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Zimbabwean president and leader of the ruling Zimbabwe African
National Union-Patriotic Front (ZANU-PF) on 7 September 2018
announced a new cabinet following his victory in the 31 July 2018
elections, the first since the resignation of long-serving
president Robert Mugabe in November 2017.
Mthuli Ncube's appointment to the finance portfolio appears to
reinforce the "Zimbabwe is Open for Business" message that
President Emmerson Mnangagwa is sending to get the economy back on
track by attracting much-needed foreign direct investment
(FDI).
The Zimbabwean Cabinet appointments most probably affirm
Mnangagwa's commitment to structural and economic reforms,
including dealing with debt arrears, tackling corruption, and
enacting pro-business reforms under a new investment law.
The main opposition Movement for Democratic Change (MDC)
Alliance is highly likely to continue challenging the legitimacy of
the ZANU-PF administration through media channels; however, further
protests like those witnessed in the aftermath of the announcement
of the presidential electoral result on 4 August are unlikely to
reoccur.
Those taking up important portfolios in the 20-member Zimbabwean
Cabinet (reduced from 33) include Mthuli Ncube, an Oxford
University professor and the former vice-president of the African
Development Bank (AfDB), who took over Patrick Chinamasa's finance
and economic planning portfolio. Chinamasa lost his parliamentary
seat despite his role in negotiating with the International
Monetary Fund (IMF) and other multilateral creditors to resolve
Zimbabwe's USD1.8-billion debt arrears.
Political stability
Others taking up important portfolios include Major General
Sibusiso Moyo, who is retained as Foreign Affairs and International
Trade Minister; Air Chief Marshal Perence Shiri, who is also
retained as Lands, Agriculture, Water, Climate, and Rural
Resettlement Minister; and Winston Chitando, a mining industry
veteran and former vice-president of the Zimbabwean Chamber of
Mines, as Mining Minister. Although President Emmerson Mnangagwa's
cabinet is made up of his key allies, it has been composed with an
eye to dealing with the increasing divide within the ruling
Zimbabwe African National Union-Patriotic Front (ZANU-PF) about the
centrality of the military in the administration. Media reports
since March, and particularly in the aftermath of the July
elections, indicate a growing rift between the military and the
civilian section of ZANU-PF, with the latter criticizing the
Zimbabwe Defense Forces (ZDF) for dominating the government and
usurping control of the party; these criticisms have been led by
members of the War Veterans' Association, headed by former
information minister Chris Mutsvangwa. Mnangagwa's placation of the
security establishment that brought him to power with appointments
and the removal of several Mugabe-era party stalwarts such as
Chinamasa, as well as former home affairs and culture minister
Obert Mpofu, to newly created positions within ZANU-PF's politburo
will probably secure his position as president and give him the
space and capacity to implement reforms.
Zimbabwe is "Open for Business" and the road to economic
recovery
Following Mnangagwa's ascension to power in the November 2017
military-assisted takeover, he immediately set about a process of
economic reforms, sending positive signals to the international
investor community under the "Zimbabwe is Open for Business"
policy. Chinamasa, then the finance minister, presented the first
budget of the Mnangagwa administration in December 2017 for the
2018 fiscal year and introduced major legislative and policy
reforms designed to revive the ailing economy, including amending
the Mugabe-era Indigenization and Empowerment Act. The amendment
removed the minimum requirement of 51% local ownership in all
businesses, except for those extractive firms mining diamonds and
platinum. Chinamasa also announced compensation for farmers whose
lands were seized during the land reform of the early 2000s. The
administration has also been able to recover USD591.0 million out
of an estimated USD1.3 billion of illegally externalized funds
following the expiration of a 90-day amnesty at the end of February
2018, according to media reports.
Despite these initial successes, Mnangagwa and ZANU-PF's major
priorities will probably include tackling corruption, promoting
foreign direct investment (FDI), especially in mining and
infrastructure, increasing value-added manufacturing and
agro-processing, and enacting pro-business reforms under a new
investment law. It also includes removing employment quotas while
re-engaging with the international community to unlock new
financing to ease Zimbabwe's liquidity crisis. In the key mining
sector, the ZANU-PF administration is seeking to increase output
and revenue from diamonds and platinum exports and other gemstones;
to give effect to this, the government on June 1 dropped a proposal
until then contained in the Mines and Minerals Amendment Bill
requiring mining companies to list most of their shares on the
Zimbabwe Stock Exchange.
Further emphasis will probably be placed on cutting government
spending; this is likely to include the announcement of a
recruitment freeze by the government, introducing plans to force
staff in the public service who are aged above 65 to retire, the
reduction of international delegations, and the closing down of
embassies to reduce the exorbitant public-sector wage bill that
consumes more than 90% of government expenditure. In addition, the
government will probably continue its rapprochement efforts with
international financial institutions, including the IMF and the
AfDB, in meeting numerous milestones, particularly to secure new
funding while agreeing to a new austerity and structural reform
program including compensation for past land expropriations.
Outlook and implications
The appointment of Ncube to the finance portfolio appears to
reinforce the "Zimbabwe is Open for Business" message that
Mnangagwa intends to get the Zimbabwean economy back on track.
Ncube has already indicated that currency reform is at the top of
his turn-around strategy for the economy and is looking at adopting
the US dollar as the only currency, while removing the
controversial bond notes from circulation. He has also committed
himself to assisting Zimbabwe's financial sector to introduce new
and innovative products. In addition, the Cabinet appointments most
probably affirm Mnangagwa's commitment to structural and economic
reforms, including tackling corruption and enacting pro-business
reforms under a new investment law.
While the economic transformation agenda takes center stage, the
opposition Movement for Democratic Change (MDC) Alliance is highly
likely to continue challenging the legitimacy of the 31 July
elections and Mnangagwa's presidency in the media, although further
protests like those witnessed in the aftermath of the announcement
of the presidential electoral result on 4 August, which resulted in
seven deaths, are highly unlikely to reoccur. Mnangagwa will
probably continue to attempt to entice MDC leader Nelson Chamisa
into endorsing his presidency. However, concerns over political
stability will probably remain over the one-year outlook, given
that some of the changes Mnangagwa is implementing, especially in
the fight against corruption, will threaten certain entrenched
interests within the military establishment and within ZANU-PF.
Indicators pointing to improving political and economic prospects
would include successful prosecutions of people involved in the
post-election violence following the publication of the report of
the independent Dixon Commission of Inquiry, announcement of new
debt talks, and removal of ZANU-PF officials from EU-US sanctions
list.