Zimbabwe

Cyril Ramaphosa can expect pleas for a bailout from Zimbabwe

Mnangagwa will ask Ramaphosa for financial help at their summit this week

10 March 2019 - 00:01 By RAY NDLOVU
Zimbabwe President Emmerson Mnangagwa is expected to ask President Cyril Ramaphosa for financial assistance for a second time.
Zimbabwe President Emmerson Mnangagwa is expected to ask President Cyril Ramaphosa for financial assistance for a second time.
Image: Reuters

The begging bowl will be out when South African President Cyril Ramaphosa arrives in Harare on Tuesday for the annual meeting of the SA-Zimbabwe binational commission.

In December, the National Treasury in Pretoria rejected a $1bn (R14.4bn) bailout request from the government of President Emmerson Mnangagwa, which needs the money to kick-start the moribund economy.

Government sources said a second attempt to obtain financial assistance would be made during Ramaphosa's visit.

The opposition Movement for Democratic Change (MDC) hopes to meet the South African leader to table its grievances about Mnangagwa's 16-month-old rule. But Ramaphosa's spokesperson, Khusela Diko, said Ramaphosa had no plans to meet the MDC.

The party is particularly worried by treason charges against its MPs. The latest one arrested is the country's youngest legislator, Joana Mamombe, 25, who was detained last weekend on charges of attempting to overthrow a constitutionally-elected government. The high court released her on $3,000 bail on Friday.

MDC spokesperson Jacob Mafume said there were now 10 people facing treason charges. "The list includes our MPs, trade union leaders and other civic society leaders such as Rashid Mahiya."

Ramaphosa's trip comes as Zimbabwe, SA's largest trading partner in the Southern African Development Community, faces its worst economic crisis in a decade.

The country is beset by foreign currency shortages, erratic fuel supplies and hyperinflation, which was officially given as 56.9% last month.

Also last month, a local currency - the RTGS (real time gross settlement) dollar - was unveiled and the central bank ditched the 1:1 parity with the US dollar on which it had insisted since the introduction of bond notes in November 2016.

The market exchange rate in the formal banking system is 2.5 RTGS dollars to the US dollar, but on Friday the ZimBollar website put the black market rate at 3.65/$.

The International Monetary Fund said currency reforms were a "step in the right direction" which must be backed "by market-determined interest and exchange rates, together with prudent fiscal policies".

But the currency distortion has left several South African companies anxious. Insurer Sanlam this week cited "internal currency devaluations" in several African countries, including Zimbabwe, as a factor behind "the negative investment market returns" it posted in its full-year financials.

Economic experts expect the currency changes to be discussed at the binational meeting as South African companies seek to minimise disruptions to their operations in Zimbabwe.

The US decision on Thursday to extend sanctions on 84 individuals in Zimbabwe, including Mnangagwa, and 56 entities, will also be on the agenda.

US state department spokesperson Robert Palladino said: "We believe that Mnangagwa has yet to implement the political and economic overhaul required to improve the country's reputation with the community of nations and with the US."

SA has been at the forefront of calls by African countries for the repeal of sanctions against Zimbabwe, and Diko said the decision to extend them was unfortunate.

"SA is on record that it is incumbent on the international community to support Zimbabwe as that country seeks to deal with its economic challenges," she said.

"The relaxation or total lifting of sanctions would be a step in the right direction. SA will continue to lobby for this, guided by its consistent interactions with the government of Zimbabwe."

Derek Matyszak, Harare-based senior researcher for the Institute for Security Studies, said the sanctions arguments were complex.

Referring to the anti-government protests in January, he said: "It's a dilemma for international relations. If one sees the events of January as rooted in the economic crisis, and that due to a lack of investment, does one encourage investment or withhold it as a sign of disapproval for the state response to the social unrest?"

In its bid to have the sanctions lifted, the Zimbabwe government has hired Washington lobbyist Brian Ballard at an annual cost of $500,000. A disclosure filing says he will offer advice on "communication with US government officials, US business entities and nongovernmental audiences".

James Rubin, a state department official in the Clinton administration, will be Ballard Partners' lead lobbyist for Zimbabwe.

Simon Marks, a veteran Washington correspondent, said if Harare wanted sanctions to be relaxed it had no choice but to hire a lobbyist in Washington.


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