Businesses should be prepared for this Risk
Political Risk Insurance (PRI) can be a solution
Political Risk has heightened in the wake of the firing of former Vice President of Zimbabwe Emmerson Dambudzo Mnangagwa, and the subsequent defacing of city buildings by youths supporting the celebrated war veteran.
By Donald Tafadzwa Chidoori
The celebrated war veteran, was fired from government on Monday 06 November, for, among other charges, disloyalty and little probity in the execution of duties and was yesterday expelled from the party (Zanu PF). As Youths from all the 10 provinces pledged their support and endorsed the first lady to succeed Mnangagwa as V.P of government.
Zimbabwe’s Short- and Long-Term Political Risk continue to be heavily high after the Mutsvangwa led Zimbabwe Liberation War Veterans Association fired the President from Zanu Pf and as reports from Bulawayo24 indicate that Mnangagwa has vowed to fight back.
“As I leave this post for now I encourage all loyal members of the party to remain in the party to register to vote as we will very soon control the levers of power in our beautiful Party and country.” – Emmerson D. Mnangagwa
“In conclusion, we are stating in no uncertain terms, that we have completely disowned Mugabe. He is no longer one of us. With immediate effect, we are in complete defiance of his leadership of the Revolutionary ZANU (PF). We are reclaiming our party and its assets. He is free to go and form his G40 Party with his receptionist wife and the G40 cabal.” – Press Statement by the Zimbabwe Liberation War Veterans Association (ZLWVA)on the State of the Nation and Party as of the 8th of November, 2017
There is also uncertainty over how Mnangagwa and his followers “will very soon control the levers of power,” and how the Mutsvangwa led ZLWVA will “reclaim the party and its assets,” or the ability of Grace Mugabe to consolidate power if she succeeds the ageing President Robert Mugabe (93), as war veterans most of whom are the leaders in the security services have clearly shown that they do not support her.
“As war veterans, we are clear that we are fighting Mugabe and his dynastic cabal that have captured the revolutionary party and in the process have led to an economic meltdown and the general suffering of the people of Zimbabwe;” – ZLWVA
Factionalism within the ruling ZANU-PF has reached its boiling point with the firing of Mnangwagwa and the purging of his followers poses a great risk to policy formation said MDC leader Morgan Tsvangirai from South Africa. While economic malaise, rising unemployment, and poor social services remain threats to peace and tranquility in the country.
Considering all the above risks and an increasingly growing powerful anti-establishment movement, Zimbabwe should brace for political violence and armed conflicts as tell tell signs of the future are beginning to show their ugly head.
Outraged by the firing of former Vice President (V.P) Mnangagwa, his supporters defaced Fidelity Funeral Assurance Company building, in Harare together with other buildings in the Capital yesterday.
‘Go 4 Garwe’ was spray-painted in black, across the bottom wall of the Fidelity Life Funeral Assurance Building along, Harare street in the Capital. The vandalism has prompted fresh calls for SADC to intervene in the chaos in Zimbabwe before it explodes.
Political Violence and street protests
Unconfirmed reports indicate that yesterday there were clashes between youths who support the former V.P and those aligned to Dr Grace Mugabe. It is feared that two Mnangwagwa supporters are dead after being heavily assaulted by youth aligned to the First Lady. It is also alleged that Zanu Pf youths were stoning vehicles along Rotten Row Avenue and Upper Belvedere.
Of late Harare’s central business district has resembled a war zone as kombi crews, street vendors, rank marshals and anti-establishment groups have often teamed up and engaged in running battles with the police protesting against harassment, use of spikes (which were banned) and the decaying socio-economic situation in the country.
“#Tajamuka activists should be reminded that their violent acts, will definitely scare aware potential investors who may want to invest in the country, defeating their purported reason for protesting ‘economic revival’.” — Peacemaker Zano.
Economic malaise, rising unemployment, and poor social services and other factors have contributed to the rise of anti-establishment groups in Zimbabwe. In most cases, these groups do not appear likely to influence political reforms, but they could influence rhetoric and public policy if they manage to come together with opposition political parties.
Anti establishment groups like Tajamuka, #ThisFlag, Vendor associations have been having running battles with the police which has often resulted in the destruction of property and looting. Their growing power is likely to continue to test the vigilance of the security forces in the country.
It is no secret that his Excellency Cde Robert Gabriel Mugabe at 93, is ageing but has no clear plans or framework for the transition of power. While the G40 and Dr Grace my have won the battle, they have not won the war as yet. War veterans are regrouping and V.P Mnangagwa has vowed to fight back. Without a clear succession plan if the president decides to resign or unfortunately passes away they will be turmoil as no one knows even if His Excellency will appoint his wife as the next V.P of the country.
In the past, in countries where leaders have died or resigned, without clear succession plans — for example, in Indonesia, Iraq, Libya, Yugoslavia, and the Democratic Republic of Congo (Zaire) — the result has often been civil war or substantial political unrest and violence.
Zimbabwe could experience similar turmoil in the next few years as anti-establishment groups continue to grow and become more powerful.
MANAGING POLITICAL RISK
History has shown us that politically motivated attacks often occur without warning. And as factionalism, economic malaise, rising unemployment, and poor social services, continue to heighten the occurrence of politically motivated attacks, it’s critical for businesses to be prepared for the possibility of the occurrence of political violence, unrest, or other large scale crises which can quickly develop in the following months.
Businesses can prepare for these risks in several ways:
Protect people. Developing and testing crisis plans in advance can help ensure effective
communication during and immediately following a crisis.
Protect assets through insurance. Credit and political risk insurance (PRI) can protect against a variety of risks, including expropriation, political violence, currency inconvertibility, nonpayment, and contract frustration.
PRI insures investments, projects, goods and/or contracts against losses arising from actions/ inactions of the Government or a loss following political events outside the control of the contracting parties.
Manage credit risk. When a government collapses or descends into crisis, it often loses its ability to honor financial obligations. This can create a chain reaction of default that spreads into the private sector. Businesses should review their credit risks and credit-control policies and procedures, and evaluate the potential impact of political risk on customers and suppliers.
Build resilient supply chains. Before a crisis develops, an organization should understand how a crisis in a country can disrupt its global supply chain. Businesses should also have response plans in place to allow for the use of alternative suppliers and/or ports, and to communicate with customers and suppliers as needed.