Africa News blog

Betting on Zimbabwe

With global risk aversion decreasing there has been renewed interest in frontier markets.

They don’t come much more frontier than Zimbabwe, which is where Investec Asset Management is looking to make one of its newest investments – buying into a supermarket chain – and then for other potential opportunities.

Despite the continued political troubles since President Robert Mugabe and old rival Morgan Tsvangirai put together a power sharing government just over a year ago, Zimbabwe’s economy grew last year for the first time after a decade of debilitating decline. Growth was estimated at nearly 5 percent.

Returns on the stock market have been even better, although trading remains thin. The ZSE Industrials Index is more than 160 percent above where it was a year ago if down 20 percent from its high last October).

Chris Derksen, head of frontier markets at South Africa-based Investec Asset management, which has $1.5 billion invested across the continent, saw strong further potential given gross domestic product in 2008 was half that of a decade before and Zimbabwe’s share of the economy in the Southern African Development Community had shrunk even more dramatically.

He sees the consumer sector as particularly promising.

“The Zimbabwean consumer is coming from a very low base and the potential for catch-up growth is strong. The difficulty, of course, is getting the timing on a sustainable change right,” Derksen said.

Should West back Zimbabwe’s government?

The United Nations has joined Zimbabwe’s power-sharing government in appealing for more than $700 million in humanitarian aid for the ruined country.

But while Western countries may show willing when it comes to emergency aid, they are still reluctant to give money to the government between President Robert Mugabe and Prime Minister Morgan Tsvangirai, his old rival.

First, they say, there must be broader political reforms and a clearer demonstration of respect for human rights.

The Western countries have long been at odds with Mugabe, accusing him of ruining Zimbabwe after the seizure of white-owned farms, of widespread human rights abuses and of making a mockery of elections last year that were widely condemned outside Zimbabwe.

But if those countries don’t come up with the finance that the government needs, some believe there is a danger it could undermine prospects for change rather than strengthening them.

“My advice is for the international community to engage Zimbabwe as the opposite of this will only benefit hardliners,” Tsvangirai told a visiting French minister last week.

The unity government has said it won more than $1 billion in promised credit lines from African banks for private firms, but says it needs more than $8 billion for reconstruction.

Is Zimbabwe’s Gono going?

The acknowledgement by Zimbabwe’s central bank governor that it raided the private bank accounts of companies and donors to fund President Robert Mugabe’s government during the economic crisis has increased speculation over his fate under the new national unity government.

Central Bank Governor Gideon Gono said the central bank took foreign currency from private accounts to help pay for some $2 billion in loans to state-owned companies and utilities and for power and grain imports. He said the government still had to repay about $1.2 billion, so the bank could repay the money it owes.

Heading the central bank at a time Zimbabwe was suffering economic collapse and hyperinflation that touched at least 231 million percent a year (according to official figures) was never going to be a badge of honour for the governor, but as he made clear in his statement, Zimbabwe’s problems went beyond economics.

“It was a political problem and not an economic one that drove us into the difficulties this nation experienced, and quasi-fiscal operations were a response to those political challenges we have now resolved through the inclusive government,” the statement said. “Our call is to let bygones be bygones and for everyone and every entity to start anew and open a new page.”

Gono has come under pressure from Prime Minister Morgan Tsvangirai’s Movement for Democratic Change (MDC) to resign since the former opposition party joined Mugabe in a unity government in February. Western diplomats have also said Gono’s departure could help bring a resumption of badly needed aid.

Are his days numbered now Tsvangirai and Mugabe seem to be working together more closely than many might have expected?

Sign of change in Zimbabwe?

President Robert Mugabe joined the mourning for Prime Minister Morgan Tsvangirai’s wife on Tuesday and called on Zimbabweans to end violence and support his old rival to help rebuild the country.

The death of Susan Tsvangirai in a road crash in which her husband was also injured has, at least on the surface, brought about a show of unity between Zimbabwe’s bitterest foes that might never have looked possible.

“This is a difficult moment for our colleague. He has lost a partner and we must all rally to support him and lessen his burden,” Mugabe told mourners at the service for the woman who supported Tsvangirai through years of political struggle against him.

