[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
__________
Printed for the use of the Committee on Foreign Relations
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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.
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