Uncertainty and the Zimbabwean economy

Over the last month there have been a number of reviews of progress – or the lack of it – since the ‘coup’ of November 2017 (see, for example, a recent BSR here). President Mnangagwa arrived in post on the back of much good will and hope for change. But hopes have been dramatically dashed since. This is not only due to the failure to address political reforms as required under the Constitution, but also a failure to confront underlying economic challenges, the inheritance of the Mugabe era. The flood of external investment failed to materialise, and the process of dealing with debt arrears and the negotiations with the IMF has been convoluted and protracted.

The situation today in the formal economy is dire. The recent budget statement was a farce, with made-up numbers conjuring up a fictional story. No-one believes the story being spun. Trust is the basis of any economy. Once lost, it is difficult to retrieve, and wild swings in exchange rates between different parallel rates, combined with accelerating inflation, means that things have become uncontrollably uncertain. Such uncertainties can provide opportunities for a few – those able to ‘rinse’ money, capitalise on fake prices and hedge against dramatic changes. These capitalist cowboys profit from chaos, and there are those in the political-military elite who are doing so today through a range of schemes.

Living through uncertain times

This leaves everyone else living in precarity through deeply uncertain times. For those who can insulate themselves from the mainstream economy, survival is possible. So, those with a secure source of remittance income, for example, can buy solar panels, generators and transformers to avoid the endless power cuts from ZESA. They can dig deep boreholes at their homes to assure clean, reliable water. And they can employ people to queue for fuel or food or any other commodity in short supply; or jump such queues using bribes, foreign currency or premium payments. There are others without such resources who must live in the informal economy, making do. This is hard, creating anxiety, stress and fear. Those who must dodge the law to sell illegally, for example, must confront violence or pay possibly the highest ‘taxes’ of any citizen to pay off the enforcers.

And then there are farmers. In such a chaotic economy, they may have the greatest resilience of all, as they can supply for themselves, and trade locally in an increasingly barter-based rural economy. The formal channels of marketing – and so some agricultural commodities – are frequently a waste of time, but alternatives emerge in the survival economy, which, against all odds, is supplying food across urban and rural areas.

In 2019, Zimbabweans have joined the citizens of places like the Democratic Republic of Congo in the darkest days of the Mobutu regime when the economy collapsed. Zimbabweans have learned the skills over two decades now, and the memories of the dramatic economic collapse of 2008 are etched on many people’s minds. In the DRC this capacity to get by, to ride the storm to make-do through resourcefulness and initiative, is termed ‘débrouillardise’. It doesn’t translate well into English, as it’s not a passive sense of hopelessness or coping or muddling-through free of active agency. It is a set of culturally-rooted skills that are actively applied in the everyday; part of life in an uncertain, turbulent world.

A new narrative that takes uncertainty seriously

The STEPS Centre at Sussex is just ending its year focused on the theme of uncertainty (check out the multiple resources, including podcasts, videos and blogs here). Reflecting on the Zimbabwe situation, our engagement with the politics of uncertainty across a range of domains has been hugely revealing. Too often, we assume we are dealing with controllable, manageable risks not deeper uncertainties, where we don’t know what the outcomes are. Predictions, forecasts and technical plans are what follows from a risk-control approach. Yet, if things are uncertain, ambiguous or even subject to ignorance (where we don’t know what we don’t know), then a risk approach – as seen in the imagined figures and forecasts in Zimbabwe’s recent budget statement – makes no sense, giving a false sense of being in control.

Professor Mthuli Ncube, Zimbabwe’s finance minister, with his background in mathematical finance, is steeped in this quantitative risk paradigm and the world of precise models and confident predictions. This may work in Oxford or Geneva but not in Zimbabwe’s economy where radical uncertainties play out. As the economy fragments, it’s the parallel, informal economy, dominated by uncertainties, ambiguities and ignorance, where the action is. Here, the standard measures of economic management being attempted by Ncube and being suggested by the IMF have no effect.

Some imagine a reform package that will bring things back to ‘normal’, provide a sense of order and control, based on principles advocated for liberal market economies where the informal sector is not significant. A recent report from Chatham House was of this type. It’s an odd read as it doesn’t connect with realities on the ground, and conjures up an imaginary, wished-for economy.

