The last few weeks have seen a flurry of diplomatic activity, culminating in the announcement that the European Union is to remove restrictions on financial aid to the government, and a new $300m programme would start in the new year focused on governance, health and agriculture.
This is long overdue. The sanctions imposed by western countries have done far more harm than good, and have provided an unnecessary political block to progress. The announcement was made by the new EU ambassador to Zimbabwe, Phillipe van Damme, and he was flanked by ambassadors from ten other EU countries, including Britain.
The thaw with Britain continues too. The new UK ambassador to Zimbabwe, Catriona Laing, presented her credentials to the President recently (there’s even a youtube video of the event!), and she tweeted enthusiastically about the opportunity to discuss UK-Zimbabwe relations, describing her new posting as her ‘dream job’. An interesting interview in the Herald exposed a very different stance to the frosty relationships in recent years. Her background is in development, and she previously worked for DFID, so it bodes well for UK engagement in the development field.
Zimbabwean officials too seem to be on the charm offensive with the west. Patrick Chinamasa argued that the policy is no longer just ‘look east’, but ‘look everywhere’. VP Joice Mujuru hosted a British trade delegation and the trade minister from Denmark was also warmly received. The UK government proclaimed the trade mission a great success.
All this is of course about trade and business, and the interests of capital, and its influence on foreign policy. The sanctions from the early 2000s sent signals to many western investors and there was a massive flight of funds. Indeed the decline in investment had a far greater impact than the sanctions per se. European business has therefore lost out from the isolation of Zimbabwe. And it’s widely recognised that much has been conceded to the Chinese, Indians, Brazilians, South Africans and others. In some sectors – mining and tobacco for example – traditional commercial relationships with the west have been pushed aside in favour of new partners. This has cost Britain and others market share and economic influence. The trade delegation from the UK was keen on a range of investments, from infrastructure to agriculture; all areas where British business can make money in Zimbabwe.
The new focus on investment is certainly good news. Zimbabwe has been starved of finance, causing a serious crisis of liquidity, and declining investment in key assets. A return of the aid programme is helpful too, but it’s the investment that really counts. The ambitious ZimAsset economic recovery programme is premised on the arrival of such investment; nothing can happen without it as the government is bankrupt and has a massive debt.
Of course there are constraints. ‘Trust’ has been the watchword in the discussions of the past weeks. Is Zimbabwe a reliable investment destination? Do the ‘indigenisation’ policies limit possibilities? Interestingly the UK Ambassador emphasised that it was less the policy on indigenisation, something she noted was the sovereign right of Zimbabwe to pursue, but the clarity of the laws and regulations, and the importance of assuring security of investment. Lack of clarity, often promoted by the media and other commentators, causes uncertainty, rumour and misunderstanding. The Minister of Finance, Patrick Chinamasa, once again assured the trade delegations, but for good reasons doubts remain.
Does this mean that everything is back to ‘normal’? The answer of course in no. EU travel restrictions still remain on the President and Grace Mugabe, despite the cordiality of the discussions at State House. And there are a number of outstanding issues, notably relating to land. Compensation for land acquired during land reform is still due for most properties, and an agreed formula has yet to be negotiated and financed. The particular case of land acquired that was under Bilateral Investment Protection treaties still has pending court cases, and remain unresolved.
But the thawing of relations and the reinstatement of financial aid by the EU is an important signal. More day to day interaction with government will build the necessary trust, and hopefully ways forward on the most tricky issues will be found.
Meanwhile, let’s hope the new aid for agriculture in particular is well directed. With the new agrarian structure, the key is to provide support for the growth of local economies based on agriculture, and that includes a focus on the new resettlements and particularly the A1 areas, that have the potential for driving economic growth and employment through agriculture, and processing.
Investments in basic infrastructure, including roads, markets, veterinary and agricultural extension systems, as well as water management, storage and irrigation systems are long overdue. The failure to invest in the new resettlements has held them back for over a decade, but now is the opportunity to put that right. Hopefully the EU support will not shy away from this challenge.