Zimbabwe 
        forward. He appears to have sufficient conviction and resolve 
        to rebuild Zimbabwe and turn it into a successful and proud 
        nation occupying its rightful place among the community of 
        nations. His government recognizes that for Zimbabwe to be 
        welcomed among the community of nations it must acknowledge and 
        settle its debts. It must also put its house in order through 
        better governance and economic management. The government of 
        President Mnangagwa appears to be committed to both.

          The President is aware of the huge expectations that the 
        people have. He recognizes that along the way there will be 
        unavoidable pain for the people of Zimbabwe--over and above the 
        traumas they have endured over the past two decades.

          As Zimbabwe's private sector we are fully supportive of the 
        reform programs embarked upon by our Government. We want to see 
        more action and less rhetoric and better co-ordination and 
        sequencing. We will give our Government support in the form of 
        advice and constructive criticism as well as through playing 
        our part in raising production and exports, conserving foreign 
        currency through import substitution and improving 
        competitiveness through cost efficiencies and value addition.

          It is the view of most in the private sector in Zimbabwe that 
        the United States government can find in Zimbabwe a worthy and 
        strategic partner. The road to that possibility starts here in 
        the Senate Foreign Relations Sub-Committee on Africa and Global 
        Health Policy.

          It is my strong and unambiguous submission, Mr Chairman, that 
        the private sector in Zimbabwe urges the United States of 
        America to urgently repeal Zimbabwe Democracy and Economic 
        Recovery Act ( ZIDERA) of 2001 ( As amended in 2018) .

          Zimbabwe is going to be a pivotal nation in the Southern 
        Africa sub-region -a country in whom the United States may find 
        a worthy and strong partner.

          I Thank You, Mr. Chairman, for the opportunity to address 
        this Senate subcommittee at this particular juncture in the 
        history of my country.



                               __________


     Statement Submitted by The Honorable Professor Mthuli Ncube, 
              Minister of Finance and Economic Development

