‘Business letting Government down’
PRESIDENT Mnangagwa is disappointed by some members of the business community
whose conduct continues to frustrate Government efforts to stabilise the economy and
the current wave of price increases obtaining in the country shows a lack of support for
even the ongoing dialogue on arrears clearance and debt resolution.
Mr George Charamba, President Mnangagwa’s spokesperson, said despite the fact that
most international creditors and even the United States of America, were impressed by
Zimbabwe’s commitment to the ongoing dialogue on arrears clearance and debt
resolution, local businesspeople continued to “stab the process in the back”.
Mr George Charamba
“I will give you an example, during the liberation struggle and when we were going for
the Lancaster House Conference, it was the time of blazing the guns “kusvika barrel
ratsvuka,” to support our leadership that was in London. The real intended beneficiaries of arrears clearance and debt resolution, namely the businesspeople, are in fact busy
stabbing the initiative in the back. Ask them (the businesspeople) why?” said Mr
Charamba.
President Mnangagwa left Harare yesterday for the United Arab Republic of Egypt for a
State Visit at the invitation of his counterpart, President Adbel Fattah El-Sisi. The visit
also coincides with the crucial African Development Bank (AfDB) Summit — at Sharm ElSheik resort — where he is expected to engage representatives of creditor nations as the
country presses ahead with the arrears clearance and debt resolution agenda.
The indabas comprise the 58th annual assembly of the AfDB Group and the 49th meeting
of the African Development Fund which opened yesterday and will run until Friday.
African Development Bank (AfDB)
Said Mr Charamba; “Having said that, what the President feels disappointed about and I
think which has come through his weekly column (on Sunday), is the fact that while
there is general consensus that until and unless there is resolution to arrears clearance,
which by the way has become a new debt, and together with debt resolution; until there is
a resolution to that question, the forward march of the Zimbabwean economy will be a
lot more difficult.
“As the President is preparing to go to that crucial meeting, we do not seem to read the
same sense of support, the urgency, coming from the business community. We see
businesses destabilising the macro-economy, in the process, undermining the very
effort towards arrears clearance and debt resolution.
“When we engage some creditors, you do so on the strength of your capacity to service
those arrears and your debts. Now, that is very doubtful if there is chaos in the
macroeconomic-environment. Which really explains the anger you read through the
article of the President.”
Proton launches Strikers Biscuits
Writing in his weekly column, the President, according to Mr Charamba, felt
disappointed by a seeming lack of support for Government efforts to address economic
challenges as witnessed by the squandering of Government’s goodwill, privileges and
incentives to profiteer and, in some instances, illicit transfer of funds “beyond our
borders for stashing”.
The President said businesses were disconnecting point-of-sale gadgets, discouraging
sales in local currency, abusing the foreign currency auction system and channelling
goods to the informal market through a shadowy network of agents.
In spite of growing foreign currency receipts by more than 20 percent between January
and March this year compared to the same period last year, with cumulative earnings
likely to rise to a record US$12 billion this year, the local currency continued to
depreciate.
“The more than US$11 billion foreign exchange earned last year is the highest ever done
by this economy, and is certainly far higher than in most economies in Sub-Saharan
Africa, outside South Africa. Sadly, this has not translated into a stable exchange rate.
Money – Image taken from Pixabay
“Government has pursued a prudent fiscal and monetary policy to guarantee
macroeconomic stability. Since the advent of the Second Republic, Government budget
has run on a cash basis, thus avoiding un-budgeted overruns. This has never been so
before, including under the much-vaunted Government of National Unity (GNU). Because
of this fiscal discipline, often pursued even at the expense of social delivery, space has
since been created for businesses to grow in a stable environment where disequilibria are
minimised. Indeed, this has been the case until now.”
He said it was curious that despite 80 percent of transactions being in foreign currency,
with business allowed to retain most of it, demand for foreign currency on the foreign
currency auction – which has allocated US$4 billion since it was launched on June 23,
2020 – has risen, yet production in the sector has remained the same.
“Fourth and most exasperatingly, when 20 percent of our transactions were conducted in
foreign currency, and 80 percent in local currency, the demand for foreign exchange at
the auction averaged US$20 million weekly,” the President wrote.
World Bank
“Today, when we find ourselves in 80-20 percent reverse transaction equation in favour
of foreign currency, the demand for foreign exchange at the same auction, and by the
same Business now directly selling more wares in United States dollars, has risen to
US$30 million a week! How does one explain such a paradox?”
The country’s total debt stands at US$17,5 billion with debt owed to international
creditors at US$14,04 billion, while domestic debt stands at US$3,4 billion. Debt owed to
bilateral creditors is estimated at US$5,75 billion, while debt to multilateral creditors is
estimated at US$2,5 billion.
The country is in arrears for not servicing its debt, with arrears to multilateral dev
elopment banks, including the African Development Bank, the World Bank, and the
European Investment Bank.
The Minister of Finance and Economic Development Professor Mthuli Ncube has
presented the country’s detailed roadmap including budgetary support to clear the debt
overhang for sustainable economic reconstruction.
Prof Mthuli Ncube
“As the Government, we are very sincere on the debt resolution agenda as can be testified
by the reforms that we have been instituting with regards to the management of our
fiscus and creating the legroom to finance the clearance of our obligations and, we have
demonstrated we can pay our debts and resolve these issues once and for all.
“This process will go ahead unabated and we are quite confident we will bring the debt
issue to finality and start on a new page,” he said during the latest round of talks in
Harare.
Confederation of Zimbabwe Industres (CZI) president Mr Kurai Matsheza said such a
move (debt dialogue) is always a welcome development for industry and hoped
government would see it through as its effects are welcome to all.
“We will be able to access a lot of cheaper credit and it will assist business in retooling
our operations, even just getting extended credit for our raw materials or other
operations. The whole programme and effort of debt resolution and expunction is
something we commend.
Mr Kurai Matsheza
“Government is talking to creditors but the efforts must be done to resolve the debt so
that it will come down to either debt cancelling, rescheduling, forgiveness or even a
reduction of the amount will help us in a long way. I think what is important is to agree,”
Mr Matsheza said.
Economist Mr Langton Mabhanga said the initiative on debt by the Government was
noble as it highlighted a clear way on how the Government intended to settle its debt
obligation.
“We need to commend the President for demonstrating statesmanship, he has set up a
roadmap of resolving the debt, coming up with a structure and an innovation which has laidbare theZimbabwean plans on the global platform.
“Openly engaging creditors and formulating a design of how debt is going to be dealt
with, that’s ingenious and commendable of the President,” said Mr Mabhanga.
The fourth meeting of the structured dialogue platform follows those that were
conducted in December 2022, as well as in February and March 2023. After the upcoming
elections expected in August of this year, the arrears and debt talks are anticipated to
continue.
Zimbabwe is optimistic that the successful resolution of the debt and arrears impasse
will be a key launch pad for unfettered access to international financiers.
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