The Economist - USA (2019-08-17)

The EconomistAugust 17th 2019 Middle East & Africa 33

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Mugabe’s kleptocracy. In the years before

he was toppled in a coup in November 2017,

Mr Mugabe’s regime created money out of

thin air to finance graft and profligacy.

Unlike in 2008-09, when Zimbabwe

printed bank notes with ever more zeroes

on them, this time the government used a

keyboard. It credited banks’ books with

electronic “Real-Time Gross Settlement”

(rtgs) dollars, which it said were equiva-

lent to real dollars. But these electronic

notes, or “zollars”, had no backing. It be-

came hard, then impossible, to withdraw

cash. On the black market zollars traded at

various fractions of a greenback.

After Emmerson Mnangagwa replaced

Mr Mugabe, the regime initially kept claim-

ing that a zollar was worth a dollar. But

from October 2018, as black-market prices

spiked, it seemed to give up the fiction. It

first ring-fenced real dollar deposits, an ad-

mission that zollars were, in fact, a new

currency. In February it went a step further,

allowing banks to trade between the two.

Mthuli Ncube, the finance minister, has

also taken steps to balance the budget by

cutting spending and raising taxes.

In theory this all made sense. Zimbabwe

was living beyond its means. In practice

the reforms clashed with the instincts of

the ruling Zanu-pfparty: command, con-

trol, steal. Despite the government’s efforts

to prop up the zollar, it lost 90% of its value

versus the dollar from February to June.

Civil servants and soldiers, who are paid in

zollars, saw their earnings evaporate.

Fearing protests from state employees

who wanted to be paid in dollars, the gov-

ernment announced on June 24th that for-

eign currencies “shall no longer be legal

tender”. As ever, though, it soon under-

mined its own policy. Exceptions to the ban

have been granted to some businesses.

Zimbabwe is locked in a downward spi-

ral, fears Derek Matyszak of the Institute

for Security Studies, a think-tank. The re-

gime relies on exporters for its supply of

dollars. But there will be few exports with-

out raw materials and power. Tobacco

farmers,forexample,arealreadyplanning

onplantingfewerseedsnextyear.

Helpingcountrieshitwithbalance-of-

paymentscrisesisthejoboftheInterna-

tionalMonetaryFund(imf).Buttheimf

cannotlendtoZimbabweuntilitclearsits

arrearstootherinternationalinstitutions,

suchastheWorldBank.Zimbabwe will

struggletodothatwithoutanotherloan.

YetWesterngovernments,ledbyAmer-

ica,areclearthatpoliticalreformmustpre-

cedeeconomicassistance.HereMrMnan-

gagwahasdraggedhisfeet.TheWesthas

suggestedthatheremovetworepressive

lawsasa startingpoint.MrMnangagwahas

repeatedlypromisedtorepealthem,but

has not done so. His security services,

meanwhile,keepshooting,abductingand

beatinghisopponentswithimpunity.

Thisterrorhascowedcivilsociety.But

suchistheangeramongordinaryZimba-

bweansthatcallsforfurtherprotestshave

grown.TheoppositionmdcAlliancewill

stagea rallyinHarareonAugust16th.

SomeZimbabweansareprotestingina

differentway.Byleaving.A decadeagoeco-

nomiccrisisforcedhundredsofthousands

toflee.So farthenewoutflowismuch

smaller.Butithasbegun,reckonsBishop

Muparutsa.HebringsupthelatestBible

versehehasdistributedonWhatsApp.Itis

a passagefromtheBookofExodus. 7

BOTSWANA

SOUTHAFRICA

MOZAMBIQUE

ZAMBIA

ZIMBABWE

Harare

National

park

Lake Kariba

Food-insecuritylevels,Jul-Sep2019*

Foodgenerally

Foodgettingscarce available

Food very scarce

Source: USAID *Forecast

200 km

I

t is oftensaid of countries that their real

wealth lies in their people. Few say this

about Gabon. With 2m people and twice

the land mass of England, it is among Afri-

ca’s richest countries, with a gdpper per-

son of $8,300. Almost all of this comes

from natural resources. Gabon exports oil,

timber and palm oil. It is also the world’s

third biggest producer of manganese, a

metal used in producing stainless steel.

The wealth masks the fact that Gabon is

one of Africa’s worst-run countries. It has

had only two presidents since 1967. The

first, Omar Bongo, was a flamboyant des-

pot. He kept a pet tiger, hobnobbed with

French presidents and turned the country

into a one-party state. After he died in 2009

his son, Ali, took over. He won an election

in 2016 that many believe was rigged (turn-

out in his home province was 99.93%, with

95% voting for the president).

Last year Ali (pictured) suffered a stroke

and spent months in Morocco recovering.

In January a few junior army officers tried,

unsuccessfully, to mount a coup. Since

then the state has shut down most news

outlets and repeatedly blocked the inter-

net. The economy is stagnant, largely

thanks to growing corruption.

A big new scam has targeted foreign

businesses in Libreville, the capital. It re-

lies on a law inherited from France, the for-

mer colonial power, that allows courts to

order companies to pay their debts. That

might make sense when the debts are gen-

uine. But oil companies, banks and super-

markets have been targeted by firms that

appear from nowhere, demanding pay-

ment of fictitious debts. Some business-

men think the courts are in on the scam:

they make it difficult for companies to pay

their debts, then hit them with large penal-

ties when they do not.

“It is a complete farce,” says Johanna

Houdrouge of Mercure International, a

firm based in Monaco that runs shopping

malls in Gabon. The authorities seized

164m cfafrancs ($280,000) from a subsid-

iary of Mercure based on the complaint of a

company with an address, but little else.

Ms Houdrouge says the court ordered the

subsidiary to provide proof that it did not

owe anything to the complainant—which

was difficult, as firms tend not to keep re-

cords of non-existent debts.

Other firms have been hit harder. An in-

ternational oil company says it is being tar-

geted at least four times a week, with sei-

zures of as much as $10m.

Gabon was never free of corruption, but

it has reached levels that threaten the via-

bility of foreign businesses. Some say they

will leave soon. The deterioration seems

linked to Mr Bongo’s stroke. Many Gabo-

nese suspect that the president, who is 60

years old, will never be well enough to re-

sume full-time work. Officials are trying to

With the president out of commission,

corruption is flourishing

Gabon

A scam too far

Ali, not the greatest