John Siko, Associate Director at The Risk Advisory Group, explores how US sanctions imposed on Zimbabwe will affect investment opportunities for foreign businesses. This article features in The Cipher Brief.
I want to talk about an African election. The ruling party, in power since independence, was not shy about using the power of incumbency to ensure it remained in place. It splashed out pre-election largesse to supporters. Its presidential candidate used military aircraft to traverse the country. Ruling party-supporting businessmen supplied traditional leaders with automobiles to help ensure their support. And more broadly, the country was gerrymandered in such a way that rural districts supporting the party in power had outsized influence, more or less ensuring its perpetual control.
Sounds pretty dire. But despite this atmosphere, no Western observers criticised Botswana’s 2009 election, or any of its other polls before or since. In fact, Botswana is held up as Africa’s democratic success stories despite conditions that more or less ensure the ruling Botswana Democratic Party remains in power. This is not a slap at Botswana. The country is one of Africa’s best governed, and the BDP’s victory was credible and reflected the will of the people. But the bigger point here is that pre-election environments across Africa (and, really, across the world) are by no means perfect, and often give significant advantages to incumbents.
Now let’s turn to a more pertinent election, Zimbabwe’s 30 July poll, in which President Emmerson Mnangagwa won just over 50 percent of the vote, and his ruling ZANU-PF won a more than two-thirds majority in Parliament. The pre-election period was peaceful and free of violent intimidation that had plagued polls over the past two decades. Election day unfolded without a hitch. The opposition contested the results, but even the independent Zimbabwe Election Support Network noted that its projections tracked with the official results. On 24 August, Zimbabwe’s Constitutional Court upheld the result, allowing Mnangagwa to be inaugurated as president.
Let’s be honest: Zimbabwe’s election was not perfect. And the post-election environment was seriously marred by the shooting of six protesters by soldiers that had been called out to control crowds that had gathered after opposition candidate Nelson Chamisa claimed victory before results were released. However, the electoral landscape was light years better than that around any poll held in the country since at least the mid-1990s, and far more credible and well-run than many polls on which Washington is happy to endorse. This is because Zimbabwe is viewed in Washington through the lens of the classic ‘Star Wars’ dichotomy of a noble and enlightened resistance – the opposition Movement for Democratic Change (MDC) – standing up to a corrupt and repressive empire.
However, things have changed, and this view is outdated. Mnangagwa is not a continuation of Robert Mugabe’s repressive rule and disastrous economic policies. Since taking power after Mugabe’s November ouster, Mnangagwa has taken such radical steps as rolling back policies that demanded 51 percent local ownership of businesses, introducing bankable leases for commercial farmland, starting the process to privatise unprofitable state-owned businesses, and cracking down on pernicious corruption. The business community, which long backed the MDC, is giddy; investors have a direct track to the president, who has worked to fast-track projects. Mnangagwa has continually claimed his desire to transform Zimbabwe into the ‘Singapore of Africa’, and he knows that only pro-market policies will spur the growth Zimbabwe so desperately needs. Lastly, he wasted no time setting up a credible commission of enquiry – headed by respected former South African President Kgalema Motlanthe – to look into the shooting of protesters and determine who was at fault.
There is genuine enthusiasm for Mnangagwa’s presidency in Zimbabwe. It is particularly present among the professional middle classes in Harare, long among the MDC’s most fervent supporters. Chamisa, a career politician at just 40, was widely viewed as lacking the experience and vision to revive the economy. There were also widespread frustrations that Chamisa could not unite the opposition, leading to 23 presidential candidates contesting the election. This disunity was a major reason ZANU-PF took parliament so overwhelmingly, as competing opposition candidates siphoned off votes from one another.
Ultimately, no matter what you think of Mnangagwa or the election, the process is over. He won, and he will be in office for five years. The question now, particularly in Washington, is what to do next. Alongside such pariahs as North Korea, Syria, and Iran, Zimbabwe is subject to a US sanctions regime covered by the Zimbabwe Democracy and Economic Recovery Act of 2001 – recently renewed and amended – and targeted sanctions against more than 100 individuals (including Mnangagwa) and entities affiliated with the government. Given the limited ties between Zimbabwe and the US, these regimes have been largely symbolic, and have certainly had no impact on influencing the type of governmental change sought by Washington.
However, they do hurt one group, US businesses. President Mnangagwa has made it clear that Zimbabwe is open for business, and for those readers not familiar with the country, it has immense opportunities. Zimbabwe has a bonanza of minerals, including some of the world’s largest platinum and lithium reserves; a once-robust agricultural sector that could be turned around with minimal investment; the best human capital in Africa, with a 90+ percent literacy rate; immense tourism potential; and a strategic location in the heart of southern Africa. In short, Zimbabwe has it all, but it needs investment in all sectors, not to mention key infrastructure such as roads and power plants.
Investors in a range of sectors are already lining up, from all corners of the world...but ours. Admittedly, American businesses are not the most adventurous creatures in Africa, but when gauging interest of companies in Zimbabwe, the sanctions issue comes up again and again. Even though very few investments would actually run afoul of the sanctions regime, just the word ‘sanctions’ is enough to make most companies wave off and find safer jurisdictions. And even US investors on the ground who know they are compliant note that the spectre of sanctions is enough to make them deeply uncomfortable.
At the end of the day, sanctions on Zimbabwe means that US businesses lose out. It’s a shame. Things have changed in Zimbabwe, and now that President Mnangagwa has been inaugurated with a democratic mandate, his reforms to further improve the investment climate will continue apace. I have full confidence that Zimbabwe is on the brink of an economic turnaround and will emerge shortly as one of Africa’s fastest growing economies. Lots of people will make money there. But barring a shift of Washington’s outdated and wrong-headed policies, Americans won’t be among them.
Dr. John Siko is an Associate Director with the Risk Advisory Group in London. He previously spent 15 years in the US Government, mostly focused on southern African political affairs. He is a visiting senior fellow at the War Studies department at King’s College, London, and is author of the forthcoming Practitioner’s Guide to African Security.
This article was first published on The Cipher Brief.
This article was shared on NewsDay Zimbabwe