Instead of senseless dreaming and fictitious prediction based on fantasies of control, a new narrative for the economy is required, one that takes the uncertainties of the real, everyday economy seriously. Only then will the necessary trust be built in the basic functioning of the economy – formal and informal – so that some much-needed stability can emerge.

This post was written by Ian Scoones and first appeared on Zimbabweland

 

Can the technocratic reformers win in Zimbabwe?

If you’ve been finding it difficult to keep up with the situation in Zimbabwe, you are not alone. Since the overthrow of Mugabe in the (not quite) coup in November 2017, the contested elections of July 2018, the 1 August shootings, the January 2019 riots and brutal clampdown, things have moved apace. Meanwhile, the economy has continued to contract, with rising inflation and an acceptance that there are parallel currencies with different exchange rates. It’s fast-moving and confusing.

Contested politics

Luckily, there have been some useful briefings on these rapidly unfolding events. The most recent is a piece in African Affairs that covers the political dimensions, and poses the fundamental question of whether President Mnangagwa is really in charge, and if not who is?

The piece by Nicole Beardsworth, Nic Cheeseman and Simukai Tinhu covers the period from the coup to early 2019, and makes the case that, despite the slick public relations, ZANU-PF has reverted to type, with an increasingly violent, authoritarian, militarised response.

What is absent in this overview is a substantive discussion of the economy, and the role of other players – including the minister of finance, Mthuli Ncube – who are arguing for a technocratic reform agenda from within ZANU-PF. The focus on contested elections and tensions between Mnangagwa and VP Chiwenga, and the role of the armed forces in the state apparatus is of course highly relevant, but it is not the only story.

The military figures and senior ZANU-PF politicians are also business people who look forward to a more stable economy. Rinsing funds on parallel exchange markets, along with all the other corrupt practices open to the oligarchs, only goes so far, especially when there’s not much left to steal. For such figures it is not contradictory to have a strong military involvement in the state alongside reformist business-friendly policies that can be sold to the world.

Another piece that explores in detail the events of January 2019, focusing especially on Bulawayo, comes from the Solidarity Peace Trust. This combines a very useful analytical introduction from Brian Raftopolous with a detailed, day-by-day unpacking of what went on. The conclusions usefully nuance some of those in the African Affairs piece. In particular, they point to the economic context of the riots.

People who are poor, disenfranchised and without hope can quickly become angry and, the report argues, the state should tread carefully. This was not something organised by the opposition – they are not sufficiently organised anyway – but an angry crowd, responding to dismal and deteriorating circumstances, particularly in urban centres, where jobs and services have all but disappeared.

A focus on politics must be located in an understanding of the economy – and its history (as @matigary reminded us in an Independence day Twitter mega-thread). Beyond the electoral politics focus, and the micro-analysis of the many different interest groups, we have to understand how people are motivated – from the urban poor to rural farmers to the oligarchs linked to the political-military elite. And this needs a much wider historical, political-economy analysis than is sometimes offered by narrower political science commentaries.

Positive signs in the economy?

So what of the economy? In the last months, the economy seems to be changing. It’s at the margins, and is far from ‘recovery’, but there are some positive signs. The fourth quarter report from the Reserve Bank had some positive news for the first time in years. The meetings at the IMF/World Bank meetings in Washington this month seemed productive. Another IMF staff supervision mission is in the offing, and IMF head, Christine Lagarde, had a few positive things to say. Even the right-wing Cato Institute held a well-attended meeting in Washington DC, with continued sanctions by the US being denounced by all panellists, including the perennial critic, Steve Hanke.

This is all good news for the technocrats, led by Ncube. Whether he is able to bring Mnangagwa and co with him is the unknown.

Eddie Cross’s recent blogs offer some useful reflections on shifts in the productive economy – all in a positive direction. Ncube listened to disgruntled tobacco farmers who were withholding their crop from the floors and removed the 2% transaction tax. The response was immediate, and tobacco auctions are now in full swing.

Cross points to the accumulation of significant funds in $RTGS (the parallel non-currency), a sign that internal investment has an opportunity under a new currency regime, expected in the next year.

A changing mood on international sanctions?

Will international funds flow and sanctions be removed?

International support that was gearing up to support the post Mugabe era dried up after the August and January shootings, as the world was correctly appalled by what they saw on their TV screens. And key players such as the UK even mooted increasing sanctions.

