The World Bank’s plan to bail out Mugabe’s government

By: 
Daily Maverick

The World Bank is working on an extensive bailout package for Zimbabwe, which could see the state receive a cash injection of up to $400-million beginning in 2017, according to leaked documents. The documents have been reported in Zimbabwean media, and were received independently by the Daily Maverick.

This news could provide some respite for Mugabe’s under-fire government, which is facing an unprecedented level of popular protest. This unrest has been exacerbated by the country’s perilous economic situation, which has all but emptied government coffers. Civil servants, police and military have all been paid late, while the government has imposed new restrictions on foreign exchange and imports in a bid to keep cash in the economy.

The internal documents – a draft turnaround eligibility note, and a draft country engagement note – praise Zimbabwe’s economic reforms, and appear to dismiss concerns about the level of human rights violations occurring in the country. They are dated 27 July 2016 and 28 July 2016 respectively, and were prepared by the departments responsible for handling Zimbabwe.

“The [Government of Zimbabwe] has gradually implemented reforms to recapture parts of the state dominated by deep vested interests and more effectively broaden the benefits of recovery and growth,” said the country engagement note, which outlines the bank’s proposed engagement with Zimbabwe in the 2017 and 2018 financial years. It notes improved policy in the areas of mining, banking, investment climate, state-owned enterprises, land reform, and public procurement.

It does not, however, acknowledge the government’s disastrous and universally criticised announcement in May that it would introduce “bond notes” in lieu of US dollars for exports; the imposition in June of an import ban on 42 products, which sparked huge protests at the Beit Bridge border post; or the increasing delays in processing international money transfers.

Nor do the documents make much reference to human rights. Notably, in the turnaround eligibility note, a reduction in human rights violations is not a necessary condition for financial support. In a list of desired indicators, the note requires only that the “number of alleged human rights violations level off or decline from 2014 average and/or no unwarranted arrests of key opposition leaders”. No mention was made of the arrest in early June of Pastor Evan Mawarire, leader of the #ThisFlag movement, or several of his supporters; or the police brutality with which #ThisFlag marches have been met.

The same note also appeared to praise Mugabe’s governance skills.

“Finally, Mugabe’s factional balancing skills have also been a source of stability by keeping the ruling party and the security forces together. The president’s factional balancing skills have helped to unify the fractious Zanu-PF at critical moments in the party’s history and are likely to have prevented all-out conflict on several occasions. Unlike his party, Zanu-PF, he remains popular in Zimbabwe,” it concluded.

Zimbabwe is already in arrears with international institutions, including the World Bank itself, the International Monetary Fund, and the African Development Bank (AfDB), to the tune of $1.8-billion. The World Bank’s proposed assistance package is conditional on Zimbabwe clearing those arrears. The government is in advanced negotiations with the African Development Bank to do just that, which would pave the way for the government to access foreign currency – a potential lifeline for the regime.

When contacted for comment, the World Bank said: “The World Bank cannot resume direct lending to Zimbabwe, under standard World Bank rules and procedures, unless the issue of arrears is resolved. Once the arrears are cleared, Zimbabwe would be eligible as a borrowing member of the Bank to a broad range of financing instruments.”

The World Bank’s position is problematic on several levels.

First, as outlined above, its analysis ignores recent events in the country, including controversial new economic policies that have seriously undermined reform.

Second, the document appears to take Zimbabwean officials at their word when it comes to further reforms. This does not take into account the unpredictable nature of the current faction-fighting within the ruling party, nor the government’s history of failing to deliver on promises.

“The notion that the Mugabe regime will reform itself is absurd. The record is long and clear. For the World Bank to give the regime funding based on more false promises would be reckless and irresponsible,” said Todd Moss, senior fellow at the Center for Global Development.

Third, the provision of further funding is likely to have a significant political impact in the country. With popular support for the regime drying up, it is increasingly reliant on patronage for support. The government’s cash crunch has made it harder for it to buy loyalty, a major factor in the scale of the popular protests. A promised cash injection will inevitably tip the balance of power back in favour of the regime.

After 36 years in charge of Zimbabwe, Robert Mugabe has made plenty of enemies. These leaked documents suggest, however, that the World Bank is not among them.

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