IT’S early morning in the Zimbabwean capital Harare, and stockbroker Tafadzwa Dzingayi (not real name) is facing a barrage of questions from a foreign investor who wants to know when he will get the proceeds of shares he sold more than three weeks ago.
By Malcom Sharara
According to the Zimbabwe Stock Exchange, the time for settling trades is T7, but it’s more than 21 days now and the investor has not received his money. Dzingayi does not have a factual explanation for the questions the investor is asking. He is equally in the dark as to why deals are not being settled on time.
When he enquired at the Reserve Bank of Zimbabwe (RBZ), he was told repatriation of funds by foreign investors is a top priority. “We can’t afford to kill the goose that lays the eggs, so repatriation of investor funds and earnings is a top priority to us,amp;” he was told.
The RBZ even issued a statement to that effect, promising investors that their investments – be it capital disinvestments, profits or dividends – are a number one priority when receiving payment allocations, but still the foreign investor does not have his money – and he wants it now.
Unfortunately the above scenario is not an isolated incident. Uncertainty and unrest have been the order of the day in Zimbabwe since the beginning of the year.
Below are some of the events that made headlines in 2016, the year of the hashtags.
In past years, President Robert Mugabe’s government has never faced protests or demonstrations organised by anyone other than opposition political parties. But in 2016 everything changed, as the hashtag movements Tajamuka and Thisflag took matters into their hands and challenged Mugabe for everything that is not right in the country from government repression, poor public service, high unemployment and widespread corruption to delays in civil servants receiving their salaries.
The most successful demonstration was the one held on July 6 2016, dubbed ZimShutDown2016. The protests were organised mostly over the internet using hashtags ThisFlag and Tajamuka, and later on ZimShutDown2016.
The demonstrations totally shut down Harare and other smaller towns. The protests continued on July 7, but this time Mugabe unleashed the police who went on to arrest dozens of protesters. More protests were to be held on the 8th, 13th and 14th but these were not as successful as the first two. This time the government was more vigilant or brutal, with several protesters being beaten with baton sticks and arrested. Teargas and water cannons were also used to disperse the crowds.
Cash crisis: Where is our money at?
Zimbabwe has been in the throes of a crippling cash crisis since the beginning of the year. The situation however worsened in early April, when there was high demand for cash from tobacco farmers who had sold their produce and wanted payments in hard cash as has been the norm over the years.
In response, the Reserve Bank of Zimbabwe directed all tobacco farmers to open bank accounts where proceeds of their tobacco would be deposited. However, this could not solve the problem which prompted banks to introduce stringent cash management systems, including limiting cash withdrawals to a maximum of $500 per day and disconnecting some of their ATMs following the liquidity crisis.
In May the RBZ also intervened, supporting cash withdrawal limits and officially pegging them at $1 000. That quickly changed, with some banks reducing withdrawal limits to $40 and also limiting the number of people who could withdraw per day.
Desperate depositors resorted to sleeping in bank queues in order to access cash. Some unscrupulous but enterprising Zimbabweans started making a killing, selling cash to frantic people. A number of retailers and wholesalers around the country also started hoarding cash and selling it at a premium.
Fuel stations started to decline payments using bank cards to raise cash for sale. Those desperate to get cash would be charged 5% commission if using bank cards, while those using the Real Time Gross Settlement (RTGS) were charged 10%. Banks, too, took advantage of the situation and charged up to 5% for cash withdrawals.
Bondnotes: The despised currency
Faced with an acute shortage of cash which saw depositors sleeping in bank queues, the RBZ on May 4 announced that it was going to introduce a surrogate currency – bond notes. But telling Zimbabweans – still fresh from traumatic financial experiences endured at the demise of the Zimbabwean dollar – that government was going to introduce a new currency by whatever name was always going to be met with apprehension.
And true to that, activists and ordinary citizens hit the streets, demonstrating against the introduction of bond notes. Hundreds of protesters gathered in Harare on August 3 to march against bond notes. They also submitted a petition to the Ministry of Finance.
On the same day, expelled former vice-president Joice Mujuru filed a lawsuit at the Constitutional Court against the introduction of bond notes, which she said was unconstitutional. Since then protests against the introduction of bond notes have been the order of the day, but each protest has more or less been met with police brutality.
Hundreds of protesters gathered in Harare to march against the introduction of bond notes. (Memory Mataranyika)
Uncertainty and unrest over the issue was worsened by the fact that it took the RBZ more than six months to introduce the bond notes. A sector which showed its displeasure towards the introduction of bond notes was foreign investors. Amid uncertainty and local unrest over the bond notes, foreign investors ditched ZSE-listed stocks in record numbers, with net outflows of $56.3m in the 10 months to October, the biggest sell-off in five years.
Factions and secessionists: Battle to succeed Mugabe
The year 2016 also saw Zimbabwe governed by a ruling party which was deeply divided and engrossed in factional wars, with its two factions fighting over who should be the successor to the 92-year-old Mugabe. Most Zimbabweans are now familiar with Team Lacoste, said to be indirectly fronted by Vice-President Emmerson Mnangagwa, and Team G40, allegedly made up of Professor Jonathan Moyo and another minister, Saviour Kasukuwere.