                              introduction
    On 22 November 2018, I presented the 2019 National Budget to 
Parliament under the theme: ``Austerity for Prosperity''. The Budget 
constituted the first economic and financial framework for implementing 
the Transitional Stabilisation Programme (TSP), which is also an 
initial stepping stone towards realising Vision 2030.
    And indeed, that ambitious Vision is duly the theme of this 
Conference: ``Towards an Upper Middle Income Economy by 2030''.
    To give perspective to this Conference theme, allow me to briefly 
walk delegates on the State of our Economy, before highlighting the 
thrust of the TSP and the 2019 National Budget.
    In the 2019 National Budget, I indicated that during the first half 
of 2018, the economy exhibited signs of strong recovery, riding on 
improved confidence from a peaceful pre-election environment and 
prospects for increased investment.
                               gdp growth
    In 2018, key growth drivers were agriculture and mining, 
complemented by the services sectors.
    With regards to agriculture, tobacco and cotton yields out-
performed the 2017 levels and 2018 Budget targets, to support overall 
sector growth of 12.4 percent. Similarly, in mining, gold output 
surpassed last year's production levels, to give mining growth estimate 
of 13 percent.
    Tourism and other service sectors (with average growth of 5 
percent) also added positive contribution to the 2018 growth momentum, 
all pointing to a growth expectation of about 6.3 percent in 2018 
during the first half of the year.
    Regrettably during the last half of the year, there were noticeable 
challenges, which posed some risks to economic activity, and these are 
associated with foreign currency supply challenges, fiscal imbalances, 
financial sector vulnerabilities, infrastructure deficiencies and 
capacity under utilisation, among others.
    Nonetheless, the economy remains resilient and is expected to 
record a solid growth of 4 percent in 2018.
                            public finances
    Positive economic performance, gave scope to better revenue 
collections for the nine months of the year, which amounted to US$3.8 
billion, against a target of US$3.4 billion. By year end, solid 
collections of US$5.3 billion are anticipated.
    However, while revenues exceeded Budget targets, total expenditures 
for January to September 2018, overshoot to reach US$6.5 billion 
against a target of US$4.1 billion. Taking into account the expenditure 
developments to September, outturn to year end is estimated at US$8.2 
billion, against a budget of US$5.3 billion, implying an expenditure 
overrun of US$2.8 billion (11.7 percent of GDP).
    Such a high deficit is clearly unsustainable against acceptable 
international levels of around 3 percent of GDP. The high budget 
deficit has been feeding into the rapid build-up in domestic debt stock 
which stood at US$9.6 billion as at end of September 2018 as well as 
other macro vulnerabilities.
    The bulk of domestic debt is also in Treasury bills, issued for 
recapitalisation of public enterprises, settling Government obligations 
and RBZ debt assumption.
                              gdp rebasing
    Zimbabwe has undertaken a Rebasing of Gross Domestic Product in 
line with international norms, which require replacing of the old base 
year, taking cognisance of changes in structure of the economy. This 
exercise is undertaken following sector surveys by ZIMSTAT.
    These surveys reflected significant changes in the number of 
establishments in specific sectors and the whole economy (5419 to 
38137). And also important is that the surveys captured the GDP 
contribution by the informal sector, which has grown bigger in 
Zimbabwe.
    The whole exercise culminated in adoption of a new base year 2012 
from the previous 2009 base year. Subsequent changes of GDP numbers in 
line with the new base year indicate that GDP at current prices for 
2016 has moved upwards from US$16.6 billion to US$20.5 billion, while 
at constant prices it grew by 29.2 percent from US$14.2 billion to 
US$18.3 billion.
    The rebasing exercise also revealed some vital information on our 
public finances. In essence, there is notable fall in revenue to GDP 
ratio, reflecting that revenue generating capacity of the Zimbabwean 
economy is yet to be harnessed and that the current tax system has 
scope for expansion.
    In addition, the higher revenue to GDP ratio before rebasing 
implies that a higher tax burden is being shouldered by a few taxpayers 
while tax evasion, particularly in the informal economy remain quite 
high.
                                 trade
    With regards to trade, exports during the first half and part of 
the third quarter were on the rise, underpinned by growth in gold, 
platinum, chrome and tobacco exports, on the back of favorable prices 
and increased production.
Exports
    Exports of goods and services for the first three quarters of the 
year amounted to US$3.79 billion, against US$3.44 billion recorded 
during the same period in 2017.
    The growth in exports, however, suffered a knock in the third 
quarter of 2018 due to challenges related to foreign currency 
shortages, particularly for key exporters. This compromised the ability 
