Zimbabwe: A Continuing Crisis

Zimbabwe: A Continuing Crisis

Updated November 27, 2019
Zimbabwe: A Continuing Crisis
An enduring, six-year economic crisis in Zimbabwe has
international standards in many respects. Mnangagwa won
intensified since national elections in July 2018, won by
the presidential race, with 50.6% of votes, and took office
President Emmerson Mnangagwa and his Zimbabwe
in late August 2018 after the MDC, citing alleged
African National Union-Patriotic Front (ZANU-PF). The
irregularities, unsuccessfully sued to nullify the election.
dire economic situation has prompted public discontent,
ZANU-PF won 180 seats in the 270-seat National
strikes, protests, and, in early 2019, days of riots.
Assembly and the MDC won 87 seats.
In response, state security forces have violently repressed
U.S. Policy and Congressional Role
demonstrations and arrested civil society activists. Since
ZDERA (P.L. 107-99) frames U.S. policy toward Zimbabwe. It
early 2019, the state has also pursued a dialogue with the
prohibited U.S. support for multilateral debt relief and credit for
political opposition, but only minor parties have
Zimbabwe’s government pending free and fair elections, credible
participated. The Movement for Democratic Change
land reform, security force subordination to civilian leaders, and
Alliance (MDC), the largest opposition party, has refused to
“restoration” of the rule of law—notably regarding civil
participate unless the state ends its repression and alleged
freedoms and property rights. It also called for U.S. financial and
breaches of the rule of law. The MDC also insists that any
travel sanctions against persons who undermine the rule of law
dialogue be convened by an independent mediator; it
or abet political violence. Such sanctions were later imposed and
contends that the Mnangagwa government is “illegitimate”
remain in effect. Public corruption was later added as a
and responsible for what the MDC calls a “political crisis.”
designation criteria. In annual appropriations laws Congress also
Background
has conditioned and restricted aid to Zimbabwe’s government,
President Mnangagwa (muh-nahn-GAHG-wah) assumed
which is subject to a U.S. defense items and services export ban.
power in November 2017, after ZANU-PF chose him as its
In 2018, Congress passed the ZDERA Amendment Act of 2018
party leader. He succeeded President Robert Mugabe, a
(P.L. 115-231). It retained ZDERA’s core provisions, and raised
semi-authoritarian who had led Zimbabwe and ZANU-PF
the prospect of stronger bilateral political, trade, and investment
since independence from the United Kingdom in 1980.
ties if Zimbabwe’s government implements existing ZDERA
Mugabe resigned under pressure from ZANU-PF following
criteria and takes "tangible steps" to carry out economic
a military intervention in politics aimed at ousting him. This
reforms, recover stolen public assets, and ensure "good
intervention was spurred by intra-ZANU-PF rivalry—
governance, including respect for the opposition, rule of law, and
notably over who would succeed Mugabe as president and
human rights." P.L. 115-231 also called on the government to
party leader—and followed Mugabe’s dismissal of
take various actions to ensure free, fair, and credible elections
Mnangagwa as vice president and Mugabe’s sidelining of a
and to align the legal code with the 2013 constitution.
party faction aligned with Mnangagwa and the military.
Zimbabwe Under Mnangagwa
Repression Since the 2018 Elections
Upon taking office, Mnangagwa pledged to pursue a range
On August 1, 2018, two days after the vote, protests broke
of economic and political reforms—notably free and fair
out in Harare, the capital, amid MDC demands for the
elections—and asserted that Zimbabwe was “open for
release of presidential vote results. Some protesters engaged
business.” This raised hopes for an end to years of deep
in violent acts (e.g., arson). After police failed to control the
economic malaise and an abiding pattern of human rights
crowds, military reinforcements fatally shot six protesters.
violations and undemocratic governance under Mugabe.
In succeeding days, soldiers, other state agents, and
unidentified attackers beat, harassed, and detained
Such changes are key U.S. goals under the Zimbabwe
numerous opposition supporters, prompting several senior
Democracy and Economic Recovery Act of 2001 (ZDERA;
MDC leaders to unsuccessfully seek asylum in neighboring
see text box), but to date the Mnangagwa administration has
Zambia. Some of these leaders were later tried on charges
not pursued a course of action that would satisfy the
such as public violence and illegal declarations of election
requirements of ZDERA. State constraints on freedoms of
results. In subsequent months, the state arrested and brought
assembly and expression declined in advance of the 2018
elections, and Mnangagwa’s administration recorded some
questionable charges against multiple state critics,
journalists, and trade unionists and, in one case, police beat
moderate progress toward some of his 2017 reform pledges.
MDC members of parliament. A commission of inquiry
Since the election, however, there has been a marked
probed the August 2018 killings and issued a report in late
deterioration in economic and political conditions and a rise
2019, but little has been done to respond to its findings.
in civil and human rights abuses by security forces.
2018 Election
In January 2019, amid rapid inflation and widespread fuel
and cash shortages, Mnangagwa abruptly raised fuel prices
The pre-poll electoral process featured some improvements
by 150%, sparking protests, which devolved into three days
over past elections, but domestic and international election
of widespread riots and looting. In response, security forces
observers and the MDC identified multiple serious flaws.
arbitrarily detained, beat, and, in some cases, tortured
Their findings indicate that the poll did not meet
protesters and opposition activists. Security forces also shot
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Zimbabwe: A Continuing Crisis
at protesters, reportedly killing 17 and wounding many
people into the informal sector, which may now employ
more, and raped at least 17 women. The government also
more than 90% of the labor force. Other factors include
cut internet access, but a court rejected the move and access
poor infrastructure, regulatory weakness, poorly managed
was later restored. The crackdown, which included raids on
state enterprises, corruption, a poor investment climate, and
private homes, persisted after protests had ended.
an ongoing drought. The drought has led to frequent power
cuts and food insecurity. Parts of Zimbabwe also suffered
Since these events, security forces have detained multiple
damage from an intense March 2019 cyclone.
labor organizers, civil society activists, and opposition
figures, and charged some with subversion. In recent
Figure 1. Zimbabwe at a Glance
months, police also have periodically deployed en masse to
prevent protests and assaulted MDC supporters attempting
to assemble. Meanwhile, in October 2019, the government
rallied its supporters to protest international sanctions,
though to mixed effect; while thousands marched, a key
stadium rally in Harare was reported poorly attended.
Spiraling Economic Crisis
Mnangagwa has prioritized efforts to rescue the badly ailing
economy, but ZANU-PF's economic policy record—which
has featured land seizures and abrupt policy shifts—is poor.

