Zimbabwe – Political Climate Inhospitable to Reform

Having achieved the presidency by means of a military coup carried out in November 2017, Emmerson Mnangagwa fulfilled his goal of obtaining a popular mandate at an election held in late July, although the result was tainted by credible allegations of various widespread irregularities. At his inauguration, which was delayed as a result of post-election violence, Mnangagwa pledged to promote national unity, eradicate corruption, and revive an economy hobbled by the statist policies of his predecessor, Robert Mugabe.

It was evident in the run up to the elections that Mnangagwa was counting on the perception of free and fair elections to convince western countries to free Zimbabwe from the burden of sanctions. However, the post-election protests organized by the opposition and the rather heavy handed response of the security services pretty much undermined the entire strategy.

Facing cash shortages, Finance and Economic Development Minister Mthuli Ncube implemented a questionable currency policy that in combination with a controversial transaction tax has contributed to a spike in inflation, stirring fears of a repeat of the hyperinflation of a decade ago, even as the government’s lack of funds to pay for fuel imports creates the risk of an economic collapse. Lacking a clear popular mandate, Mnangagwa will remain beholden to the military leaders who put him in power, and who may question their choice if economic problems contribute to a breakdown of domestic order.

Mnangagwa’s economic policy proposals in many cases amount to a sharp break with the economic nationalism and unorthodox fiscal strategy favored by Mugabe, but he has yet to follow through to any meaningful degree. The president has signaled that he is prepared to make a push on the reform front after receiving a strong vote of confidence from the governing party’s recent congress, but there are clear signs of the continued potential for destabilizing factional tensions within ZANU-PF. Thus, even if the regime possesses the will to tackle the numerous impediments to realizing the country’s full economic potential, a lack of administrative capacity and the political risks associated with a serious attempt to dismantle the complex system of patronage constructed under Mugabe will be obstacles to reducing deterrents to investment.

Since 1979, The PRS Group Inc., has been a global leader in quant-based political and country risk ratings and forecasts. This excerpt is from our latest Political Risk Letter publication, for more information please contact us at (315) 431-0511 and sales@prsgroup.com

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