of exporting firms to cover their costs of key consumables, hence 
reduced production.
Imports
    On the other hand, the pressure emanating from rising internal 
growth during the first nine months of the year, propelled the demand 
for imports of goods and services.
    A total of US$5.87 billion in merdiandise imports were recorded 
during the first nine months of the year, against US$4.86 billion of 
the same period last year.
    These imports were mainly dominated by fuels, electricity, 
fertilizer, chemicals, soya, medicines and few other consumables.
    The higher growth of imports relative to exports implies a widening 
trade balance of US$2.1 billion during the first three quarters of the 
year, compared to US$1. 4 billion.
    The deteriorating trade balance, higher primary income payments 
relative to receipts and slowdown in transfers, particularly 
remittances, gave rise to a widening current account balance.
    This second part of Zimbabwe's twin deficits has also a role in 
igniting the macro instability including inflationary pressures during 
the fourth quarter of the year through rising parallel exchange 
premiums.
    As a result, annual inflation, which averaged 2.9 percent during 
the first half of 2018 shot to 20.8 percent in October 2018, reflecting 
the dangers of living with the twin fiscal and current account 
deficits.
                the transitional stabilisation programme
    In view of the above challenges and our quest for transforming the 
country into Upper Middle Income status, Government has launched a 
short term stabilisation strategy--the Transitional Stabilisation 
Programme (Oct 2018-Dec 2020), which is already under implementation 
and to be followed by two strategic successor plans--Five-Year National 
Development Plans: NDP 2021-2025 and NDP 2026-2030.
    The Transitional Stabilisation Pro gramme s immediate task is 
centered on macro and fiscal stabilisation and laying a solid 
foundation for attaining the overall goal of a strong, sustainable and 
shared growth.
    Such growth, will be anchored on good governance and promotion of 
democratic principles, equitable access to means and outcomes of 
production, as well as modem infrastructure that supports day to day 
socio-economic activities.
    Sustainable and shared growth will also prioritise efficient 
delivery of public services and restoration of Zimbabwe's rightful 
place in the global economy.
    Implementing the Transitional Stabilisation Programme by powering 
the respective strategic and transformative drivers for change and 
development is initially through the 2019 Budget.
                  the transformative drivers of change
Macro-Fiscal Stabilisation
    The primary objective of the TSP and hence the 2019 Budget is to 
stabilise the economy by targeting the fiscal and current account twin 
deficits, which have become major sources of overall economic 
vulnerabilities including inflation, sharp rise in indebtedness, 
accumulation of arrears and foreign currency shortages.
    The strategy for reducing the budget deficit entails managing 
expenditures while stimulating economic activity in order to broaden 
the revenue base for any future expenditures required for development.
    In addition, during the macro stabilisation phase, efforts will be 
directed at mobilising and optimising revenues without compromising the 
viability at source.
    On the other hand, managing the current account deficit, as already 
indicated in the Budget, will require measures on managing our import 
bill while stimulating exports and other forex inflows.
Treasury Bill Issuances
    High fiscal deficits became entrenched largely due to expenditures 
committed outside the Budget framework and financed primarily through 
Treasury Bill issuances and RBZ over draft.
    Going forward, with immediate effect, all Treasury bill issuances 
will be strictly through the Auction system and for financing 
expenditures under the Budget framework and for short term cash-flow 
mismatches.
    The overdraft facility with the RBZ is now limited to 5 percent of 
previous years' revenues and for the sole purpose of smoothening cash 
flows.
    The Public Finance Management Act is, therefore, being amended to 
penalise any Treasury Bill issuances outside the Budget framework.
Expenditure Containment
    The Budget emphasizes on living within means by instilling fiscal 
discipline and rationalising expenditures in order to create additional 
financial capacity for funding developmental expenditures and enhancing 
delivery of public services.
    Consequently, a number of measures on containing expenditures are 
already under implementation, targeting the wage bill and other 
operational expenditures.
    In support of expenditure containment measures, the Budget is also 
introducing measures on improving expenditure controls, f1Scal 
transparency, and reporting.
Tripartite Negotiating Forum (TNF)
    Social dialogue has proved to be a key platform for addressing 
various social and economic challenges between the three social 
partners, namely, Government, Labour and Business.
    The TNF, therefore provides scope for negotiating a social contract 
that also reduces pressure on the wage bill with the objective of 