The UK’s confused diplomatic positioning (a sorry, long-running story) is discussed in an interesting piece in Yale’s The Politic, quoting many well-informed authorities from all sides of the debate. With Brexit consuming the UK government’s energies, there are unlikely to be any meaningful initiatives from the UK any time soon, and Zimbabwe is not going to do much to contribute to the UK’s absurd ‘global Britain’ imaginary in any case.

The US does not seem to be budging yet, but may yet. Some (but not all) US commentators, who long argued for sanctions against Mugabe, are seemingly changing their tune.

A key move, playing into the discourse around ‘protecting property rights’ as a condition for releasing sanctions, is the allocation of RTGS$53 million in the recent budget to pay compensation for improvements on farms expropriated during the land reform.

While this is not new (even in the Mugabe era the government had agreed to pay and had allocated similarly paltry sums), but there (finally) seems to be movement on finalising the audit and agreement on the payment formula, and wider discussions about how concretely to link payments to overall debt repayment.

Could this at last help unlock the 19 year post-land reform impasse?

Unpleasant but necessary medicine?

Much of this may be grasping at straws. The struggles between factions that has consumed ZANU-PF since the liberation war will continue. The opposition does not seem to be in any better position. Will the technocrats win out, and the politician-securocrats let them move ahead, if reform is in their own interests too?

An IMF-led technocratic reform regime will undoubtedly lead to further austerity and suffering, hitting those who are already the least well off hardest. Remember ESAP in the 1990s? It will also inevitably allow those with existing assets and connections to do best; perhaps further entrenching the military-political-business oligarchic elite.

In her Washington speech, Lagarde talked of the need for ‘social protection’ programmes, not only in relation to post-Idai recovery, but more broadly to help the poor through the transition.

If this is the medicine that unleashes the investment and opens up the economy again, then unfortunately it may be necessary. But the medicine must not be taken without a much wider debate about the future.

As the Solidarity Peace Trust report argues, “the major strategic task for all democratic forces involved in the Zimbabwe national question in the immediate future will be to build sufficient consensus for credible national, regional and international forces to assist with a national dialogue”.

This post was written by Ian Scoones and first appeared on Zimbabweland. Photo credit: Ian Scoones. Photo credit: IMF Photo/flickr (Lagarde and Ncube, March 5 meetings)

 

Zimbabwe’s fuel riots: why austerity economics and repression won’t solve the problem

A day after the president announced a 150 percent hike in fuel prices, the Zimbabwe Congress of Trades Unions and others called for a peaceful three-day shutdown. Their demands were simple: end the economic crisis and hardships, reverse the fuel price increase and pay US$ salaries. By the end of day one, there were several dead and many injured. There were riots in many towns and cities. Property was destroyed, road blocks mounted, police stations attacked, and there was widespread looting. The security forces responded brutally, as tear gas filled the air.

On day two, the state executed an internet blackout, an attempt it said to disrupt organisers of the protests. The military deployment continued and, across urban areas, opposition activists and others were being beaten and rounded up. By the end of the week, around twelve deaths had been recorded (including the stoning of a policeman), 70 odd were being treated for gunshot injuries and several hundred had been arrested. There was a mixture of confusion and outrage, and blame being apportioned by all sides (see this overview from the International Crisis Group).

What should we make of this latest twist in the troubled tale of contemporary Zimbabwe? With the president out of the country on a desperate attempt to raise funds, it seems he was not expecting such a reaction. The opposition MDC have kept very quiet, presumably fearing reprisals.

Fuel riots are common occurrences, but have different political origins and consequences. Cheap (often heavily subsidised) fuel is often a key route to sustaining rule; a contract between the state and its people, and way of ensuring livelihoods and jobs are secured, especially in precarious economies. Unrest explodes when such a lifeline is threatened. A timeline compiled by colleagues from IDS, led by Naomi Hossain, shows the variety of energy related protests from 2007-2017. And for the last year you can add in others – of course France and the gilets jaunes, but also recently Sudan and elsewhere.

But what are the particularities of the Zimbabwe case, and what lessons can be drawn for the future? There are different ways of looking at the Zimbabwe events; here I want to highlight three.