“To our supporters, we want to say violence should stop. That’s what (Mrs) Tsvangirai would have wanted, for us to co-exist peacefully. We have just started a new life after years of fighting each other and insulting each other. We have said let’s give peace and harmony a chance and work together.”

Many Zimbabweans were suspicious of the cause of Friday’s crash, the month after Mugabe and Tsvangirai had formed a unity government that has been mired in disagreements over appointments, economic policy and the detention of activists and supporters of long time opposition leader Tsvangirai.

Tsvangirai himself, however, has ruled out foul play in the car crash – putting it down to an accident on one of Zimbabwe’s dangerously potholed roads.

Tsvangirai’s oldest son Edwin thanked Mugabe for his speech.

Will Zimbabwe power-share work?

Zimbabwe’s opposition leader Morgan Tsvangirai became the new prime minister on Wednesday, sworn in by President Robert Mugabe — his old political rival.

Tsvangirai vowed to rescue the stricken economy and called on the international community to help salvage the economy of Zimbabwe where unemployment is above 90 percent, prices double every day and half the 12 million population need food aid.

The new unity government will also have to grapple with a cholera epidemic that has killed nearly 3,500 people, the worst outbreak of the disease in Africa in 15 years. Millions of Zimbabweans who fled the country will be cautious about coming back until they see results.

Foreign investors and Western donors have made it clear money will come only when a new democratic government is formed and bold economic reforms are taken – such as reversing nationalisation policies.

What are the prospects for the unity government given the historic animosity between Mugabe and Tsvangirai, the shear scale of Zimbabwe’s economic collapse and the ongoing detention of opposition activists?

Gaddafi keeps African leaders talking

Despite the extremely tight security at this week’s African Union summit in Ethiopia, one brief lapse gave some journalists covering the meeting a very rare glimpse behind the scenes.

Reporters at the annual meeting in Addis Ababa are normally kept well away from the heads of state, except for the occasional carefully managed press conference, or a brief word thrown in our direction as they sweep past in the middle of a phalanx of sharp-elbowed, scowling bodyguards.

As the talks dragged well past midnight on Tuesday, long after the summit was scheduled to end, a European diplomat approached me and a colleague: “Want to see something interesting?”

Leading us down an outside staircase, we were suddenly confronted with the sight of dozens of African leaders consulting in private.

The curtains in the meeting room had been left open a little, and we had a perfect view of Libya’s Muammar Gaddafi holding forth. Gaddafi, who was elected AU chairman at the summit, appeared to be particularly animated — although we couldn’t hear what he was saying.

But as the discussions neared 2 a.m., the other presidents became visibly more and more tired.

Zimbabwe’s President Robert Mugabe, sitting just a couple of metres away, looked particularly dejected, often holding his head in his hands. Ugandan President Yoweri Museveni stared stonily ahead. AU Commission chairman Jean Ping, sitting next to Gaddafi, stifled a few yawns.

New hope for Zimbabwe?

Zimbabwe’s opposition Movement for Democratic Change has agreed to join a unity government with President Robert Mugabe, breaking a crippling deadlock four months after the political rivals reached a power-sharing deal.

The decision could improve Zimbabwe’s prospects of recovering from economic collapse and easing a humanitarian crisis in which more than 60,000 people have been infected by cholera and more than half the population needs food aid.

Zimbabweans have long wished for a new leadership that can ease the world’s highest inflation rate and severe food, fuel and foreign currency shortages. Millions have fled the suffering to neighbouring countries, straining regional economies.

Western aid and financial assistance tied to the creation of a democratic government and economic reform could be crucial to rescuing what was once one of Africa’s most promising countries.

South Africa’s President Kgalema Motlanthe was optimistic and told Reuters in Davos that his country would help rebuild Zimbabwe.

But Senegal’s President Abdoulaye Wade and Kenyan Prime Minister Raila Odinga cast doubt on whether the deal would work and said President Mugabe must go.

Will this decision work? Will it bring change and help ease the suffering of ordinary Zimbabweans? What do you think?

from Global News Journal:

Crunch time for Zimbabwe

Southern African leaders have decided at a summit that Zimbabwe should form a unity government next month but the opposition said it was disappointed with the outcome, raising doubts over chances for ending the crisis.