enhancing the economic development process of the country and at the 
same time promote consensus building for the national good.
Penalties under the Public Finance Management Act
    Compliance with provisions of the statutes that govern public 
finance management is central to fiscal discipline and the achievement 
of Government development and service delivery objectives.
    The PFM Act empowers the Treasury to exercise genera l direction 
and control over public resources, and further provides for financial 
misconduct in cases of willful and/or negligent failure to perform duty 
and exercise powers in compliance with provisions of the Act.
    Treasury will, in the context of amending the Public Finance 
Management Act, propose measures that enhance the enforcement of 
approved penalties, for cases of non-compliance with requirements of 
the Act, to achieve improved accountability in the management of public 
resources.
Multi-Currency System
    In the 2019 Budget , I reiterated that the country is still using 
the multi-currency system, which was put in place by Government in 
2009. From this multi-currency basket, the US Dollar is our reference 
currency, also applying to the 2019 National Budget.
    Government commits to preserving the value of money balances on the 
current rate of exchange of 1 to 1, in order to protect people's 
savings and balance sheets. This value preservation arrangement is 
hinged on consistent implementation of prudent fiscal and monetary 
policies, as well as disciplined market conduct by all economic agents 
as espoused in the Transitional Stabilisation Programme.
    Going forward, the objective is to build foreign reserves and 
credit lines, as part of the strategy for the value preservation 
objective.
    In the same vein, as macro-fiscal consolidation progresses, 
Government will establish a strong inclusive framework, through an 
interim Foreign Currency Allocation Committee, with broader 
representation as was the case in the past.
    This will, however, be in the context of gradualy exiting from 
exchange controls to market based mechanisms that promote efficiency in 
foreign currenc.y allocation.
Reengagement for External Debt Resolution
    Reengagement with co-operating partners and International Financial 
Institutions to discuss and map the way forward on the country's 
Arrears Clearance Road Map continues. The last meetings were held in 
October 2018, in Bali, Indonesia.
    In summary, the co-operating partners are in support of the 
Transitional Stabilisation Programme, as it captures adequately the 
policy reforms that Government is implementing, in order to tum around 
the country's economic fortunes.
    However, the international community emphasised the need to 
consistently implement the measures as outlined in the TSP and 
therefore, implementation of reforms under the Transitional 
Stabilisation Programme holds the key for advancing the arrears 
clearance strategy and unlocking of new financing.
                           productive sectors
    The 2019 Budget recognises the current constraints of limited 
fiscal space against high demands, and therefore, initially focuses on 
quick-win flagship projects and programmes across key sectors of the 
economy, with a view of stimulating inclusive growth with jobs.
    Consequently, the 2019 Budget prioritises agriculture, 
infrastructure rehabilitation and development which ordinarily supports 
our productive sectors besides other social-economic activities.
                        public services delivery
    In the same vein, the Budget prioritises healthcare, education, 
water and sanitation as delivery of these services remain utmost 
important and yet still fall short, that way imposing hardships on 
parts of the population.
    Details on these sectors will be dealt with by the respective 
Ministers.
                       infrastructure development
    Infrastructure development is prioritised under the 2019 Budget and 
the Transitional Stabilisation Programme as a key ingredient for 
attracting investment, reducing the cost of doing business and 
facilitating business operations.
    Treasury in consultation with line Ministries and other Departments 
has drawn an Infrastructure Development Plan. The 2019 priority 
projects have been selected through further engagements with line 
Ministries, Public Entities and stakeholders.
    A number of the identified projects will be accorded high priority, 
with their execution being tracked by Cabinet under the 100 Day 
Programme cycle. This will ensure adequate resources are directed 
towards effective projects delivery, including access to critical 
construction inputs.
    The list also includes projects that address emerging 
infrastructure gaps, which have put the lives of the public at risk, 
particularly in the water and sanitation, housing and energy sectors.
Infrastructure Spending and Finance
    A total of US$2.6 billion will be invested in infrastructure during 
2019, of which US$1.1 billion will be mobilised through the Budget and 
US$1.5 billion as off budget financing.
    Already, Government has facilitated mobilisation of off-budget loan 
funding through public entities, which will result in US$969 million 
