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| Man holds up defaced Robert Mugabe street sign during one of the many protests to engulf Harare in 2016 - Photo Credit: Reuters |
2016, was always
going to be a tough year. The seeds had been sown years prior, with the
economy manifestly displaying signs of distress. Inflationary data was negative
coming off 2015, and tightening lending by banks all but pointed to a severely
weakening liquidity situation that had largely remained restricted to business
circles, and big-shot private investors. As the year wore on however, this
crisis eventually blew-up and started affecting the individual Zimbabwean at a
very micro level, where it hurts the most.
Civil Service Bonuses
With some
commendable level of foresight, finance minister Patrick Chinamasa had
announced early in 2015 that it was government`s considered view that bonus
payments for civil servants was a luxury it could no longer sustain, and hence
bonuses were to be scrapped. However, at an Independence Day speech just a few
weeks later, President Mugabe disowned Chinamasa`s pronouncements and took a
populist stance, promising that government would continue to pay bonuses
despite revenue collections clearly showing that government had no capacity to
fund bonuses. This was to be the ghost that would haunt government even in
2016, as it was forced to stagger civil service salaries for the better part of
2016. This unpopular move eventually culminated in the successful mass
stay-away in July which coincided with the now infamous #ShutdownZimbabwe led
by Pastor Evan Mawarire`s #ThisFlag movement. Pastor Mawarire would prove to be
a major thorn in government`s skin even as he was miles away after having fled
the country. As 2016, draws to an end, government still has not paid this
year`s bonuses, having barely managed to pay salaries on time for the month of
December. Unfortunately, this is a theme that will very much be recurrent in
2017.
Missing $15 billion
Zimbabweans
would receive a huge awakening when the President announced in an interview to
mark his 92nd birthday that $15 billion in diamond revenues was
missing from the economy and that treasury had only received $2 billion since
2008. As is always the case, the culprits are known, but no action was taken,
as the government has consistently displayed its unwillingness to tackle
corruption, unless it furthers someone`s political interests. The Reserve Bank
of Zimbabwe governor later came in to try and water this down by claiming that
the $15 billion the president had referred to was merely an “economic loss,”
and not actual monetary value. Be that as it may, this would just go to set the
tone for how government handles issues of graft, what with admissions by
Professor Jonathan Moyo that he had ‘misappropriated’ Zimdef funds as he
painted himself as some sort of Robin Hood, yet today, he is still walking a
free man.
Indigenisation
Indigenization
minister Patrick Zhuwawo finished the latter part of the year largely obscure,
and unnoticeable, but this wasn`t the case when the year begun, The firebrand minister made a lot of noise hammering
foreign companies on the need to comply with the Indigenization Act`s
requirements of ceding 51% of their ownership to local Zimbabweans. Most
observers agreed that he lacked tact in his general approach to the issue. Earlier,
he had demanded that foreign owned companies give 10% of their annual earnings
to the Empowerment Levy, but businesses had ignored this call. In response he
gave foreign companies up to the 31st of March 2016 to comply with
the Indigenization law or else he would shut them down. This gave credence to
the notion that government was not that serious in wanting to attract foreign
investment given how it was scaring the little foreign capital already in the
country. To begin with the policy of contributing to the levy was flawed in
that effectively it was asking companies to pay the 10% out of their revenues,
not profits. Zhuwao`s brash mannered approach would eventually see him bump
heads with finance minister Patrick Chinamasa, something that would again show
that government had no real political will to attract foreign investment. How
would an investor possibly invest money in a country where two cabinet
ministers have a divergent view of such a critical policy, and openly attack
each other? President Mugabe had to eventually move in to break the impasse
between his cabinet ministers over the issue, by issuing a public statement
that the indigenization law was “sector-specific” and had to be implemented
differently without a “one-size-fits-all” approach. However noble this
intervention might seem, there still exists no official law to back the
President`s statement, hence it was a non-event and investor concerns over the
Indigenization law still exist.