ZANU-PF oversaw a 66% contraction of the economy from
Sources: CIA & IMF public data; 2018 data unless otherwise stated.
2000 to 2008 featuring hyperinflation that hit an annual rate
Debt Deal?
of 471 billion percent in September 2008. The economy
High deficit spending has generated high public debt, worth
recovered rapidly under Tendai Biti of the MDC, Finance
$16 billion (72% of GDP) in late 2017, of which $8.8
Minister during a power-sharing government (2009-2013).
billion is external debt, including international financial
Biti ended use of the Zimbabwe dollar and replaced it with
institution (IFI) arrears worth $2.6 billion. These arrears
a system in which multiple foreign currencies were legal,
have prevented access to IFI loans and reduced state access
but in which the U.S. dollar predominated.
to commercial credit. (The IMF also reports that the state
The economy has faltered since 2013, when ZANU-PF won
may face further liabilities of $2.4 billion to $10 billion
a parliamentary majority, ending the power-sharing deal.
related to compensation for land seizures—mostly from
The International Monetary Fund (IMF) projects that gross
white farmers—during the Mugabe era.)
domestic product will contract by 7.1% in 2019. A key
Since 2015, the government has unsuccessfully sought to
factor in the economic crisis has been an acute lack of cash
pay off its IFI arrears. It aims to use “bridge loans” from
caused by U.S. dollar shortages. In 2016, to increase cash
undetermined creditors, restart regular IFI loan payments,
available for market activity, the central bank created a
potentially gain renewed access to IFI credit, and then
local unit of exchange called the “bond note.” The bank
renegotiate its other bilateral foreign debts. In May 2019, to
also has promoted the use of digital dollar bank credits.
emphasize its commitment to macroeconomic stability and
to earn creditors’ confide
Both bond notes and bank credits were officially equal to
nce, the government agreed to
the dollar, but the market did not treat them as such. Sellers
implement a series of reforms under IMF observation. The
charged more for purchases made with bond notes and bank
risk of failure is high, as the reforms may impinge on
credits than for those made with U.S. dollars. This led to
powerful vested political interests, and the state has a poor
inflation, as a lack of U.S. dollars forced people to use
record of carrying out such pledges. Under the IMF
increasingly less valuable bond notes and bank credits.
program, it agreed not to obtain new commercial loans, but
Authorities responded in early 2019 by merging bond notes
just after signing the IMF agreement it accepted an earlier-
and dollar bank credits into a single new currency, the
arranged $500 million nonconcessional loan.
“RTGS dollar,” and allowed its exchange rate to float. The
U.S. Stance
same problems that had afflicted bond notes and bank
U.S. officials seek improved relations with Zimbabwe,
credits, however, also affected the RTGS dollar. Its foreign
which has hired U.S. lobbying firms to help achieve that
exchange value rapidly plunged, prices soared, and goods
end, but maintain that the government must first meet the
shortages grew. Annual inflation hit 176% in June 2019,
goals set out in ZDERA. In May 2019, a U.S. official stated
after a 49% average fuel price hike in May.
that while the IMF program is a positive step, deep political
To counter inflation and the RTGS dollar’s persistent slide,
and legal reforms must accompany economic reforms. U.S
the government ended the multi-currency system in June
officials have also called for security forces to be held
2019, renaming the RTGS dollar the “Zimbabwe dollar”
accountable for human rights abuses, notably the violence
and making it the sole legal tender. This change raised fears
in August 2018 and early 2019. Meanwhile, diverse U.S.
of a return to hyperinflation, and did not end cash shortages,
aid programs continue to support humanitarian needs and
which have persisted despite the government’s November
endeavor to improve human rights, economic growth,
2019 issuance of new low–denomination Zimbabwe dollar
health, and good governance. Bilateral aid totaled $191
currency notes. The currency change also has not affected
million in FY2019, not including emergency aid.
broader factors contributing to the economic crisis. These
Nicolas Cook, Specialist in African Affairs
include low production due to the closure of many firms in
recent years, which has shrunk the goods supply, helped
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increase already high unemployment rates, and driven many
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Zimbabwe: A Continuing Crisis

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