The politics of contention

The IDS team made use of a ‘contentious politics’ framework in a paper that looks comparatively at energy protests in a number of countries, including Zimbabwe (although the analysis here was rather limited). They argue that a contentious politics framing would look at: “the identities of protestors and their grievances; modes or repertoires of protest and the responses they elicit from the state; the means by which protests are ‘amplified’ or undergo ‘scale-shift’, transforming from local or particularistic struggles to wider, more systemic political complaint; and the political alliances and political cultural effects to which these episodes contribute”.

How do these elements fit for Zimbabwe? Young, urban men were at the forefront of the recent street protests, living often precarious existences, often without stable ‘jobs’, but reliant on transport to go and seek work, commuting from townships to the business and industrial areas. Zimbabwe’s inherited colonial urban geographies makes transport – and so fuel – crucial for those on the margins.

The repertoires were familiar. Sometimes violent street protests – involving criminal behaviour, including looting – were at the centre. Social media networks were vital (until the internet shutdown) for organising. Meanwhile, music, jokes and memes providing a cultural backdrop of resistance. The state’s reaction has been swift and violent, repeating its reaction to the post-election violence last year. While there was plenty of incendiary material on public Twitter accounts, and no doubt much more on ‘private’ WhatsApp and FB groups, a full internet blackout to quell protests was an illegal overreaction, and an abuse of basic rights. Many suspected (correctly) that this provided cover for extreme forms of state repression out of the glare of publicity.

How these protests might result in ‘scale-shift’ effects remains unknown. Protestors appeared to involve many groups, with multiple affiliations. Among those arrested were ‘ZANU-PF youth’, as well as ‘MDC activists’. Many though were just angry with the government, and wanted to express it, and some criminal opportunists made use of the chaos. The crackdown by the security forces has however been directed at opposition and union activists, using the riots as a pretext. Whatever happens next, this is clearly a significant moment, with unknown consequences.

Underlying class dynamics

A focus on the dynamics of contention only goes so far, however. A deeper understanding of how and why such protests emerge must look at the class (and generational) relations at the heart of such tensions. In Zimbabwe, the ruling party has never constructed a successful accommodation with a growing, but marginalised and poor, urban population. In a declining, crisis economy – a situation persisting for more or less two decades – the opportunities for social reproduction, let alone accumulation for young people in the larger towns and cities has been extremely limited. As ‘footloose’ labourers, they have to make ends meet through a variety of strategies, living under extremely precarious conditions. Fuel price rises have a huge impact on already marginal livelihoods, given the importance of transport for work.

By contrast, in the rural areas, and particularly in the land reform areas, there have been opportunities for people to emerge as successful petty commodity producers or even as a class of rural petit bourgeoisie. Fuel price increases are not popular for sure, but have less direct impact. This year tobacco production was the highest it has ever been and some rural areas are booming. This is not the case in town, and urban youth, many of whom have no longer any connection to rural areas, have no access to land, having missed the opportunities of land reform in 2000.

While Mugabe always had a contract with rural people – support us, and we will not let you starve – the same was not the case with the urban poor. Seen as hotbeds of opposition politics, intimidation, repression and violence has been, as this week, the standard state response. The fragmented ‘classes of labour’ that result from neoliberal restructuring and extended periods of economic crisis rarely have a strong political voice. Unruly protests may provide one outlet for pent-up frustrations brought by poverty, alienation and disenfranchisement, but confrontation with state-military power is inevitably one-sided.

A political economy of fuel

To understand the particularities of the Zimbabwe fuel protests, a broader political economy analysis is also required. This needs to look at the interests behind the fuel supply and the control of the industry. In Zimbabwe, this has come under intense scrutiny, with accusations of oligarchic cartels linked to certain factions within the ruling-military elite, with ‘queen bee’ at the centre. National fuel supplies thus reflect competition within the governing elite, as different groups jostle for position. This is compounded by the increasingly absurd parallel market arrangement for currency. This has created untenable distortions, as well as massive incentives for dealing and extraction.

Foreign trucking companies, for example, have been making good use of the disparities between the currency rates, buying fuel in Zimbabwe in large quantities with hard currency at reduced prices, resulting in shortages. In the strange world of Zimbabwe’s currency system, what is the price for a commodity is never clear. Which rate do you accept? The fuel price hike in effect was just an acknowledgement by the state that the parallel market exists.

The murky world of parallel currency dealing, fuel trading cartels and political-military patronage thus adds a particular complexion to the Zimbabwean story. While the protests started with fuel price hikes, wider discontents with the corrupt and dysfunctional system are being aired. For this reason, an analysis of underlying political economy remains important.

