Zimbabwe has secured a syndicated loan of around $1.2 billion to clear its arrears with the World Bank in addition to $1.5 billion to guarantee private sector investments in its drive for economic recovery.
Zimbabwe has struggled with a huge debt owed in part to multilateral lenders who have for decades blocked access to new concessionary loans to fund its development programmes, while investors have also been uncertain about the safety of their capital.
The $1.2 billion is in the form of a commercial loan while the $1.5 billion is a facility established by the Africa Import and Export Bank (Afreximbank) to cover investment risks for foreign investors willing to venture into Zimbabwe.
Lack of access to cheaper credit lines from the multilateral lenders, due to arrears, has grossly impacted on government’s ability to drive its development agenda, Finance and Economic Development Minister, Patrick Chinamasa Chinamasa said on the sidelines of the two-day Africa CEO Forum here.
Zimbabwe in 2016 paid its dues to the International Monetary Fund (IMF) but still owes the World Bank and African Development Bank (AfDB) around $1.8 billion.
Clearance of IMF, World Bank and AfDB arrears is expected to unlock access to new funding.
Chinamasa said Zimbabwe had managed to obtain a cheaper loan to pay the World Bank debt of around $1.2 billion but wanted guarantees the country would in turn receive financial support from the institution after paying its dues.
“We have succeeded to mobilise a commercial loan which is cheaper than what the World Bank is now charging us (in terms of interest) and when we know what new money the World Bank will give us then we should be able to complete the transaction,” said the Minister
Chinamasa is part of President Emmerson Mnangagwa’s high profile delegation attending the Africa CEO Forum, a high level meeting of top decision makers and investors on the continent at which the country is pushing its “Zimbabwe is Open for Business” agenda, to attract new investment.
With the advent of a new administration in Zimbabwe, which is pushing to re-build bridges with lenders and donor nations, countries such as France have had a change of heart and are agitating for lifting of sanctions imposed on Zimbabwe by the European Union.
France’s Minister of State in the Ministry for Europe and Foreign Affairs, Jean-Baptiste Lemonye paid a courtesy call on President Emmerson Mnangagwa on the sidelines of the forum and stressed his country’s desire to have sanctions on Zimbabwe lifted.
Dr Benedict Orama, Afreximbank President, told delegates at the forum that the continental lender had put in place a $1.5 billion package to guarantee inward investments in Zimbabwe.
“The opportunities in Zimbabwe are an entrepreneur’s dream. Some of you are worried about the risks to your investments that may arise from any other changes in the on-going economic reforms,” said Dr Orama, whose institution has been working in Zimbabwe for over 20 years.
“You need not worry because we at Afreximbank, longstanding partners of Zimbabwe are willing and ready to accompany you and protect your investments. We are putting in place an innovative package to be dubbed the Zimbabwe Inward Investment Support Facility which will provide between $1 billion to $1.5 billion of funded and guarantee facilities in support of those interested in investing in Zimbabwe.” — New Ziana