‘Zim must reform for debt efforts to pay off’

Zimbabwean Government needs to deliver on key economic and governance reforms and the compensation of white former commercial farmers who lost their farmland during land reform programme to remove headwinds that could stand in the country’s path to arrears clearance and debt resolution, African Development Bank (AfDB) president, Dr Akinumwi Adesina has said.

Adesina is the debt champion of Zimbabwe’s arrears clearance and debt resolution process. The AfDB chief is working together with former Mozambican President, Joachim Chissano, who is the other key facilitator.

Speaking at the same event President Mnangagwa expressed his administration’s unwavering resolve to implement all the reform proposals to ensure Zimbabwe’s debt resolution efforts succeed to reopen the avenues to cheap long-term external funding.

Data from the Treasury shows that Zimbabwe’s total external public debt as of the end of September last year stood at US$14,435 billion inclusive of the US$5,632 billion bilateral debt.

Upon assuming power in 2017, President Mnangagwa promised to institute the relevant economic and political reforms and compensate the more than 5 000 white former farmers to the tune of US$3,5 billion for developments made on the lost farms.

“I highly commend President Mnangagwa and the Government of Zimbabwe for putting forward a three-part central-pin strategy which includes economic reforms, governance reforms and the compensation of commercial farmers. We must now ensure that all the elements of the central-pin strategy are delivered.

“The central pin is the full compensation of the commercial farmers under the Global Compensation Deed and the full implementation of the Bilateral Investment Promotion Protection Agreement, and the implementation of the laws that assure long-term security of titles to land,” he said.

“And we must show progress on the Zimbabwe Democracy and Economic Recovery Act (ZIDERA). All of which should make for peaceful, free, and fair elections. They will also remove headwinds on our path to arrears clearance and debt resolution.”

The US maintains two sets of sanctions on Zimbabwe. One targets “specially designated nationals” perceived to undermine democratic processes. The directives prohibit any American citizen or entity from having commercial dealings with such people or entities.

The second set of sanctions direct any US citizen in a position of influence in international financial institutions to block credit to Zimbabwe. The southern African country cannot access fresh credit from most global lenders due to arrears on its external debt.

The west, US, Britain and their allies, first imposed sanctions on Zimbabwe at the turn of the millennium after Zimbabwe embarked on the heavily contested fast-track land reform programme to resettle its landless black majority.

Adesina expressed optimism that the Sector Working Groups (SWG) established for structured dialogues on the specific reform areas would build the much-needed trust, momentum, and implementation.

“The governance working group would allow us to tackle and make measurable progress on critical issues of freedom of speech, human rights protection and implementation of laws in line with the constitution, as well as the implementation of the (Kgalema) Motlanthe Commission (former South African President) of inquiry and compensation of victims,” said Dr Adesina.

The commission was established to do an inquiry into the post-election violence that claimed six lives and left property worth millions of dollars destroyed in Harare in 2018.

He said the economic reforms working group would allow for progress on exchange rate reforms and quasi-fiscal operations of the Reserve Bank of Zimbabwe, reforms of State-Owned Enterprises and a Staff Monitored Programme (SMP) by the International Monetary Fund.

The AfDB Chief said Zimbabwe suffered the debilitating effects of economic sanctions for over 20 years, and this has seen the once thriving private sector imploding while international banking has almost dried up with 102 correspondence banking relations lost in the past decade.

“Today, 90 percent of the economy is now informal. Zimbabwe’s once thriving contribution as the nerve centre of the SADC region has been broken, lowering regional trade and investments.

“The once thriving National Railways of Zimbabwe, with a rolling stock of 12,5 million tonnes in the 1990s now accounts for under 2,5 million tonnes. The number of people living in extreme poverty now stands at 44 percent,” he said.

Earlier in his address, President Mnangagwa said the issues, perspectives and recommendations raised by stakeholders and partners during the December 2022 first dialogue meeting were invaluable and thus the consensus and broad endorsement of a central pin strategy, gives good guidance on the way forward.

“The first aspect relates to economic reforms. The second is on governance issues while the third relates to our commitment to a sustainable land tenure system.

“The compensation of former commercial farmers for improvements made on farms as well as the resolution of cases of farms affected during the Land Reform, which were covered by the BIPPAs will also be considered under the third pillar,” he said.

“With regards to economic reforms, we recognise that exchange rate stability is a key area that requires continued attention.

“So far, multi-pronged routes are being pursued to ensure greater certainty around this matter.

“My Government has agreed on a compensation package with former commercial farmers for improvements made on the land, under the Global Compensation Deed.”

He said the Government remains committed to the resource mobilisation efforts to enable payment of the former commercial farmers.

“Under the Governance pillar, my administration is unwavering in its adherence to Constitutionalism, the rule of law and the tenets of good governance and democracy. We will ensure that our laws are applied consistently, without fear or favour.

On BIPPAs, the President said his administration was engaging the affected investors on a case-by-case basis.

Working Groups

Working groups have been created to address key issues and they the Economic Growth and Stability Sector Working Group (SWG) and the Governance SWG, which will feed into the High-Level Structured Dialogue meetings on ways to clear the external debt owed to various international organisations by the country.

The technical committee includes representatives from the government, civil society, donors, business community and is co-chaired by World Bank and International Monetary Fund (IMF) representatives.

Recently, Andrew Bvumbe, head of debt management at the Ministry of Finance and Economic Development, confirmed the existence of the SWGs.

“Yes, there was an inaugural meeting of the Economic Growth and Stability Sector Working group and the other SWG is on Governance.”

He said it was agreed at the Inaugural Structured Dialogue Platform meeting on December 1, 2022 that these two SWGs will feed into the High Level Structured Dialogue meetings by producing matrices of reforms to be implemented as key elements of the arrears clearance and debt relief process being championed by Dr Adesina.

“The two SWGs have started the process of consultations on these reforms. The members are drawn from Government, creditors, development partners, private sector and civil society organisations,” he said.-ebusinessweekly