Beyond austerity economics?

While most stayed at home during the shutdown – often as a result of extreme intimidation tactics – those on the streets undoubtedly had genuine grievances. But will the riots translate into progressive change?

As E.P. Thompson argued many years ago, historically, food ‘riots’ arose when public authorities failed to guarantee the right to eat, allowing others to profit from the trade in food commodities. As IDS colleagues argue, the same could be said today of fuel, and certainly this rings true in Zimbabwe. This is what John Bohstedt calls the ‘politics of provisions’ – the ways ordinary people interact with their rulers over subsistence. If the state’s economic policies do not have a moral economic commitment at their core, then resentment will inevitably grow. This is what is happening in Zimbabwe.

A large, disenfranchised youthful urban population is the consequence of long-term economic decline, without the sort of redistributive opportunity that land reform brought to some in the rural areas. Rebooting the economy, as everyone agrees, is vital. However, the technocratic approach of the finance minister, Mthuli Ncube, with his slogan ‘austerity for prosperity’, may require recalibrating.

While appealing to donors and the Davos elite, such slogans do not take account of underlying class tensions and political economy dynamics at the root of the riots. Unless these are addressed, and the moral economy responsibilities of the state for public provisioning taken seriously, strong doses of austerity economics will only bring more protest, more repression and more trauma.

This post was written by Ian Scoones and first appeared on Zimbabweland. Photo credit: nehandaradio.com

 

Zimbabwe’s latest crisis: it’s the economy – and politics, stupid!

The images of economic crisis in Zimbabwe are all too familiar. Queues for petrol and cash, commodity hoarding, parallel markets in currency, rising inflation and so on. It all seems reminiscent of the dark days of the mid 2000s, in the build-up to the full-blown crisis of the hyperinflationary collapse of 2008. This was not meant to be how the much-hailed second republic started out.

Bill Clinton’s 1992 election slogan, ‘it’s the economy, stupid’ does ring true. Years of economic mismanagement, deep corruption and failure to invest, combined with sanctions, credit embargoes and investment freezes, have taken their toll. But the current crisis is also to do with politics, both domestic and international.

The dimensions of the economic crisis

Tony Hawkins, an economics professor at the University of Zimbabwe, recently gave a widely-circulated talk to the British Council on the economic travails of Zimbabwe. There was much to agree with in his summary of the situation.

The economy is uncompetitive, he argued, not helped by the appreciation of the US dollar by 17 percent since dollarization, the huge loss of value of the South African Rand and rising oil prices. Estimated 14% revenue increases from tobacco, gold and other minerals are offset by a massive hike in state expenditure, up 57%, exacerbated by election commitments to public servant wage hikes. The budget deficit has ballooned to $3.3 billion, with a projected trade gap of around $2.5 billion.

What’s more, he said, the total national debt now stands at a staggering $22 billion, now more than the GDP. Government borrowing continues to grow, crowding out the private sector, and putting pressure on available finance for investments, as people seek cash on the (expensive) parallel market. Inflationary pressures are also increasing dramatically therefore, with money supply far exceeding (formal) GDP growth.

But, despite the value of this description (repeated of course in numerous assessments by the IMF, the World Bank and other economists), his diagnosis of causes was only partially on target, and his solutions missed crucial dimensions.

Causes were laid largely at the door of domestic economic policy (or lack of it) and corruption by the ruling party. This, as is well documented, is a key part of the story. From Gideon Gono’s use of the reserve bank as a political tool in the ‘casino economy’ years to the massive expropriation of diamond resources, both show how the Zimbabwean economy has been destroyed from within.

This has not been the only story. The sanctions imposed following the land reform of 2000 took their toll too. While only targeting select individuals, and withdrawing aid from government led programmes, this signalled diplomatic disapproval from the West, and it had a major impact on patterns of economic support.

Aid programmes still continued but under a humanitarian label channelled through NGOs. But much more significant was the withdrawal of international finance and credit lines. This had a devastating impact and, even if not directed by official sanction policies, were their direct consequence. Despite the easing of diplomatic tensions in the post-Mugabe era, and the charm offensive that Mnangagwa has been engaging in from Davos to New York, the situation has not fundamentally changed.

