Corruption, poor governance at the heart of Zim problems . . .

United States ambassador Brian Nichols says the country’s sanctions do not prevent American companies from doing business in Zimbabwe.

Nichols (BN) told Alpha Media Holdings chairman Trevor Ncube (TN) on his platform In Conversation with Trevor, that Zimbabwe’s economic problems have nothing to do with Washington’s restrictive measures.

The American envoy said instead corruption, poor governance and poor business conditions were behind Zimbabwe’s economic collapse. Below are excerpts from the interview.

TN: What was your imagination about this country, what were your expectations?

BN: Well, it’s a country that Bob Marley sang about it.

It captured people’s imaginations. A number of senior policy makers in my country and around the world have done their theses and dissertations on Zimbabwe. It’s a country that was a great focus in terms of US and international policy.

The chair of my confirmation hearings was Senator Jeff Flake who lived here, did his Masters’ degree thesis on Robert Mugabe.

So that focus and the moment I was entering into that crucial election up to that point when it was generally free of violence and intimidation, things seemingly going relatively well and this could be a moment where there’s a real springboard for Zimbabwe becoming a much more democratic, prosperous and transparent country.

TN: So you then land, presented your credentials on the 19th of July, elections were on the 30th, has that imagination, the hope that you have in this country, have you been disappointed or what?

BN: Well, I have been incredibly impressed with the people of Zimbabwe.

This is a country with incredibly talented people, very well educated, very hardworking.

When you look at Zimbabweans in the diaspora, they are successful all around the world and that should be the case here.

In the week of the election on August 1st, I was in President (Emmerson) Mnangagwa’s office with Senator Jeff Flake and at that moment we were congratulating him on the progress in the elections and while there were some flaws in the process overall, it was a vast improvement over prior votes and then later that day I was in my office and there was gunfire in the central business district.

International election observers were wondering what’s gone wrong, what it means.

The process that Zimbabwe went through with the creation of the [Kgalema] Motlanthe Commission, the fact that those recommendations have not been implemented even more than a year after the August 1 violence, the crackdown by security forces even after August 1, people going into the high-density suburbs, security forces beating people up.

It was quite shocking. We want to give this government space to address those issues, implement the agenda that President Mnangagwa campaigned on and as we heard at the state of the nation address not too long ago, much of that agenda has still not been passed.

Many of the reforms this government has campaigned on, alignment of the constitution, repealing of repressive legislation like AIPPA, POSA that has not happened.
TN: Why do you think that this has not happened?

BN: I think there are entrenched interests that are resisting reform here and reform is not easy, but it is important.

When you see the trajectory in the country is now, where inflation is on the hundreds of percent. We measure a basket of 16 basic items in our embassy: mealie meal, bread, cooking oil, petrol, basic vegetable etc, that’s up to 641% year and year as of mid-September.

So the things that most people need are incredibly very expensive.

We have seen very disturbing incidences of abductions of civil society members; we have seen the protests in January, the violence that followed turning off the internet.

Those things were deeply concerning to the international community and to every Zimbabwean.

So that reluctance to take on reforms that could move this country forward is what’s holding it back.

Look at where Zimbabwe is today and where it was five years ago, there is need to make irreversible reforms to address the challenges that this country faces.

TN: Clearly from what you are saying political reforms are not happening, economic reforms are not happening as fast as you want. Tell me in a nutshell, as far as political reforms are concerned what are the three critical aspects of those political reforms that you want to see coming through?

BN: Number one is the low hanging fruits. Implement the electoral reforms called upon by five different international observer missions as well as the domestic electoral observers across multiple elections.

That’s something that almost these observers reports would agree on, the governments has previously said it had plans to do so, they have retreats, they had discussions. You’ve heard all sorts of people come back from these international missions to participate, they’ve got a nice grid, all the blocks are filled in and there’s no reason why that can’t go forward.

The second one would be media reform, I think that the media space in Zimbabwe is very narrow and I congratulate you for maintaining one of the few independent voices here, but it should be broader.

This is a country with only one television station. That even a small town in most countries has more than one television station and having an independent voice in radio or television.

There have not been any licensing of new radio stations in communities or national.

TN: So the media reforms have not happened to your satisfaction. Which is the third issue as far as political reforms are concerned?

BN: Well, I might have to do more than three but I think security force reform is a crucial issue.

One of the deep concerns, I think the people of Zimbabwe have and the international community have is that the security forces continue to resort to excessive force in dealing with protests. You’ve got over 50 abductions that have not been investigated, you have the violence surrounding protests as I mentioned in January and then August again.

That’s something that is crucial, the over-arching issue that I think is very important is a broad inclusive national dialogue to address the concerns that Zimbabweans have.

I think the [fact that the] Zimbabwe Council of Churches call for such a dialogue is a very important one.

It’s something that has the potential to overcome all of these issues bring people together to face the country’s problems in a united way

TN: Is there a creative way that the diplomatic community, that our international friends could come up with, that lowers the temperature, facilitates an engagement of the parties that are currently floating, can we do that.

