President Emmerson Mnangagwa’s recent cabinet appointment has retained Finance Minister Mthuli Ncube, a decision of great interest to the markets given Ncube’s complex track record and the economic challenges Zimbabwe faces.
Ncube, a former vice president and chief economist at the African Development Bank, has faced a mixed legacy during his tenure as the finance chief. He oversaw the reintroduction of the Zimbabwean dollar after a decade of primarily using the US dollar. However, the local currency has struggled to gain widespread acceptance, with the US dollar still dominating most transactions.
Under Ncube’s leadership, Zimbabwe experienced a resurgence of runaway inflation, reminiscent of the Mugabe era, reaching a peak of 837% in July 2019. A shift to a new inflation gauge, reflecting the increased use of US dollars in the economy, recently brought the inflation rate back down to double digits.
Ncube’s fiscal policies did include some positive aspects. He managed to maintain budget surpluses, allowing Zimbabwe to allocate over $100 million for securing coronavirus vaccines, primarily from China, positioning the nation at the forefront of Africa’s response to the pandemic. Additionally, Ncube spearheaded efforts to clear Zimbabwe’s $17 billion debt owed to multilateral lenders, a crucial step for the country to access new credit lines.
However, his tenure was marked by the challenge of operating within a highly irregular economic environment, making his orthodox economic methodologies less effective. According to Stephen Chan, a professor of world politics at the School of Oriental and African Studies in London, while Ncube “has worked valiantly to rescue the Zimbabwean economy,” the unique circumstances have posed significant challenges.
As Mthuli Ncube continues in his role as Finance Minister, the markets will closely monitor his strategies and initiatives, hoping for stability and reforms that can bolster Zimbabwe’s economic recovery and attract foreign investment. His retention signals a commitment to continuity, but challenges remain in addressing inflation, currency stability, and overall economic growth in the nation.