Hawkins does point to the problem of ZDERA (the Zimbabwe Democracy and Economic Recovery Act of 2001, amended this year) in particular. This is the US law that prevents the US government supporting Zimbabwe at the IFIs, without implementing a set of political reforms. In the coming months, this will likely prevent the US rep at the IMF backing a recovery plan, making the position of others on the IMF board crucial if any changes to support Zimbabwe’s recovery are to be realised.

Reforming the economy

The new finance minister, Mthuli Ncube, knows all this, but does he have the leeway to change course? He is severely hampered by the political legacy of sanctions and other ‘restrictive measures’, and deep distrust across international actors. However, there have been some good signs. His interviews with Bloomberg and speeches around the world have mostly been impressive, and suggest that he is committed to a major economic restructuring.

Some of this will be tough, and will be highly political. A test of the new government’s commitment will be how far he is allowed to go. Already attempts at introducing taxation measures have resulted in protests. What happens when he is forced to cull the public sector, massively reducing the salary bill, or overhaul the currency system, which benefits those dealing on the black market, including powerful individuals well connected to the political system?

Clearly the stop-gap measure of a “multi-currency” environment that followed the abandonment of the Zimbabwe dollar and the adoption of the US dollar is no longer working. Local ‘bond notes’ were supposed to be backed by external hard currency finance, but are clearly no longer, and are fast losing value. Stalling the massive flow of hard currency out of Zimbabwe is vital, and this means ending the pretence of equivalence between greenbacks and bond notes. Sticking to the US dollar in a period when US protectionism is boosting its value is risky too, as it makes everything absurdly expensive. But setting up a new currency in such straitened times is not wise either, given the low levels of confidence in the economy.

What to do? Given the dire experiences of structural adjustment from 1991 – which in many ways set the scene for much of Zimbabwe’s current malaise – making the case for IMF stabilisation intervention, combined with a HIPC-style debt relief package, with all the raft of expected conditionalities does seem rash. But there really doesn’t seem to be any other option currently. The Chinese are fed up with Zimbabwe given its failure to pay back loans in the past, and the ‘socialist solidarity’ line has worn thin. Reluctantly, this may be the only route.

The centrality of the rural economy

Assuming a political route to reform can be created, it therefore matters a lot what such reforms look like, and how they are implemented (lessons from Greece and others of course). Where I fundamentally part company with Hawkins’ analysis is his disparaging rejection of the importance of the rural economy. Like so many conventional economists, he focuses on the urban, industrial sector, forgetting that this is dependent on a wider economic system that remains substantially small-scale, informal and rural. The distinctions between ‘formal’ and ‘informal’ economies in Zimbabwe are irrelevant today: most of the economy is ‘informal’, and that’s where livelihoods are made.

In the rural areas this is especially so. And, as we have shown in our research over many years, this is vibrant, growing and generating employment in significant ways, particularly when linked to land reform areas that are producing surpluses and creating spin-off linkages in local economies. It is far from dead, as Hawkins suggests, but it is different to what went before. This is not backward-looking rural traditionalism, bound by archaic cultural norms, as Hawkins seems to suggest, but the new economy; one that everyone must get used to and support. For sure, it is the ZANU-PF support base, and the reason they won the parliamentary elections, but that makes it even more important that the government gets its reforms right for rural people, as well as the urban middle classes.

The small steps towards a positive dynamic of rural growth spurred on by land reform however stalls dramatically when the wider economy is in crisis. With no liquidity, investments dry up, and with a lack of credit, the financing of new operations cannot occur. If inflation kicks in, as it is now (some estimate that annual inflation is touching 50 percent already), then the value of goods is uncertain, and economic transactions are risky. The result is that the economic dynamism ceases, and livelihoods are affected up and down value chains, from agricultural producers to traders to processers to wholesalers to retailers and consumers.

This is what happened in the mid-2000s, and again is what is happening now. But rather than dismiss rural people and areas as economically backward, somehow culturally unable to engage with a modern economy, policymakers and economic advisers need to appreciate the potential of the agrarian economy, and encourage investment. Simply wishing an industrial revival without a core agrarian productive base supporting the mass of the population is foolish, especially in Zimbabwe’s context, as a small economy operating in a highly competitive global environment.

Wider stabilisation, debt write-offs and addressing inflation and currency instability is vital at the macroeconomic level and must be central to Mthuli Ncube’s agenda. But his next step must be to set up the type of investment strategy that allows a dispersed, largely informal economy to thrive, and contribute to growth and employment in multiple ways for long-term, sustained and equitable recovery.

