When Mthuli Ncube took on the position of minister of finance & economic development in Zimbabwe’s post-coup government in September 2018, he was something of a political outsider.
Far from the Zanu-PF inner circle, the former African Development Bank deputy president was leading a quiet life in Switzerland, splitting his time between the private sector and academic pursuits at Oxford University, when he got the call to join President Emmerson Mnangagwa’s government.
It was never going to be an easy gig — but even he seemed taken by surprise at just how difficult it was initially.
One of his first tasks was to lay out the 2018-2020 transitional stabilisation programme — a plan for policy and institutional reforms to build a private sector-led economy and stimulate growth.
"As soon as I got in office we were hit by cholera," he tells the FM. "Then came another shock in the form of Cyclone Idai. In other parts of the country, the cyclone translated into a drought issue. That meant we had to pull resources just to deal with those two, and we found ourselves importing food for the rest of 2019 into 2020."
Then there were the power cuts — the result of low water levels in the Lake Kariba hydroelectric power system.
"No-one can be this unlucky!" he says, recalling his thoughts at the time.
Complicating things was Zimbabwe’s increasingly fraught relationship with the international community, given concerns around corruption, poor economic practices, and the violation of human rights and democratic norms.
Things came to a head with the onset of the pandemic, when the Paris Club — major shareholders in the International Monetary Fund (IMF) and World Bank — spurned Ncube’s plea for funds.
He had written to the group arguing that, without external support, Zimbabwe’s economy could collapse. In response he was told his books were not in order and the country’s human rights record stood in the way of further funding.
On the finance side, at least, that’s something he’s trying to set right.
"I want to pay all the country’s debts. Country by country. And international creditors must be paid," he says. "Zimbabwe should earn a ‘good debtor’ credibility status."
That’s a tall order. Zimbabwe’s debt stands at $16.9bn, or 78% of GDP. Of the $7.4bn it holds in external debt, $5.6bn is in arrears, according to the government’s own figures.
"Every day I engage in at least two intensive discussions with international creditors. Come the third quarter, we will be paying something to every creditor. We will then renegotiate the restructuring of our debt," he says.
Ncube intends to raise funds for debt repayment from the mining sector, specifically platinum, gold and diamonds. By his projections, the sector should be pulling in $12bn a year by 2023.
"We will put emphasis on value addition and beneficiation, shifting away from just being an extractive industry. We expect the mining industry to grow by 11%. That’s where most of our money will come from as we pay off debts," he says.
To gain miners’ confidence, Ncube is offering tax incentives and rebates.
"In the case of a holder of a special mining lease, corporate income is taxed at a special rate of 15%. A holder of a special mining lease may be exempt wholly or partly from nonresident tax on fees, remittances and royalties," he told a mining expo last week.
The mining sector is also, it seems, part of Ncube’s plan to compensate white commercial farmers who lost their land during Zimbabwe’s chaotic land reform programme.
"We’ve started paying," he says, "but we’d like to do it faster."
Still up for debate is just how much the state owes the farmers. While they have the figure pegged at $10bn, Ncube puts it at $3.5bn. Either way, it’s a lot of money to raise — funds that simply aren’t available.
To this end, Ncube is pinning his hopes on Kuvimba Mining House, a $1bn investment vehicle in which the government owns 65%. Some of the profits from the sale of lithium, gold, nickel and platinum assets will be used to compensate the farmers.
He’s also trying to source compensation funds from the international community. And farmers can be compensated by applying for land.
Probably Ncube’s most controversial move so far was the reintroduction of the Zimbabwe dollar in early 2019. It’s a decision he stands by.
"We had to introduce a domestic currency because we realised that we couldn’t eliminate the current account deficit because we didn’t have a monetary policy," he says.
"What we had to do on the fiscal front was reduce access to the Reserve Bank window. We were paying salaries from accessing an overdraft at the Reserve Bank. That had to stop because it was bad for fiscal management. We had to live within our means."
Ncube, at least, believes that it’s working, pointing to a general decline in inflation and improved currency stability. He also expects Zimbabwe’s economy to grow 7.8% this year. Given an IMF forecast of 3.1%, that may be an optimistic assessment.
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