being disbursed during 2019 for ongoing works at Hwange 7 and 8 Thermal 
Power Station (US$350 million), Harare-Masvingo-Beitbridge Road 
Upgrading Project (US$250 million), NRZ recapitalisation (US$216 
million) and R.G. Mugabe International Airport (US$78.2 million).
    Furthermore, Statutory and public entities own resources will 
contribute US$390 million, whilst Development Partners are expected to 
invest US$99.4 million, mostly targeted at projects in energy, water 
and sanitation, transport and irrigation sectors.
                inclusive and private sector led growth
    Government deems all sectors of the economy, as having potential 
and abundant capacity to contribute to economic growth and jobs 
creation. Critical for triggering this opportunity is harnessing and 
organising the requisite financial and human capital resources for this 
purpose.
    An aggressive investment drive is fundamental under the thrust - 
Zimbabwe is Open for Business. This necessitates enhanced efforts on 
reforming the business and investment environment, under the Ease of 
Doing Business Reforms.
    The short comings identified under the Ease of Doing Business 
Reform Agenda are being prioritised with specific actions being 
nstituted under 100 Day Rapid Results Plans.
    Other investment initiatives include the formation of the Zimbabwe 
Investment and Development Agency (ZIDA)), through amalgamation of the 
Joint Venture Unit in the Ministry of Finance and Economic Development; 
Zimbabwe Special Economic Zones Authority; and the Zimbabwe Investment 
Authority.
    As of 31 October, 2018, a total of fifty two (52) investment 
proposals with an aggregate value of US$57 billion had been received 
for appraisal.
    Already, eleven (11) of them have already been approved by 
Government, setting the stage for preparations towards commencing 
operations. The approved projects have a combined value of US$5.3 
billion. The bulk of the projects are work in progress and are at 
various stages of processing.
Venture Capital funding
    Further to this, Government is also establishing an enabling 
environment to attract investments through venture capital.
    Venture capital firms match financing to entrepreneurs with 
potentially viable good projects, thereby contributing to the success 
of investee companies. Consequently, upcoming firms grow and create 
jobs, increase overall innovation, productivity and growth at 
macroeconomic level is realised.
    It is envisaged that such investments will complement Government 
efforts in turning around the economy.
Tax Incentive for Jobs
    The Budget also made proposals for a taxation regime targeting job 
creation, especially incentivising investors, corporates and 
entrepreneurs. Consultations with the private sector, are ongoing with 
a view of identifying strategies for promoting job creation in the 
economy.
SMEs Support, Youth and Women Empowerment
    As with previous Budgets, the TSP and the 2019 Budget continue to 
capitalise empowerment banks as well as the respective empowerment 
funds in the Ministries of SMEs, Women and Youth.
    This is in recognition of the immense potential of the above 
players in economic transformation agenda.
                               devolution
    Devolution is a key tenet for equitable, shared and sustainable 
growth. As such the 2019 National Budget committed 5 percent of Central 
Government revenue collections for distribution to Provincial and Local 
tiers, in line with the Constitutional provision under Chapter 14 on 
devolution. This constitutes US$310 million to be distributed upon the 
promulgation of an enabling Act of Parliament in 2019.
    An interim inter-governmental fiscal transfer Framework, which 
allocates the resources, cognisant of socio-economic disparities across 
provinces and local authorities is being developed.
    Such a framework takes account of provincial population size, 
poverty levels and infrastructure deficit in the areas of health and 
education, and economic disparities within and between provinces, among 
other relevant considerations.
                               conclusion
Austerity for Prosperity
    Ordinarily measures on cutting on expenditures, mobilising more 
resources through taxes entail foregoing certain benefits in the short 
term.
    Therefore, as we implement the macro-economic stabilisation 
measures to our fiscus and current account adjustment, inevitable 
hardships will be unavoidable.
    However, the objective is to build the base for a prosperous 
economy in line with our Vision 2030. And precisely, this Budget under 
the theme ``Austerity for Prosperity'' promises a better future by 
doing the right things now.
    And, attaining a better future is within reach, despite some of the 
hardships of the past. Currently, the economy remains resilient, with 
performance exceeding expectations. Government policy initiatives will 
see solid growth in 2019, that way sustaining revenue and exports 
performance above targets.
    The re-engagement efforts are also raising investors' interest with 
more than US$15 billion worth of projects being negotiated.
    Therefore, as the Budget focuses on addressing macro-fiscal 
challenges, the economy should start genuine stabilisation for 
sustainable growth.