The 15-nation SADC grouping said after the meeting in South Africa - its fifth attempt to secure a deal on forming a unity government - it had agreed that opposition MDC leader Morgan Tsvangirai should be sworn in as prime minister by Feb. 11.

All parties agreed control of the hotly disputed Home Affairs Ministry, which has been a major obstacle to a final agreement, should be divided between President Robert Mugabe's ZANU-PF party and Tsvangirai's MDC for six months, said South African President Kgalema Motlanthe.

But the MDC quickly issued a statement after the SADC communique was read out, making clear its disappointment and raising the possibility that deadlock would drag on as Zimbabweans face growing economic hardship. The MDC said its national council would meet this weekend to define its position on the summit.

SADC said ministers would be sworn in on Feb. 13, which would "conclude the process of the formation of the inclusive government". Allocation of ministries would be reviewed six months after the inauguration of the government, it added.

Mugabe, in power since 1980, and his ZANU-PF party have urged the opposition to join a unity government but say they will not hesitate to form one without them.

As the dispute drags on, prices are doubling every day. Food and fuel are in short supply and the local currency has been rendered virtually worthless. The death toll from a cholera epidemic has neared 2,900.

from Global News Journal:

Cheers for Africa’s new military ruler. For now.

Fifteen years ago this month, Guinea’s late ruler Lansana Conte made clear what form democracy would take under his rule.

We answered a summons to a late night news conference to hear the result of his first multiparty election, speeding through silent streets where armoured vehicles waited in the shadows. The interior minister announced that ballots from the east, the opposition’s stronghold, had been cancelled because of irregularities. Conte had therefore won 50.93 percent of the vote. There was no need for a run-off because he had an absolute majority.

The show was over.

We rushed off to file our stories at the press centre, set up helpfully by a government under pressure to show the world it was ready for fair elections. The press centre was gone, the lines cut. In the morning, fighter jets swept over Conakry in case the message had not been clear already.

There were more elections, there was occasional turmoil on the streets, sometimes bloodshed. At one point Conte was almost overthrown, but he managed to hold on until his death from illness on Monday.

In a matter of hours, the army - Conte’s real constituency – made clear he would be succeeded by one of his own instead of any of the civilian politicians who prospered under the system over which he kept such strong control.

Captain Moussa Dadis Camara, the head of the junta, was the first soldier to announce the coup on state radio. A Guinean website said the choice was made by drawing lots. Camara's promises - heard many before times in Africa - are to fight corruption, to hold elections in a set period – in this case two years - and not to stand himself.

How quickly can Zimbabweans expect economic change?

For Zimbabwe’s long-suffering people, the true meaning of the signing of a power-sharing agreement between President Robert Mugabe’s ZANU-PF and the opposition MDC would be how quickly it leads to an improvement in their daily lives. An economic crisis that began in 1998 has turned the once prosperous Southern African country into a basket case economy with the world’s highest inflation at over 11 million percent. Millions of Zimbabwean’s who have fled across the borders to escape unemployment and severe shortages are waiting to see if the political deal will result in economic rebound paving the way for their return.

The agreement negotiated by South African President Thabo Mbeki provides for the sharing of power between veteran President Robert Mugabe and Morgan Tsvangirai, leader of the main opposition Movement for Democratic Change (MDC). Tsvangirai takes on the new role of Prime Minister with extensive powers, with Mugabe’s 28-year hold on power significantly eroded.

But will Tsvangirai wield sufficient powers to place the new coalition government on a new policy track needed for rapid economic reform? Will the international community be confident enough to unlock the needed economic rescue package to help accelerate economic change? How quickly can the collapsed commercial farming sector start to turn around? How will business raect to the new deal? Most important, how quickly will ordinary Zimbabweans begin to feel the impact of the power-sharing deal? Read the following insights from two leading analysts and have your say.

Marian L. Tupy, The Cato Institute

“The government should trust the ingenuity of the Zimbabwean people and allow their creative energies to rebuild teh country with minimum bureaucratic hindrance.” (Read full analysis)

John Makumbe, University of Zimbabwe

“The major political party, the MDC, has devised a very promising economic recovery and rehabilitation programme for the transitional period. It is my considered view that if that programme is effectively implemented, the Zimbabwean economy could recover within as short a period as two to three years.” (Read full analysis)