While no one wants to admit that they belong to any team and all deny the existence of their said teams, they have however traded blows in the media, both mainstream and on social platforms such as Twitter. Like savages, the rival factions have done nothing for the struggling economy other than scheme against each other, throwing unrestrained blows at their opponents.
Zimbabwe President Robert Mugabe speaks at the party’s annual conference on December 17, 2016. The ruling ZANU-PF party’s congress endorsed Mugabe as its candidate for the 2018 election, which could extend his 36 years in office. He was endorsed by all party structures at the meeting held in Masvingo, 300km southeast of Harare. (Jekesai Njikizana, AFP)
Headlines in most local papers were dominated by news related to the activities of the two factions. Mugabe even warned the warring factions to stop mudslinging in public and instead use party channels to settle disputes, but the warning fell on deaf ears. Alleged factional leader Moyo seemingly defied Mugabe and continued to launch snide attacks upon his opponents, using social network Twitter. His favoured hashtag has been handeitione, loosely translated to mean let’s keep up the fight.
Indigenisation: The bungling minister
In March 2016 Youth, Indigenisation and Economic Empowerment Minister Patrick Zhuwao threatened to shut down foreign companies with effect from April 1 should they fail to comply with indigenisation requirements. Despite other ministers accusing him of sabotaging investment and the economy, Zhuwao remained defiant.
Instead of reflecting on his actions, he went on to publicly humiliate a fellow minister, accusing Finance Minister Patrick Chinamasa of shielding non-compliant banks from legal regulations. “The RBZ cannot shield their [banks] illegality by submitting that the letter that was written by the governor constitutes compliance with the laws of the land,amp;” Zhuwao charged.
“It is unbelievable and astounding that a national institution can be used as an accomplice to subvert the principle of indigenisation which is enshrined in the Constitution of Zimbabwe.amp;”
He warned that if the foreign-owned banks did not comply with the law, they risked depositors money as they would be shut down. “These foreign-owned financial institutions cannot, in perpetuity, remain with only 20-31% indigenous shareholding. Such a situation is in clear violation of the law,amp;” Zhuwao said.
The war between the ministers raged on until Mugabe finally decided to clip his nephew’s wings by issuing a statement saying “conflicting positions in the interpretation of the indigenisation and economic empowerment policy amp;hellip; (have) caused confusion among Zimbabweans, the business community, current and potential investors thereby undermining market confidence.amp;”
The clarification also placed limits on the role of the Youth, Indigenisation and Economic Empowerment Ministry by allowing line ministries to come up with compliance models. The president said the ministry’s role was to coordinate activities of line ministries in the implementation of the indigenisation policy through a Cabinet committee, chaired by the minister.
Zhuwao finally admitted to bungling on the Indigenisation and Economic Empowerment Act, saying he could have misinterpreted certain issues. At last someone in government admitted that he had failed, but Zimbabweans could not give him a pat on the back for admitting his well-documented shortcomings because he refused to resign and is still on the job.
For all the damage he brought to the economy, causing policy inconsistency in government, the minister refused to resign, saying he is serving at the pleasure of Mugabe and would not readily surrender his post to please the opposition. This was after calls for him to resign because of his bungling, which analysts say cost the country business opportunities in both domestic and foreign direct investment.
SI64: Import ban
The introduction of Statutory Instrument 64 of 2016 was also another bone of contention between the Zimbabwean government and its citizenry. Introduced mid-year, it was meant to control imports of selected commodities into the country.
The responsible ministry said SI 64 would help revive companies affected by importation of goods they can easily make locally. But Zimbabweans were having none of it. The introduction of SI 64 proved to be a hard sell, as evidenced by the demonstrations that culminated in a warehouse belonging to the Zimbabwe Revenue Authority being burnt.
More protests were planned and rocked the border towns of Beitbridge and Musina, as protestors tried to force the government of Zimbabwe to abolish the regulation which banned the importation of some goods cross border traders and shoppers used to import into Zimbabwe.
The South African government also tried to force Zimbabwe’s hand but to no avail, with Harare arguing that South African companies were free to come and manufacture in Zim and also enjoy the same protection.
Industry and Commerce Minister Mike Bimha remained defiant, saying government would not deviate from engineering its economic revival agenda and would press ahead with the limited import restrictions.
“There is no change whatsoever in government’s position. The statutory instrument went through all the processes of public consultations with relevant stakeholders and then through Cabinet. So how can we just wake up one morning and declare that we have changed the policy?”
With that defiant stance, we can safely say SI 64 will remain in force for up to three years as pronounced by the minister. Already the Confederation of Zimbabwe Industries has attributed the growth in 2016’s manufacturing capacity utilisation to an increase in production by companies whose products were banned from being imported under the regulation.
Capacity utilisation for Zimbabwean manufacturers increased from the 34.3% realised in 2015 to 47.4% in 2016.
This was first published at Fin24