Zimbabwe’s president Robert Mugabe earned much of his status as an international pariah with a series of controversial laws and populist policies that have crudely attempted to reverse the imbalance of an economy that was traditionally controlled or dominated by the country’s white minority. But as the the economy has nearly ground to a halt in recent years, he is being forced to reconsider some of his more controversial positions.
Last week, Mugabe said his government would amend (pdf, p. 14) the economic empowerment law that transfers majority shares of foreign-owned firms to black Zimbabweans. The softened stance was part of an effort to reassure investors, who are deterred by the law, and to clear the confusion over how government agencies should implement the law.
In its current form, the indigenization law requires white Zimbabwean-owned and foreign mining and financial companies to transfer at least 51% of their shares to blacks. The empowerment policy, approved in 2008, has proved controversial and has been cited as undermining desperately needed foreign investment.
Yet, the president’s new announcement pinpoints to the larger socio-economic and political problems currently facing Zimbabwe. The southern Africa nation is in dire economic straits, with the economy growing at only 0.4% in 2016, according to the World Bank. Economic vulnerabilities are exacerbated by the drought, which is having a severe impact on agricultural production, a mainstay of the economy. Nearly five million people face food shortages due to the drought–the longest in decades–and one-fifth of the population currently lives in extreme poverty. Anti-government protests continue to grow, and civil servants and teachers have refused to work after their payments were delayed. High levels of corruption and a lengthy isolation from the international community have also increased debt and restricted the flow of aid.
Mugabe’s statement also points to the confusion within his government on how to best implement the black empowerment policy. In April, the president said conflicting interpretations of the law had “caused confusion among Zimbabweans, the business community, current and potential investors, thereby undermining market confidence.” Yet, nothing has happened since April, a move analysts say shows the government doesn’t have a credible plan to move the economy out of debt and create jobs.
“Why he repeats this undertaking now is moot and feeds speculation that this is part of a rhetorical dance to keep the international financial institutions interested in some form of re-engagement,” says Piers Pigou, a senior southern Africa consultant with the International Crisis Group. If the amendment is followed through, he says, it would represent a major compromise by the ruling party.
But whether cash-strapped Zimbabwe can overcome the current uncertainty clouding its economy seems far-fetched–at least for now. The government has an opportunity to seek meaningful dialogue around these issues, but this seems unlikely given its own internal fissures and the uncertainties around Mugabe’s tenure and succession. At the parliament’s opening session, the 92-year-old dispelled rumors of mental decline from last year by joking that his team had given him the right speech this time round.
But in the long run, whether or not the accelerating decline “expedites momentum towards genuine reform, greater transparency and accountability remains to be seen,” Pigou said.-qz.com
