Zimbabwe is set for more uncertainty

By Anne Fruehauf

Despite a historic 2008 power-sharing agreement, Zimbabwe is not out of the political woods. President Robert Mugabe’s failing health is fueling both an unseemly scramble among Zimbabwe’s elites for a share of the country’s wealth, and also disputes over the succession. While an all-out asset grab is unlikely (in part because of elite squabbling), Zimbabwe is set to experience another round of volatility and uncertainty that will last at least until after the next elections, which are not likely to occur until 2013.

Mugabe’s Zimbabwe African National Union-Patriotic Front (ZANU-PF) is trapped in an awkward unity government with its bitter rival, the Movement for Democratic Change (MDC) headed by Prime Minister Morgan Tsvangirai. Both parties are maneuvering ahead of upcoming elections, but even the date is disputed. Mugabe is pushing for polls in 2012, while the MDC and the Southern African Development Community are pressing for 2013 in order to allow time for overdue political reforms. The MDC should be able to win minimally free and fair elections, but another coalition government (involving all or part of ZANU-PF) seems a more plausible outcome at present.

Mugabe, now 87, has long been rumored to be suffering from prostate cancer, raising doubts about his ability to carry on in office. Succession concerns and the party’s uncertain future are reinforcing efforts to push through a controversial indigenization law of 2007. The law requires foreign businesses to cede 51 percent of their equity to indigenous Zimbabweans within five years. In part, the goal is to secure large amounts of cash for ZANU-PF ahead of the upcoming elections, but elites are also taking advantage of the program to syphon off money for private and party gain.

ZANU-PF has haphazardly implemented the legislation and the law is weak, riddled with loopholes, and probably unconstitutional, according to legal experts. It foresees no specific timeframe for indigenization, but regulations issued in 2010 and 2011 give effect to the law, implying a cut-off point of 2015. The MDC does not support the scheme, which it views as a self-enrichment scheme for ZANU-PF bigwigs, which could cost it an election and the country much-needed investment. But it is unable to exert moderating pressure on ZANU-PF on this issue despite its control of the finance ministry and improvements to macroeconomic policy. This means the law’s revocation or overhaul is inconceivable, at least until the 2013 elections and probably beyond.

Disagreements within ZANU-PF will make for a chaotic process, however. Minister of Youth Empowerment and Indigenization Saviour Kasukuwere is already running into opposition from Minister of Mines Obert Mpofu, whose department controls licensing. Although Mpofu is a Mugabe ally and supports indigenization, he has rejected attempts by Kasukuwere, his junior, to dictate policy. This rivalry among ZANU-PF players renders government relations increasingly unpredictable. Uncertainty over indigenization will likely stall investment and give an advantage to emerging market investors unencumbered by targeted Western sanctions, which include the state miner ZMDC.

Threats to revoke licenses or demands for irregular payments are likely as political players try to maneuver themselves or their front men into shareholder positions. Impala Platinum, which produces around 25 percent of global platinum output from mines in South Africa and Zimbabwe, for example received a letter from Kasukuwere on September 6 threatening to revoke its mining license unless it submitted acceptable indigenization proposals.

In the meantime, elites within ZANU-PF are jockeying for position given Mugabe’s illness. Vice President Joyce Mujuru will be Mugabe’s likely interim successor, if he becomes incapacitated while in office, but ZANU-PF factionalism raises the specter of a contested political transition. The constitution, which is yet to be reformed, stipulates that fresh elections be held within 90 days of the president’s incapacitation. But the 2008 power-sharing agreement requires vacancies to be filled by the same party; this means Mujuru is next in line until fresh elections are held. However, the mysterious death of her powerful husband Gen. Solomon Mujuru in August may embolden rival factions, such as that led by Minister of Defense Emmerson Mnangagwa, to challenge her succession bid.

Anne Fruehauf is an analyst with Eurasia Group’s Africa practice