BN: The international community can play an important role in that regard. An international actor is going to want to see some level of positive will from the key parties and stakeholders in Zimbabwe.

It needs to be an African-led solution, ideally southern African countries playing a major role in that.

Sadc in the past has played an important role in mediating disputes.

Those are the players that are vital. Once you go further afield, it becomes more complicated.

I think the African Union plays an important role throughout the continent and could be supportive in this area.

TN: I am asking this question with the Kenyan situation among it, where the late Kofi Annan with the international community did make something happen there because the problem is we have entrenched interests and entrenched positions on both sides. We need someone to move both sides to the centre with something that is creative.

BN: In the wake of these elections we had Kofi Annan as member of the Elders here in Harare, meeting with people, getting to play a role with Mary Robinson at that time.

We have subsequently had former President Robinson and Graca Machel to follow up with the Elders.

I think that’s an important initiative and could yield positive results.

Sadly as we all know, the former secretary general passed on. You wonder want could have happened if he had been able to intensify those efforts a year and half ago.

TN: Congratulations on your big building. The embassy is beautiful. Is that a sign of the confidence that you have about the future of this country, building that huge beautiful building?

BN: Let’s put the beautiful before the huge. Yes we spent US$292 million building that embassy and we put a presence here and consolidated our presence.

We haven’t increased our staff but that’s a matter of the faith that we have, that this country can progress. There is a bright future for Zimbabwe if it reforms, if it takes the steps.

But I think most Zimbabweans know it needs to move forward.

TN: This country has been under United States sanctions for the past 17 years, since the first Zimbabwe Democracy and Economic Recovery Act of 2001, which was then amended in 2018. There is an argument that these sanctions are targeted but as you and can see what’s happening out there. In reality, these sanctions are devastating to the poor person, to the majority of the companies in the country. What’s your view about these sanctions and what’s the future?

BN: Well, I categorically reject that argument. What Zidera does is that it instructs the executive directors of international financial institutions not to vote in favour of new loans or debt forgiveness for Zimbabwe unless a series of conditions are met.

Broadly, economic and democratic reforms and respect for human rights.

Those executive directors, the board members, the World Bank, IMF, African Development Bank, have never had a vote on Zimbabwe because this country’s own failure to reform has prevented it from ever reaching consideration for debt relief or new lending.

So as a practical matter Zidera has never come into play.

In 2003 the executive branch added Zimbabwe sanctions programme, which is a targeted programme that currently has 141 persons and entities on it.

That is point 0.006% of the population roughly that’s covered.

That does not prevent trade with Zimbabwe. I have brought Fortune 500 companies to Zimbabwe to promote our economic relationship.

I have been in meeting with GE Africa and the president.

I hosted the minister of Health at a trade reception in my home.

I meet with American business associations in Zimbabwe to promote their efforts.

The CEO Roundtable Zimbabwe is going to the US.

I have met with them a couple of times to encourage them to do business here.

John Deere just had a cabinet approved sale of US$51 million worth of tractors to Zimbabwe.

We have several US government supported investment projects and the US Department of Commerce has approved formal advocacy for these companies and they are working on early stages of development right now.

So, we are working hard to encourage business and two-way trade between our countries for the benefit of both our peoples.

When you look at the cause of the economic problems in Zimbabwe number one is corruption.

Corruption has cost this country billions of dollars, the low estimates is a billion dollars a year.

Just the recent Auditor General’s report on command agriculture: there was nearly US$3 billion unaccounted for in the audited period which is between 2017 and 2018.

Just in June to August of this year you had pay-outs to Sakunda Holdings for command agriculture and other purposes at a preferential rate, which increased the money supply in Zimbabwe by 50%.

You wonder why the exchange rate collapsed and inflation spiked between June and August of this year.

It’s that type of operation of illicitly giving people insider sweetheart deals to the detriment of the people of Zimbabwe.

Look at today’s paper, the story on Zinara and its former head involved in illicit activities as part of a larger scandal where someone is paid as much as US$71 million.

Zesa, the transformers and other equipment that are never delivered.

You have international businesses coming here putting in bids, winning the bids be at the verge of the signing a contact and virtually someone inside is parachuted in and they get the contact and then never deliver the products.

This happens over and over again. You see it every single day.

Look at health sector, the procurement of the pharmaceutical sector, the corruption is going around .

People are paying three or four times the US$ price for pharmaceutical products where in many cases free products donated by the international community are available.

Look at the budget of any ministry here and you will find that there are tremendous financial leakages here.

Zimbabwe is near the bottom of the transparency international corruption perceptions index.

It’s near the bottom of the ease of doing business index and the World Economic Forum just put out the numbers I think yesterday.

Zimbabwe is I think 127 out of 141 in the WEF rankings. So, these are what drains this country.

TN: And nobody can argue against any of the stuff that you have said. Here is the one thing that complicates issues as far as this is concerned. The litany of issues of corruption that you have outlined are facts, that’s reality, that’s happened and regrettable. What one wonders why America is not even-handed in dealing with Zimbabwe. Let’s look at Pakistan, Pakistan gets a lot of support from America, from the IMF, US$6 billion to support the IMF staff-monitoring programme. Egypt, with abuse of human rights, 800 people are killed gets US$12 billion for their staff monitoring programme. Why is there no even handedness?