Bond Notes
Perhaps, the
mother of all earthquakes to shake the economy in 2016 was the announcement in
April by the RBZ governor that government intended to introduce Bond Notes. What
would follow thereafter was pure unadulterated madness economy-wide. This pronouncement served to only catalyze
the worsening of an already dire liquidity crisis as panic withdrawals beset
banks, mopping out the little currency that was circulating in the formal
economy. It did not help matters, that the whole deal was shrouded in secrecy
from the beginning as the central bank was mum on detail. Again, given the
general distrust of the public against local monetary authorities, the fact
that the proposed release date of the notes kept being postponed also didn`t
help matters and the uncertainty created fueled speculative tendencies in the
economy. The announcement of bond note introduction had several implications on
the economy. Chief among them, was that it created some sort of “electronic
inflation” whereby due to the scarcity of physical cash, many transactions had
to be done electronically through transfers. The few people with access to cash
began adding a 10-15% premium to access hard foreign currency, as they
capitalize on the need to remit payments outside the country which now needs
cash. This in some way is a reverse déjÃ
vu moment of the electronic inflation of 2008, which brought about the “burning
money” phenomenon. Bond notes appear to be holding their value against the
greenback for now, but the key question is for how much longer? 2017 will
surely be interesting in this regard.
War Vets Communique
The political
landscape has been rapidly becoming predictable. To the wry observer it has
been very clear that the politics of Zimbabwe in 2016 would be dominated by the
internal party struggles of Zanu PF. The whole country was at the party`s
mercies this year, as for all intents and purposes, Zimbabwe does not have an
effective opposition party with the structures, acumen and vision to match that
of Zanu PF. (This is a rather controversial assertion, however, it is one I
fully stand behind.) A group of anonymous war veterans released a highly
combustible communique which read in part, “…The ZANU (PF) Party Leadership has
dismally failed to use the resounding mandate given to it in the 2013 general
election, to address the economic problems that have beset our great nation since
independence from British rule. We note, with concern, shock and dismay, the
systematic entrenchment of dictatorial tendencies, personified by the President
and his cohorts, which have slowly devoured the values of the liberation
struggle in utter disregard of the Constitution…” Although this statement was
roundly disowned by the vast majority of the war vets, the powers that be in
the ruling party appeared rattled and hastily arranged a War Vets Indaba where
the President met war vet delegates who aired their grievances. This would just
pass to be a talk-shop as no real tangible thing emanated from this meeting;
suffice to say the war vets had been placated momentarily after gaining an
audience with the head of state. But again, the key question is for how long?
Brexit and Beyond
Further across
our shores, the world was rattled too, first with the largely unexpected vote
by Britons to exit the European Union, what has now become known as (Brexit).
This would also see David Cameron quit as British Prime Minister. Further
across the Atlantic, Americans went on to defy logic and reason, by choosing
Donald J Trump to be the 45th President of the United States of
America, and successor to Barack Obama. These two seminal events would mark the
beginning of populist tectonic shifts in the Western world as evidenced by
events in Italy, Poland and Austria later on in the year. Fidel Castro, once
the longest reigning President eventually answered death`s knock, and the
nonagenarian died at a time when frosty relations between Cuba and the USA were
beginning to thaw.
In Africa,
Angolan President Eduardo Dos Santos who has ruled the oil-rich country for
nearly 40 years pulled a shocker by announcing that he would step down in 2018.
In Ghana, elections were held peacefully, and a peaceful handover of power
between John Dramani Mahama and Nana Akuffo Ado is on course, as the country
further establishes itself as one of the most stable democracies on the
continent. In The Gambia, what promised to be a peaceful transition was brought
to a grinding halt as incumbent Yahyah Jammeh who had initially conceded defeat
went back on his word and vowed to remain in power despite losing the election.
This would serve to be a stark reminder that despite the occasional mirage of progress;
Africa will always be Africa after all. One can only guess how 2017 will play out
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