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Zimbabwe President Emmerson Mnangagwa Plans Billions in Compensation, Bond Sale

Zimbabwe’s New President Plans Billions in Compensation, Bond Sale

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  • President who replaced Mugabe wants to end economic isolation
  • Funds from bond sale would be used to fund infrastructure
Zimbabwean President Emmerson Mnangagwa speaks during his state visit to Mozambique on Jan. 17, 2018 in Maputo.

Photographer: Mauro Vombe/AFP via Getty Images

Zimbabwe’s new president, Emmerson Mnangagwa, has a plan to revive one of the world’s worst-performing economies and ends its isolation: pay compensation to white farmers whose land was confiscated, sell bonds to rebuild infrastructure and hold internationally acceptable elections.

 It’s a tall order for a man who served more than half a century at the side of former President Robert Mugabe and was a key figure in a government that oversaw an economy that halved in size since 2000 and the collapse of the agricultural industry. Yet, Mnangagwa, a 75-year-old former spy chief, remains optimistic he can win lender support and tap international capital markets.

“Can we not do it? We think we should do it,” he said of a potential bond sale in an interview Thursday in Harare, the capital. He wore a gray suit in an office decorated with photographs of himself as a young man and a crocodile-themed mug, a reference to his nickname earned during the liberation war against white-minority ruled Rhodesia. “We really need a substantial investment in the productive economy.”

 Mnangagwa’s rise to power was problematic. After seemingly Mugabe’s heir apparent for decades, in recent months he clashed with the president’s wife, Grace, and finally fled the country on Nov. 6 after she accused him of plotting a coup. That day, he was fired as vice president, and two hours later he learned that his life was in danger. He set out for the eastern border with Mozambique and crossed the frontier with his son and three soldiers.
 “I could not use the formal border so I used the informal one which resulted in me walking for over 30 kilometers at night,” he said, adding that some tracks were filled with land mines. “Because I am a former guerrilla I understand the area, I operated there.”

He took office with the support of the military, which briefly took power and together with the ruling Zimbabwe African National Union-Patriotic Front forced Mugabe to resign and put Mnangagwa in his place.

God’s Voice

Mnangagwa shows no bitterness toward Mugabe, who he served as a right-hand man through the liberation war against Rhodesia and since independence in 1980, and still calls an “icon.” Mugabe, 93, is being well looked after in his retirement, he said.

Walls of a passage near his office are decorated with a photo of a poster saying “Mugabe is right,” while another shows the former leader shaking the hand of Fidel Castro.

“I have been with the former president for 54 years. I don’t regret it. It was necessary,” he said, while admitting that there were increasing demands for change. “The people’s voice, as I say, is the voice of god.”

Now he faces a dire economic situation: a 90 percent jobless rate and a cash shortage so severe that some people sleep near banks in the streets of Harare to ensure they can make withdrawals limited to $40 a week.

A program to redistribute land to black Zimbabweans who were dispossessed during colonial rule slashed exports, and that, together with a series of elections marred by violence and irregularities, prompted sanctions by western countries, hyperinflation and the withdrawal of credit lines by international lenders.

White Farmers

While his plan to compensate white farmers who were dispossessed for the improvements they made on their land “will come to billions down the line,” there is no going back, he said.

“We were a colony where our land was taken by the colonizer and we went to war in order to reverse that situation,” he said. “The reform was a necessity. It is now behind us, but what we can do is to make sure it is not abused.”

But reviving an agricultural industry that was once the envy of neighboring countries is key as is unlocking investment in mining and reestablishing credit lines. Farmers who lost properties will only be compensated for developments such as dams and barns rather than the land itself.

Caps on farm sizes will be imposed, and all Zimbabweans, including the white farmers who lost their property, are welcome to participate in the industry, he said, while there needs to be investment in processing crops and marketing them. Zimbabwe was once the world’s second-biggest exporter of top grade tobacco and also exported corn, paprika and roses.

International Creditors

While the government is already in talks with international lenders such as the International Monetary Fund about paying arrears and restoring credit lines, it may also sell bonds, he said.

“We are saying this has happened to other countries and it helped them,” he said.

Mnangagwa’s administration intends easing a requirement that mining operations be at least 51 percent owned by black Zimbabweans. While the threshold will be maintained for platinum and diamond mines “for now,” it could be lifted following a more thorough examination of those industries, he said. Zimbabwe has the world’s second-biggest reserves of platinum after South Africa.

Vote Confidence

Mnangagwa plans to call elections within the next four to five months, and he is confident ZANU-PF will win, even though the vote will be the first it’s contested without Mugabe at the helm. International observers will be invited to oversee the vote, and the government will ensure it is free of violence, he said.

The main opposition Movement for Democratic Change is in disarray, with its leader and founder Morgan Tsvangirai, who’s battling colon cancer, hinting that he may step down.

“I am actually over confident, which worries me, but I cannot see another political party in the country today that embraces the wishes of the people,” Mnangagwa said. “I believe we are going to succeed.”

— With assistance by Brian Latham

Source :

Bloomberg

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