BM: Our focus is on the welfare of the people of Zimbabwe.

Zimbabwe has never qualified for the lending associated with an IMF staff monitoring programme.

When they had the last IMF process here in 2016 it turned out that the government had been cooking the numbers and just as that programme was ending with the introduction of the RTGS we heard revelations that there was off book spending to the tune of hundreds of millions of dollars that the IMF missed when they were doing the accounting and certainly that was a shock to the international community.

I want to stress that the idea that the US is not providing support to Zimbabwe is false. The US is that largest donor, bilaterally to Zimbabwe. Since 1980 we have provided over US$3.2 billion of assistance to Zimbabwe.

TN: Since 1982.

BM: Beginning with independence we have provided US$3.2 billion in assistance. In 2019 we have provided over US$300 million in assistance for the upcoming lean season as we are refer to it, so rolling over into 2020 for food security humanitarian assistance, US$86 million in additional funding over baseline corporation programme.

TN: My argument is that would Zimbabwe’s economy, industry and commerce be in a position to perform in a manner that brings much the money the Americans are bringing in? So, my point is the damage that has been inflicted on this economy by the perceptions and the reality of the American sanctions is hurting the country much more than the development assistance that the Americans are giving.

BM: The perception of the issues in Zimbabwe is driven by the actions, the government of Zimbabwe in the wake of the elections in the 2018.

A lot of companies were calling and inquiring about investing in Zimbabwe and there had been no change to our legislation or executive orders at that time.

As I mentioned to you I brought Fortune 500 companies here to do business, in search of deals and the issue is when people get here and they realise that it’s very difficult for them to find an impartial (hearing) into business disputes.

If they are trying to set up a business here, one small medium businessperson who wanted to establish a lifestyle media company here and when the internet was turned off in January he said how can an internet based lifestyle magazine work here when you turn internet off.

We had companies who are one or two looking into the manufacturing sector here and when they see the problems of customs at Beitbridge they realise that how am I going to deal with this issue, how am I going to deal with corruption, will it delay my truck if I don’t pay a bribe?

Some one sits in a queue for two days to cross into Zimbabwe and if somebody greases a palm their truck goes ahead.

We have had stuff stolen ..warehouses under customs’ control here. The list goes on and on you look at the Zinara.

TN: The list does goes on and on. To run off this issue the list runs on and on but if you look at the two countries that I have raised, Pakistan and Egypt. The list is even bigger there and my question was around the even-handedness about dealing with that. But that being the case the perception about the effect of American sanctions is that we have lost a lot of corresponding banks from 2016 and the perceptions and the reality of the US sanctions is making a lot of banks leave the country because of the fear that if they do business with Zimbabwean banks they are going to be punished by the Americans.

That’s the point and the reality and the perception of the sanctions hurting the Zimbabwean economy. What do you say?

BN: Deal risking is a global phenomenon. Settling the post-September 11, 2001 era, the customer requirements increased globally, there were many countries that have had to confront deal risking issues.

But I think if you want to look at where Zimbabwe can help itself from deal risking there are a number of reforms that the financial intelligence unit and the financial task force within Zimbabwe and globally there are partners have called for the need to be …to increase transparency in the financial sector.

One of the biggest challenges is you see, for example, the low portfolios with non-performing loans that move for …into RBZ, the central bank without real scrutiny of how that was happening continued linkage in certain banks that had to be recapitalised [and] that generates a lack of confidence.

I think in the financial sector above the issue of derisking and know your customer, many countries around the world including major countries like Nigeria and Saudi Arabia have dealt with derisking issues as well and the challenge for Zimbabwe as a small market US$26 billion economy to 16 million people population.

If you don’t have clear transparency measures in place, the benefits for the financial sector internationally with engagement don’t match the risk and that’s when you having issues with derisking.

And I think that solution is well within the government of Zimbabwe’s ability to address.

TN: Lets us look at the issue around president Donald Trump’s administration and its interest in Africa. They have just legislated for better utilisation of investments leading to the Build Act, which is in place. Are we going to see more interests and investments in perhaps prepared markets in Africa, is that going to happen?

BN: It absolutely has that potential. We think that this is good initiative, which brings a new

$60 billion market capitalisation of all our investments and development agencies from the United States government together under one roof so that we can offer comprehensive suite of tools for American businesses that are looking for partnerships and relationships around the world.

TN: Any ideas of where this is going to be deployed, which countries, sectors?

BN: Well that is the beauty of our policy which is that it is going to be driven by the market and the private sector.

We want to make sure that these initiatives support our overall development goals for our partner countries but it is going to depend on the different countries being interested in doing a deal, finding a market and then we bring them things like market feasibility studies, investment insurance which is very important particularly in countries like Zimbabwe where you have forex risk.

That is one of the key things this will bring.