Only then will links be made that allow the industrial and service sectors to thrive, and taxation and so government revenue raising to be applied. The post land reform economy does not look like that of the 1990s in the earlier adjustment era, or the post UDI sanctions period in 1980. Big ticket ‘modern’ investments in agriculture, tourism, maybe even some industries, will be important, but they must not undermine or take attention away from the key challenge, which is supporting the real, predominantly rural, economy where most people make their living.

It’s politics, stupid!

The on-going negotiations with the IMF and the wider diplomatic and donor community are of course not just about economic restructuring, investment and financial prudence. They are also (of course) about politics. With Nelson Chamisa and the opposition MDC still not recognising the results of the elections, their lobbying of western governments continues.

Their strategy is unclear, but it seems to be to encourage the US in particular to maintain sanctions and the ZDERA law, with the aim of extracting political concessions for the long-term. You can see the rationale, but the consequence is that the economy is nose-diving and people are suffering; if not from cholera due to lack of investment in urban infrastructure, certainly from growing economic hardships, even if this is only queuing for petrol at night. This may backfire, with the opposition seen as holding the country hostage, undermining recovery for political gains.

Calls for demilitarising the state apparatus as part of conditions are appropriately central to many demands. The latest bogey-man for the international community is of course the Vice President General Chiwenga. But, with ZANU-PF, despite the new, PR-branded version that President Mnangagwa is projecting, a securitised state is likely to persist, even after the army has returned to the barracks or swapped uniforms for suits. A technocratic-military state is a feature of the current dispensation, and by some seen as a positive route to implementing a state-led (aka ‘command’) developmentalist policy, in the mode of Kagame in Rwanda or previously Meles in Ethiopia.

Where next?

There are divisions amongst the western diplomatic community on how to move forward. Some take a pragmatic stance and argue that a stabilisation bailout will create stability, and allow the economy to function, arguing that conditions for future elections and a deeper embedding of (western-style, liberal) democracy will emerge only when the country is not in crisis mode. Others make the case that a crisis of legitimacy following the elections means that this is the moment to exert pressure on Mnangagwa and exact the maximum concessions in favour of the opposition’s stance. Economic crisis is a price worth paying if political reform emerges, goes the argument. Within ZANU-PF and the MDC, as well as commentators not linked to any party, all shades of opinion exist.

What all agree is that a return to 2007-08 is not desirable, and that action to avert this needs to happen soon. And I would add: a focus on supporting the informal sector and the agrarian economy – and the linkages beyond – is vital to any way forward.

This post was written by Ian Scoones and this version first appeared on Zimbabweland.

Open for business: what does investment look like on the ground?

Last week I was at the at the African Studies Association of the UK (ASA) conference in Birmingham. I was co-hosting, with my colleague Jeremy Lind (whose earlier blog this one draws from), a fantastic stream of five panels and 17 papers. Drawing on rich and recent empirical evidence from Kenya, Ethiopia, Tanzania and Somaliland, the discussions covered the emergence of investment corridors, investments in oil, minerals and renewable energy and the implications of the rush for land for the dynamics of circulation, accumulation and patterns of social differentiation. Listening to the presentations, I was struck by the potential lessons for Zimbabwe, as the country becomes ‘open for business’.

Across the drylands of eastern Africa, the past ten years have seen the spread of large-scale investments in infrastructure, resources and land. In the past these areas were insignificant to states in the region and large capital from beyond – at least compared to the region’s agrarian highlands and Indian Ocean coast. Yet, the recent rush to construct pipelines, roads, airports, wind farms, and plantations signals a new spatial politics that binds the pastoral margins ever closer to state power and global capital.

Being ‘open for business’ in order to develop infrastructure, resources, and towns as new industrial centres and markets is often seen very positively. State officials and donor agencies view these as part of generating growth; bringing the margins into the core of the national economy. Some see such investments as a precursor to peacebuilding of restive frontiers, ushering in stability through diversification and the creation of new livelihoods.

