By Takunda Mandura
Zimbabwe has begun to take steps towards clearing more than US $6 billion in arrears on its foreign debt, a development that had resulted in the Southern African country being denied loans from lenders such as the International Monetary Fund (IMF) and World Bank for more than two decades.
To clear its debt, the country has put forward a three-part central-pin strategy that includes economic reforms, governance reforms and compensation to commercial farmers.
State of the economy
Zimbabwe's once-thriving private sector has imploded. International banking has almost dried up with 102 correspondence banking relations lost in the past decade.
Today, 90% of the economy is informal. Zimbabwe's contribution as the nerve centre of the SADC region has been broken.
The 2022 census report of the Zimbabwe National Statistics Agency notes that close to a million Zimbabweans are living in diaspora, with South Africa having the largest population of close to 800,000 immigrants, followed by Botswana with 48,000 and the UK 23,000.
According to the World Bank's economic and social update report, almost half of Zimbabwe’s population fell into extreme poverty between 2011 and last year, with children bearing the brunt of the misery.
"The number of extreme poor is expected to remain at 7.9 million amid continued elevated prices, and a slow recovery of jobs and wages in the formal and informal sectors," states the report.
Dr Akinwumi Adesina, president of the African Development Bank Group that is leading the debt resolution process for Zimbabwe, lamented the people of Zimbabwe have suffered enough.
"The young people of Zimbabwe deserve to have their once prosperous country back. They cannot continue to suffer for a past they did not create. They deserve a new and prosperous future," he says.
Taking this process forward, the African Development Bank approved $4.1 million for an arrears clearance and governance enhancement project.
The country has fallen back on debt servicing, with arrears due to multilateral development banks, including the African Development Bank, the World Bank and the European Investment Bank.
Token payments are being made to service this debt even as the government struggles to cater to its citizens.
Chissano wades in
Former Mozambique President Joaquim Chissano, who is playing the role of a facilitator in the debt dialogue and resolution process, has urged all stakeholders to gear the dialogue process towards affirming Zimbabwe's position in the Southern African Development Committee.
"The structured dialogue process is a unique chance that should not be missed. This opportunity should not be squandered. Zimbabwe must firmly regain its position in SADC and power the development of Southern Africa, besides improving the living standards of its people.
Zimbabwe's destiny is in the hands of Zimbabweans. They must make sure that it remains on the right track," he says.
Debt to white farmers
Zimbabwe’s President Emmerson Mnangagwa has assured compensation to former white farmers on the improvements made to the farms.
“Compensation to former commercial farmers for improvements made on farms as well as the resolution of cases pertaining to farms affected during land reform will be considered under the third pillar, as covered by the Bilateral Investment Promotion and Protection Agreements," he says.
The plan to expedite payments entails halving the period from 20 to 10 years. "We had initially converged on a mechanism to pay farmers over a long period of 20 years. But while we were busy concluding that, their leadership came forward.
At the end of the day, one has to pay faster, which will also allow us to clear the rest of the debt sooner,” says finance and economic development minister, Prof Mthuli Ncube.
The government is committed to pay $3.5 billion in compensation to mostly white commercial farmers displaced by the fast-track land reform programme in the early 2000s.
While the Zimbabwean government is looking into alternative ways of compensating former white farmers, it has ruled out using the land. The question is whether there is a plan to use the land as a basis for compensation? As of now, there is no indication that it even being contemplated.
"We are here to look at alternative ways to mobilise resources that are there, and we are making much progress in that regard," says Zimbabwe's land, agriculture, water and rural resettlement minister Dr Anxious Jongwe Masuka.
Bogey of sanctions
Under the governance working group, Zimbabwe has to tackle and make measurable progress on issues of freedom of speech, human rights protection and implementation of laws in line with the constitution.
Peaceful, free, and fair elections will also remove headwinds on the path to arrears clearance and debt resolution for Zimbabwe, besides the removal of economic sanctions by the US.
"We must show progress on the Zimbabwe Democracy and Economic Recovery Act (ZIDERA), all of which should make for peaceful, free, and fair elections. These will also remove headwinds on our journey to arrears clearance and debt resolution," says AfDB president Dr Adesina.
“Zimbabweans should stay away from violence and choose freely their leaders and representatives in government and parliament. They should not allow themselves to be manipulated by anyone to engage in violence or any illegal acts that may undermine the electoral process.
They must remain vigilant and participate in a process that is peaceful, free, fair and transparent," adds ex-Mozambique President Chissano.
Some of the conditions of the removal of ZIDERA include the army steering clear of the country's political arena, good governance, respect for the opposition, rule of law, human rights and economic reforms such as respect for contracts and private property rights.
Jobst von Kirchmann, the European Union's ambassador to Zimbabwe, is optimistic that the country will advance in the right direction. "What we want to achieve is a win-win for everyone.
It is important to agree on a mutual process. The staff monitoring programme of the IMF is one and good governance is another, because that as an approach is promising we have all the hope that Zimbabwe is going in that direction. What we can do as partners to support the process, we will certainly do."