                               __________


     Responses to Additional Questions for the Record Submitted to 
              Matthew Harrington by Senator Cory A. Booker

Indicators of Reform
        The conduct of the recent election demonstrates that Zimbabwe 
        has not yet established a tolerant, democratic culture that 
        enables the conduct of elections in which parties are treated 
        equitably and citizens can cast their vote freely. In your 
        testimony you mentioned a few of the concrete steps that 
        Zimbabwe could take to demonstrate progress on reforms. I agree 
        that those are important indicators that will hopefully be 
        addressed in the short term.

    Question 1. What specific indicators for the longer term are you 
tracking that would demonstrate progress?

    Answer. The Zimbabwe Democracy and Economic Recovery Act, as 
amended, frames our longstanding posture toward Zimbabwe, and provides 
the major indicators we use to assess progress. These include: 1) the 
restoration of the rule of law, 2) a commitment to equitable, legal and 
transparent land reform, 3) an election ``widely accepted as free and 
fair by independent international monitors,'' or a sufficiently 
improved pre-election environment ``consistent with accepted 
international standards for security and freedom of movement and 
association,'' and 4) military and national police forces that are 
subordinate to the civilian government.

Prosecuting Perpetrators of Violence
        I was alarmed by the violence that took place against 
        demonstrators--leaving six dead--following the July 30th 
        election. Unfortunately, this fits a pattern that we've seen 
        over many years. A presidentially-appointed commission of 
        inquiry is probing the killings. Its terms of reference have 
        been criticized on legal bases, issues they may not address, 
        and an apparent implicit presumption that a military response 
        was justified.

    Question 2. Could you evaluate the process that the commission of 
inquiry has followed? Have you found the process credible?

    Answer. The establishment of a Commission of Inquiry (COI) into 
post-election violence has been a welcome step. We hope the Commission 
will be transparent in its determination of what happened and that the 
Government of Zimbabwe will hold those responsible accountable for 
their acts. We have been closely following the process, and have been 
calling for this both directly to the government of Zimbabwe as well as 
publicly.
    While we do not want to pre-judge the results, we note serious 
concerns raised by members of Zimbabwean civil society about the terms 
of reference of the COI, which focus on the acts of protestors rather 
than those who shot at them or those who may have ordered shooting at 
unarmed civilians. In fact, much of the testimony presented to the COI 
focused on the nature of the protest preceding the shootings rather 
than the circumstances of the killings themselves. The COI report was 
sent to President Mnangagwa on Friday, November 30. We have urged the 
Government of Zimbabwe to release the report to the public. We will 
await the COI results to assess the process and will encourage the 
Government of Zimbabwe to implement any appropriate recommendations.

Election Commission
        One of the key recommendations of the IRI/NDI observer 
        delegation was to implement reforms to ensure the Zimbabwe 
        Election Commission (ZEC) is widely perceived to be an 
        independent election management body capable of administering 
        credible elections.

    Question 3. What are steps that the ZEC needs to take to regain its 
credibility? To what degree is this a question of technical assistance 
or political will? To what degree should the United States assist the 
ZEC with undertaking these efforts?

    Answer. There are many changes to Zimbabwe's elections laws that we 
would recommend for the Government of Zimbabwe to make progress towards 
a freer and fairer elections process in the future. The Zimbabwe 
Election Commission (ZEC) should adopt processes that are more 
transparent, and the government should amend the Electoral Amendment 
Act to improve the political independence of the ZEC. Other 
recommendations include: adopting transparent procedures for the 
tabulation, transmission, and announcement of results; expanding the 
right to vote to include diaspora members who are Zimbabwean citizens; 
ensuring equal opportunities for contesting political parties and 
candidates to use media for advertising or other appearances; enforcing 
rules for nonpartisanship for traditional leaders and government 
officials; making clear the process for resolution of electoral 
disputes; and easing restrictions on voter education.
    Should the Government of Zimbabwe demonstrate a genuine will to 
reform, including by implementing political and economic reforms, it 
could make sense for the United States to provide technical assistance 
to the ZEC.

Zimbabwe Strategy
        We've heard that there is a State Department Zimbabwe strategy 
        in the works as part of a broader NSC-led policy discussion on 
        Zimbabwe.

    Question 4. When will that strategy be released? What will be some 
of the top lines from that strategy?