As Zimbabwe’s new government repeats the mantra of being ‘open for business’, seeking investment from any source is seen as an imperative in order to rescue the economy from the doldrums. The new cabinet is aimed to highlight technocratic competence, banishing the reputation of corrupt neglect. Certainly, President Mnangagwa’s choices have been widely hailed, and the appointment of Prof. Mthuli Ncube as finance minister was a smart move. His credentials and connections signal a new way of doing things. With a training in mathematical finance economics, a post at Oxford and experience with the private sector finance advice and the African Development Bank, he will be central to galvanising much-needed investment across all sectors.

But what investment will emerge? And who will it benefit? Certainly, Zimbabwe’s economy is still seen as high risk, so early investors may seek to strike a hard bargain, and safeguards, whether environmental or social, may get short shrift. As our ASA panels showed, large-scale investments have far-reaching consequences for the future directions of development. Many powerful actors are involved, from international corporations and financiers to states and local elites, but important questions are raised about who gains and who loses out, and whether such large-scale projects do indeed deliver poverty-reducing development as is often claimed.

Early debates on large-scale investments in eastern Africa’s pastoral areas turned on headline grabbing figures of the size of proposed projects, such as the $23 billion price tag for the Lamu Port South Sudan Ethiopia Transport Corridor project (LAPSSET), or the scale of proposed land deals for commercial agriculture, such as the 300,000 hectare land lease (since cancelled) to Indian Karuturi Global in Ethiopia’s Gambella Region.

A decade on, the large-scale investments have advanced in a more piecemeal way as challenges of implementation have mounted. LAPSSET’s grand modernist vision has not materialised in a sudden multi-billion dollar bang but rather emerged incrementally, such as through the completion of the Isiolo-Moyale highway and the recent opening of Isiolo’s airport. Mass expropriations to establish large-scale commercial farms have by-and-large not come to pass, as only a small part of an agreed area is actually farmed.

But the focus on ‘opening up’ the frontier through new infrastructure and investments in land and resources has had other consequences. Proposed infrastructure and investments have ignited intense competition for and revaluation of land as local elites, and other domestic and foreign investors, jostle to claim tracts of land. In and around Isiolo, which is being reimagined as an industrial centre and gateway to northern Kenya, proposed investments have set in motion an economy of anticipation as diverse actors rush to collectively and individually lay exclusive claims to land at the town’s edges. A similar dynamic plays out in Lokichar – the base of operations for nascent oil development in Kenya’s Turkana County – where fencing has multiplied around town as area residents race to claim plots to develop housing, shops and guest houses.

Development of oil, wind and geo-thermal reserves has fuelled other competitions around ‘local content’ – the industry term for procuring goods and services from local suppliers and workers. The footprint of these developments, and the arrival of workers and contractors from outside of local areas, sit uncomfortably with the reality of work opportunities that are thinly spread and temporary. Protests by residents and political leaders in south Turkana halted Kenya’s Early Oil Pilot Scheme in June barely days after it was launched to great fanfare by President Uhuru Kenyatta. Operations only resumed in late August after political concessions to address local demands for greater opportunities for work, contracts and tenders.

In this and other instances of protest, local elites have advanced their own interests by playing on the legitimate concerns of residents living adjacent to development sites concerning inclusion, rights and compensation. Various local interlocutors have positioned themselves as key liaisons between investors and communities in and around sites of operational activity, including political aspirants, ward and sub-county administrators, brokers, elders, seers, and young people. Local capital has been the greatest beneficiary of investments in oil in Turkana, or wind in Kenya’s Marsabit County. Wealthier local elites – many with connections in politics or who have worked for international relief or church organisations – have constructed rental housing, guesthouses, bars and restaurants.

Thus, while the impacts and influences of large-scale investments still unfold, the early signs can be seen. New territorialisations, local contestations and struggles, and enrichment of local elites are all part of an emerging picture. Some investments are proposed and never take off, but nevertheless reconfigure land use and local political and social relations.

As we heard in Birmingham, it’s a complex picture, and one that continues to unfold in a very fast-moving setting. Zimbabwe is only now dreaming of such investments, and state efforts will be energised to seek them out. However there are lessons to be learned from eastern Africa. Investments certainly transform, but there are always winners and losers. This is worth remembering as Zimbabwe opens its borders to all-comers with money to invest.

This post was written in part by Ian Scoones and this version first appeared on Zimbabweland. Thanks to Jeremy Lind for the original blog, and to all the presenters at the ‘Precarious Prospects’ stream of the ASA UK conference.

Photo credit (from Turkana, Kenya): Evans Otieno