President Emmerson Mnangagwa’s government has approached international financiers begging for a lifeline to avoid a possible economic collapse and political upheaval, a respected security publication has reported.The government’s desperate pleas were exposed by Africa Confidential, a respected London-based newsletter covering politics and economics in Africa, which obtained letters written to International Monetary Fund (IMF), World Bank (WB) and African Development Bank (AfDB) by Finance minister Mthuli Ncube . According to the report, Ncube’s letters dated April 2 painted a gloomy picture of the situation in Zimbabwe, which is battling an unprecedented public health emergency following the outbreak of the coronavirus. The letters warn that Zimbabwe’s economic collapse, which is inevitable without outside help, could have a domino effect in the region.
Ncube’s letters were addressed to WB president David Malpass, IMF managing director Kristalina Georgieva and AfDB president Akinwumi Adesina.
“The global (coronavirus) pandemic will take a heavy toll on the health sector, with many lives being lost and raise poverty to levels not seen in recent times, including worsening food security,” the minister is quoted as saying.
“A domestic collapse also would have potentially adverse regional effects, where spillovers are significant.”
Ncube admitted “responsibility for the recent policy missteps during late 2019, which have led to inflation currently running at an annual rate of over 500% and with the COVID-19 crisis, the country’s economic woes were set to deepen, hence the desperate need for rescue,” the report said.
Ncube was not picking calls yesterday and his adviser, Clive Mphambela said he was not aware of the letter.
“I don’t know about the letter, maybe the minister may know. I saw the Africa Confidential story and shared it with him,” Mphambela said.
He promised to give feedback after talking to Ncube, but had not done so by last night.
Ncube promised that the government would implement a “time-bound programme” of economic, political and governance reforms in exchange for aid.
He said Mnangagwa’s government would also implement an “ambitious anti-corruption strategy”, apart from controlling spiralling government expenditure.
Without those funds, Ncube says, the government would have no choice, but to revert to printing money, risking a return to hyperinflation and the crash of the local currency, the report says.
“Zimbabwe’s economy could contract by 15-20% during 2020 — with very serious social consequences,” Ncube is quoted as saying in the letters.
He revealed that Zimbabwe needed US$200 million in unplanned spending to fight COVID-19. The WB estimated that Zimbabwe’s financing gap was US$1 billion for health, education, food security and social protection in the aftermath of the coronavirus outbreak.
Meanwhile, Ncube pledged to introduce a market-determined exchange rate and end what he called the Reserve Bank of Zimbabwe’s “quasi-fiscal operations” and its direct lending programme.
That would include removal of all State subsidies in the budget documents presented to Parliament and scrutinised by the Public Accounts Committee.
The international financial institutions, however, had not responded to Ncube’s letters, the report said.
Ncube appeared to be isolated in his bid to get financial assistance for the stricken economy, with the report quoting an anonymous source who appeared dismissive of Ncube’s overtures.
The unnamed official said, instead, the government should deal with leakage of State funds: the financing with zero accountability of Mnangagwa’s favoured Command Agriculture scheme and the pillaging of gold reserves by the President’s inner circle.
“Zimbabwe is in a political, not an economic policy crisis … without credible change on that level, nothing else will move,” the official was quoted as saying.
Ncube’s pledge to deal with corruption comes at a time Mnangagwa is accused of protecting his family and allies who are pillaging the country’s resources through corrupt means, makes hollow the Finance minister’s commitment.
The United States has always claimed that corruption was the elephant in the room for Zimbabwe, but Mnangagwa blames Western-imposed sanctions.
Just last month, government awarded a US$60 million tender for coronavirus drugs to Drax Consult SAGL — a company fronted by Nguwaya working in partnership with Mnangagwa’s son, Collins — under unclear circumstances.
Nguwaya has a very rich criminal record and fronts Drax Consult SAGL, registered in Switzerland, which has already supplied drugs to NatPharm, the government drugs firm.
Finance secretary George Guvamatanga said the US$22,5 million arrangement has been on since September last year.
His closeness to Mnangagwa has triggered suspicion the company was a conduit to funnel COVID-19 funds for the Zanu PF leader’s family and inner circle.
On April 8, Nguwaya donated a ventilator worth US$$200 000 to Mnangagwa at State House towards the country’s COVID-19 fight, raising questions about the President’s conscience over interacting with someone who has a known criminal past.
It was at State House that he announced a “US$60 million drug supply deal” with the government through NatPharm, but the deal seems to have been made without following proper tender procedures.
Investigations by online publication ZimLive revealed that Drax Consult SAGL is one of 30 suppliers of “pharmaceuticals — medical drugs, supplies and consumables” approved by the Procurement Regulatory Authority of Zimbabwe, but there was no evidence that their supply deal with NatPharm went to tender.
Health minister Obadiah Moyo declined to comment, asking for written questions which were sent to him, but had not been responded to by last night.
Nguwaya also did not respond to questions sent on his WhatsApp, despite reading them, but admitted to his relationship with Collins in an interview with ZimLive.
He claimed his company was, in fact, loaning money to NatPharm, which has no foreign currency to acquire critical drugs. In the past decade, Nguwaya has been arrested over half a dozen times on a string of criminal charges, which include armed robbery, cocaine possession and extortion.
He has been in and out of court on criminal charges involving impersonating a police officer or intelligence operative.