The recent Reserve Bank of Zimbabwe decision to combine all Bond Notes, Bond Coins and E Cash under the umbrella of “RTGS Dollars”, to set the exchange rate against the US dollar at 2.5:1, and allow it to float, is the most significant economic initiative of the Mnangagwa government. RTGS (Real Time Gross Settlement) dollars are now the official currency, and not the US dollar or other foreign currencies. This exchange rate is well above the real market rate for RTGS dollars of 3.8:1. While this initiative has been welcomed by international finance agencies, it is likely that rapid inflation and further economic collapse will follow unless the Reserve Bank has enough hard currency reserves.
Another significant decision in mid-February was to retire four senior generals and send them out of the country as ambassadors. This may well be an opaque response to the mid-January violence which also targeted the President’s staff.
An important upcoming opportunity for Zimbabwe is the May 24-26 Movement for Democratic Change Special Congress to elect a new leadership. The February 14 deadline – one year since the death of President Morgan Tsvangirai - had passed for MDC-T to hold a Special Congress to elect a new President, this making Nelson Chamisa illegitimate, which was a setback for him. Chamisa had been pushing for the Congress to be held in October. There is now an intense struggle within MDC about who is a legitimate delegate, and who will contest the Presidency.
The recent visit to Harare by South African President Cyril Ramaphosa captured the difficulty of this period – Ramaphosa showed strong personal support for Mnangagwa, but insisted on substantive - but unspecified – changes in economic policy before there could be an external rescue package. Deposed President Mugabe made a rare but sharp public attack on Mnangagwa to underline that he still has a powerful voice in what happens next in the country.
President Mnangagwa has initiated a commission to implement the recommendations of the Motlanthe inquiry into the August 1, 2018 violence, but his own effort at an inclusive national dialogue has been hobbled by the non-cooperation of Chamisa, and by the arrest of ZCTU leaders and attacks on NGOs who are vital to an effective national dialogue.
Zimbabwe Information Centre, Australia
March 17, 2019
