This July, Tendai Biti received a bullet in the post. Welcome to Zimbabwe’s new age of reconciliation, where political optimism and death threats sit together.
Biti, installed as the country’s finance minister in February, is a key figure in a power-sharing agreement between two parties – the Movement for Democratic Change (MDC) and Robert Mugabe’s Zanu-PF. But it is an ugly marriage of convenience. The MDC are fighting a turf war with Mugabe’s supporters, who are in control of the central bank, army, police and judiciary.
Nevertheless, Biti is seeking to heal the policy paralysis that confronts the economic meltdown. “In many ways, he represents the hope that the country’s prospects have started to brighten,” says Matthew Pearson, head of Africa equity research at Renaissance Capital.
Mugabe’s violent seizure of white-owned farms at the turn of the century and autocratic rule have triggered a decade-long economic meltdown that has battered the population with hunger, poverty and Aids. Massive food and foreign exchange shortages and deviant policies caused inflation to soar to 500,000,000,000% last September. The Zimbabwean dollar was demolished.
In response, Biti has announced the removal of the Zimbabwean currency and introduced the US dollar and South African rand for official payments. This has brought inflation down dramatically – to a monthly rate of 0.4%, though annual figures are still not available. By axing the Reserve Bank of Zimbabwe’s control over printing money, a key source of funds to Mugabe’s supporters has been choked off.
Biti is seeking to oust Reserve Bank of Zimbabwe (RBZ) governor Gideon Gono and RBZ’s control over private companies. The latest episode in the battle took place in September. At the time, the IMF allocated around $400 million in special drawing rights (SDRs) to Zimbabwe after the fund enacted a $250 billion agreement to beef up the reserves of its members.
Biti has blocked Gono’s moves to siphon off the funds.
His orthodox economics and push for better governance have injected a dash of optimism among western donors, who have long withheld funding in protest against Mugabe’s rule and misuse of funds. But the winds of change may be blowing in the right direction, says Pearson: “Donors – as well as many foreign investors – are now coming to Zimbabwe because they like and trust [Biti].”
Biti is seeking to jumpstart the moribund commercial sector by pushing for partnerships with private companies in mining ventures and negotiating investment protection accords with South African banks to disburse the credit lines. Biti, who is also secretary-general of the MDC, is also battling against Mugabe’s indigenization laws that seek to oust foreign investors.
With capital dribbling in and some recovery in manufacturing and mining, the economy is set to grow by 3.7% this year compared with its 14.1% contraction last year.
The IMF says “a nascent economic recovery” is underway, citing that there now exists “a more liberal economic environment, price stability, a deepening in financial intermediation, and increased access to foreign credit lines”.
Biti has battled valiantly to turn round the economic calamity that has struck Zimbabwe, but its political recovery remains worryingly fragile.