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Zimbabwe elections — currency crisis threatens to outprice Emmerson Mnangagwa’s presidency

Simukai Tinhu
By Simukai Tinhu
20 Jul 2023
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The Zim dollar is currently trading at around 8,000-to-1 to the US dollar on the black market. The collapse was a world-beating drop from 3-to-1 to the US dollar, at which it was pegged when Emmerson Mnangagwa took over in 2017.

Since he became Zimbabwe’s president, Emmerson Mnangagwa has been preoccupied with warding off threats to his position. To do so, he has deployed the legislature to muzzle dissent, the police and courts to detain opposition leaders, and security services to haunt pro-democracy activists.  

Yet what is turning out to be the most tenacious threat to his grip on power is a challenger that cannot be subjected to levers of state compulsion.

A few weeks ago, in the most dramatic sign of the extent of economic rot in Zimbabwe, the southern African nation’s dollar crashed to 10,000-to-1 to the US dollar on the black market — as a country with no financial system and a currency not accepted in other countries, the black market is the largest, if not sole source of foreign currency for ordinary citizens.

The collapse was a world beating drop from 3-to-1 to the American dollar, at which it was pegged when he took over in 2017. It might have slightly recovered and is now trading at around 8,000-to-1 to the US dollar, but this wreckage of a local currency is a blow to a man who took over on the promise of recharging the economy.

What is more worrying for Mnangagwa is that Zimbabweans seem to have made up their minds on who is causing the currency crisis. While his government and party activists’ talking point on inflation is sanctions and sabotage by unpatriotic local businesses, the public sees the president’s wasteful corruption as the proximate cause.

That much is evident in his spending (some say illegal) spree.

Keeping cartels sweet


Faced with a difficult election this Zimbabwe winter, Mnangagwa has been attempting to spend himself out of a hole by keeping political elites happy and motivated. He has done this by showering government ministers, Members of Parliament (MPs), senior bureaucrats, military commanders and traditional leaders with state loans, grants and expensive vehicles.

There have been different kinds of gifts for business cartels. Though not important from a psephology standpoint, these semi-criminals are a powerful political constituency on which Mnangagwa relies for financing his political activities — some of them are his business partners — and as parallel power structures to supplant competition from the military and Zanu-PF elites.

The president has kept these movers and shakers of Zimbabwean politics on his side by expanding their opportunities for rent-seeking. As a result, cartels have made handsome profits by importing goods without paying duty, and smuggling out of the country banned exports such as nickel and lithium concentrates.

Cartels have also profited from serving the needs of the state through the provision of overpriced goods — medicines, fuel, wheat and agricultural inputs — and services, effectively defrauding the public purse of hundreds of millions of dollars.

To cover for such unbudgeted spending and wastefulness, the central bank, The Reserve Bank of Zimbabwe (RBZ), has been wantonly printing money. And the result is the ongoing raging inflation that is now dragging every Zimbabwean man and woman into poverty.

Even those once loyal to the president and whose investment assets have often been insulated from such inflationary shocks have been indignant at the government’s management of the economy. As their businesses struggle, these lesser elites — less wealthy than cartels — have undermined the president’s public diplomacy by, for example, abandoning the presidential advisory council that Mnangagwa had created as part of his efforts to keep elite mutiny minimal.

Some have been actively undermining his legitimacy by openly criticising his regime’s economic policies.

Shaky Zanu-PF support


But a far deeper problem for the president lies in Zanu-PF core supporters’ disillusionment with his handling of the economy. Through its state-enabled complex patronage system in the villages, Zanu-PF is a social network which is effective at distributing state resources to its clients in return for votes. This partly explains its strengths among rural voters.

Fiscal pressures due to the currency crisis have seen vehicles for state patronage such as the Command Agriculture and presidential input schemes, which have previously been used to parcel out agricultural inputs to rural clients, being drastically scaled down. This has strained the regime’s social contract with this important voter constituency.

What is worsening Mnangagwa’s woes is his lack of political stamina to starve off the currency crisis. Indeed, he cannot risk confronting business cartels, senior Zanu-PF officials and securocrats — whose economic activities are the biggest drivers of inflation — without provoking sabotage of his authority, if not outright threats to his presidency.

Neither does his government have a solid grip on economic matters. Its response has often been erratic, exacerbating the problem: it has varied from mockery of and contempt for citizens (for example, the president telling those people who cannot afford meat to turn vegetarian) to muddling through contradictory measures — the regime keeps changing monetary policy.

All this mess has shaped nicely for Mnangagwa’s challengers. Seeking to make as much hay from the currency crisis as possible, the main opposition party, Citizen Coalition for Change (CCC), has refashioned the economy into a central part of its electoral campaign.

At CCC campaign rallies, the party’s leader Nelson Chamisa has been rattling off statistics on grim wages, high unemployment and high food prices, pointing to the government’s mismanagement and corruption as the source of these economic problems.

The latest polling report published by Afrobarometer, a reputable research agency, is showing that Mnangagwa and Zanu-PF’s unpopularity, owes mainly to the government’s handling of the economy, and soaring inflation. Eighty five per cent of voters think the economy is being badly managed.

These poll figures have given hope to opposition strategists who see the ongoing currency crisis as spelling doom for the regime. In the hope of a repeat of the same scenario, the understanding is that the collapse of the economy and hyperinflation in the 2000s explain Robert Mugabe and Zanu-PF’s defeat in the first round of the 2008 presidential elections.

This is an accurate observation up to a point. In 2008, the ruling party was defeated in elections, but the regime didn’t yield. It remained intact because of its lack of scruples in employing violence and repression to its advantage. But Zanu-PF’s ability to inflict violence on voters would not have been possible if it did not have a core base of supporters who still vote for it.

Indeed, the same Afrobarometer survey suggests that its leader, Mnangagwa still enjoys more than 35% support, which is downright astonishing given the level of economic mess that the president has presided over. For these voters, concerns over economic policy do not matter. Rather, they vote based on their emotional and kinship ties with the party. 

In other words, as in 2008, the ongoing economic tragedy will be an effective recruiter of voters for the opposition. However, the tragedy is not yet severe enough to effect an unstoppable swing of voters, and crucially fragmentation of the Zanu-PF elite, components that are fundamental to political transition in Zimbabwe. DM

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