    Answer. The President approved a new Africa strategy, which 
National Security Advisor Bolton announced December 13. With that 
essential component in place, we are reviewing our Zimbabwe strategy 
across the interagency in an NSC-led process. Our goal is to encourage 
a more democratic, prosperous, healthy, and self-reliant Zimbabwe, and 
the Zimbabwe Democracy and Economic Recovery Act, as amended, frames 
our longstanding posture toward Zimbabwe.
    Additionally, the U.S. Embassy in Harare is in the process of 
updating its Integrated Country Strategy (ICS) for Zimbabwe. The ICS is 
a four-year strategic plan that articulates whole-of-government 
priorities in a given country and incorporates higher-level planning 
priorities. The Chief of Mission leads the ICS through a coordinated 
and collaborative planning effort among Department of State and other 
U.S. government agencies with programming in the country. The updated 
ICS for Zimbabwe should be finalized in early 2019 and will be 
available on the Department of State website.



                               __________


     Responses to Additional Questions for the Record Submitted to 
        Hon. Matthew Harrington by Senator Christopher A. Coons

        More than 346 miles of land in Zimbabwe, along the border with 
        Mozambique, remain contaminated by landmines. These explosives 
        have killed or injured more than 1,550 people since the end of 
        the war, and impact 75,000 people across 87 communities on the 
        Zimbabwe side of the border. Clearing the remaining mines saves 
        lives, improves rural food security, promotes security and 
        stability, and facilitates economic development in border 
        regions. In recent years, the State Department has cut funding 
        for humanitarian demining in Zimbabwe from $3 million in Fiscal 
        Year 2015 to a proposed $1 million in Fiscal Year 2019:

    Question 1. Is the State Department committed to helping achieve a 
mine-impact free Zimbabwe, and will the State Department provide 
additional funding to the U.S. humanitarian demining program in 
Zimbabwe?
    Answer. The U.S. Government remains committed to helping achieve a 
mine-impact free Zimbabwe. Zimbabwe's need for arable land is so great 
that people attempt to farm mined land, resulting in deaths of people 
and livestock. Demining is complementary to other development 
activities as it opens new areas for agriculture and tourism.
    Since 2013, the State Department has provided more than $10 million 
in funding to partner organizations committed to demining in Zimbabwe. 
This assistance has resulted in more than 23,000 mines destroyed. We 
remain committed to supporting this valuable humanitarian work.



                               __________


     Responses to Additional Questions for the Record Submitted to 
                Joseph Mutizwa by Senator Cory A. Booker

Sanctions and the Elections
          In your written testimony you said that sanctions do 
        constitute a real stumbling block to the efforts of the current 
        Government to get the country's economy moving forward again. 
        You also said that President Mnangagwa appears to have 
        sufficient conviction and resolve to rebuild Zimbabwe and turn 
        it into a successful and proud nation occupying its rightful 
        place among the community of nations. Yet, the first real test 
        of Mnangagwa's resolve was the recent elections, which failed 
        to be the real turning point that so many had hoped. The 
        government had a choice in terms of the conduct of those 
        elections and it chose not to make the reforms that would 
        increase credibility.

    Question 1. Considering the conduct of the election, what should 
give us confidence that President Mnangagwa will now make the dramatic 
reforms necessary to promote free expression, rule of law, human 
rights, and accountability for past wrongs?

   Considering the conduct of the recent election, is there any reason 
        that we should relax sanctions before fundamental reforms 
        actually take place?

    Answer. The 2018 elections were accompanied by the following 
substantial changes which in my view did not receive sufficient 
recognition by the observer missions:

   The campaign was completely free for the first time since 
        Independence in 1980. There were no overt attempts to stop the 
        Parties campaigning in all areas of the country;
   The use of State organs such as the Army, was not visible and this 
        also marked a significant improvement on previous elections.
   State media were much more balanced although we could not claim 
        they were not biased in favor of the ruling Party;
   The Election Commission was much more independent and professional 
        on this occasion and the international media were reasonably 
        satisfied with the final tally. This is in sharp contrast to 
        earlier elections;
   Opposition Parties did not challenge the results of the election of 
        2000 local government Councilors who occupy the lowest level of 
        the elections. MDC only took a quarter of all these seats;
   Very few of the elections for Members of Parliament were challenged 
        and Zanu PF did end up with a substantial majority of these 
        seats; and
   Emmerson Mnangagwa defeated Nelson Chamisa by 300 000 votes 
        although the majority over 50 per cent was a tiny 0,6 per cent. 
        Had the President lost this initial poll he would almost 
        certainly have lost the run off. This extremely narrow victory 
        gives reasonable grounds to assume that he was genuine in 
        trying to deliver a democratic vote.

Obstacles to Reform
          The United States and others in the international community 
        have identified reforms that need to be taken for Zimbabwe to 
        relax sanctions. The Mnangagwa government has appeared 
        cognizant of such views and the central role that the 
        international community is likely to play in ensuring future 
        access to finance and investment. Nevertheless, it has arguably 
        achieved only limited progress in fostering the deep reforms to 
        which it committed after Mugabe's resignation.

    Question 2. Although some human rights, democracy, and governance 
reforms take time, others can be done relatively easily by the 
executive. What do you believe is holding the reform process back?

   Are there more effective ways that the international community can 
        encourage action on those reforms?

    Answer. I do not think that the United States is giving the new 
Government of Zimbabwe sufficient credit for what has already been 
achieved, even though the President faces substantial resistance from 
elements of the old regime. I would list the following as very 
significant in this context and even in terms of the ZIDERA conditions:

   The appointment of new, non-political leadership throughout the 
        armed forces and in the security services;
   There are reports that both the Police and the intelligence 
        services are being completely restructured and retrained to 
        return them to something more professional and less political;
   Many Permanent Secretaries have been replaced with less politically 
        aligned individuals and in an attempt to make the Civil Service 
        more professional;
   The Government has started to take action against corruption and 
        the replacement of the Prosecutor General is expected to 
        accelerate this process;
   The Government has accepted that the rights of the former farming 
        community have been violated and compensation will be paid when 
        the resources are available. This process has been moved into 
        the Ministry of Finance where it is receiving attention;
   On the economic front the reengagement with the IMF has started and 
        the needs of the economy are well understood. Significant 
        economic reforms are underway and I would highlight the 
        following:

        The fiscal deficit has been dealt with and the Treasury is 
            now operating at a surplus on a monthly basis;
        Companies and individuals have been given foreign currency 
            accounts to protect hard currency balances from the 
            inevitable devaluation of the de facto local currencies in 
            use;
        Import restrictions which violated regional and 
            international trade rules have been removed; and
        We are expecting the adoption of more open market driven 
            policies accompanied by strong monetary policy and control 
            and a managed float of the local currency.

    The following political reforms have been already implemented and 
should be given more recognition by the United States:

   Indigenization laws which were racially discriminatory have been 
        virtually abolished;
   The Public Order and Security Act (POSA) has been suspended pending 
        removal from the statute book after being used, first by the 
        Smith Regime and latterly by the Mugabe Regime to suppress 
        political freedoms in many areas of national life - freedom of 
        speech, association and movement were all compromised by this 
        Act which is specifically listed in ZIDERA;
   Recently the Act controlling and suppressing the media industry 
        AIPPA, has also been slotted for suspension or modification 
        with the intention of allowing State media more freedom and 
        independence and to protect the private media. Already media 
        controls have been relaxed and the international media in all 
        forms is allowed free access and freedom of activity in 
        country; and
   The President has clearly committed himself to the amendment of all 
        local legislation to bring it into line with the new 
        Constitution adopted in 2013.

    Finally, I would argue that Zimbabwe has suffered enough under the 
catastrophic Government of Mr. Mugabe during which time up to 3 million 
Zimbabweans have fled as economic and political refugees and the 
quality and length of life has declined dramatically. Although the 2018 
elections were by no means perfect, they were probably on a par with 
similar events in Kenya, Tanzania and South Africa.
    Given that the new Government needs support from all who want to 
see Zimbabwe get back on its feet and to achieve its full potential as 
a regional economic power house and center of stability, it is time to 
start providing the Government with support and encouragement rather 
than trying the punish the new leadership for the mistakes of the past.

                                  [all]