ZIMBABWE’S sincerity in implementing the letter and spirit of a raft of political governance reforms will come under the spotlight as the country embarks on an ambitious African Development Bank (AfDB)-backed diplomatic offensive which seeks to anchor the country’s arrears clearance, debt relief and restructuring programme.
BERNARD MPOFU
Experts say the country is expected to remain in debt distress in the absence of a comprehensive arrears clearance strategy aimed at debt sustainability in the post-Covid-19 pandemic era, sustained economic recovery and growth. Official figures show that Zimbabwe registered 6% growth in 2021 after enduring two successive years of economic contraction.
Desperate to extricate the country from a ballooning debt overhang, the government has now settled on two options — the initially disdained Highly Indebted Poor Country (HIPC) model and a hybrid of concessional loans, use of domestic resources and restructuring.
AfDB Group president Akinwumi Adesina flew into the country this week at the invitation of President Emmerson Mnangagwa and Finance minister Mthuli Ncube to take a leading role in helping Harare normalise relations with its creditors.
Adesina told journalists that the regional lender had agreed to take this role due to the contagion effects which Zimbabwe’s economy would have on the region and continent, growing numbers of people who are food insecure in the country and his personal conviction. Adesina once worked in Zimbabwe in the late 1990s.
A cocktail of dynamics playing out on the international political economy will determine the success or failure of the plan.
“The process requires to be backed by the implementation of a comprehensive reform programme, supported by the Breton Woods institutions,” Ncube said in his debt plan titled Arrears Clearance, Debt Relief and Restructuring Strategy.
Currently battling a huge debt overhang which has worsened the country’s sovereign risk profile, the authorities in Harare have been left with few options except seek debt forgiveness and seek bridging financing from potential sponsors.
But most Western powers doubt Mnangagwa’s commitment in effecting a raft of political reforms needed to normalise relations with creditors and the international community.
At the turn of the millennium the United States enacted the Zimbabwe Democracy and Economic Recovery Act (Zidera) over Zimbabwe’s worsening human rights record and charges of electoral fraud.
Under Zidera, Washington can veto any financial support extended to Zimbabwe by Bretton Woods institutions, most notably the World Bank and International Monetary Fund, if Harare reneges on its promise to undertake reforms.
Harare strongly opposes the foreign policy tool, saying it is Washington’s ploy to effect regime change following the controversial land reform programme which saw thousands of white commercial farmers losing swathes of land to locals.
The US and the UK have in recent times raised the red flag over growing political intolerance and the shrinking of democratic space following Mnangagwa’s ascendancy in 2017.
Harare, on the other hand, cites the repealing of the draconian Access to Information and Protection of Privacy Act, Public Order and Security Act among some of its political reforms. However, critics say these laws have been replaced by equally repressive ones.
Despite all these hurdles which have in the past stood, Adesina remains upbeat. As if echoing former Reserve Bank of Zimbabwe governor Gideon Gono’s line, the AfDB president boldly declared that: “It is going to be challenging, but it is not impossible. Failure is not an option. The arrears clearance strategy must succeed.”
“It is about the people of Zimbabwe. They have suffered long enough – for two decades now. When you look at the situation today, 40% of the country’s population live in extreme poverty. We must change that and create new hope. I believe that it is time to reinvigorate and re-dynamise the country’s economy because it is critical for the southern African community.”
Adesina said despite economic challenges, Zimbabwe remains a strong and reliable shareholder of the AfDB. He said the debt-troubled southern African nation has continued to make quarterly token payments of US$500 000 to service debts to the regional lender, the World Bank, and other creditors.
“Zimbabwe is one of the 54 African member countries of the African Development Bank Group. When one part hurts, the whole body hurts,” Adesina said.
Ambassadors and representatives of several G7 countries, the World Bank and International Monetary Fund (IMF) met with Adesina in Harare. He said they pledged to work with the African Development Bank to develop a debt clearance and resolution roadmap, as well as a re-engagement agenda.
The debt clearance process to be led by the African Development Bank president will emphasize the importance of implementing prior land compensation commitments and additional political and economic reforms.
“It is going to take more than one person. It is going to take all of us, locked hand in hand, working together to chart this course,” Adesina told the partners.
He added: “We did it for Somalia, helping to clear the country’s arrears, working closely with the World Bank and the IMF. We also did it for Sudan, working with partners. Circumstances are different, obviously, but President Mnangagwa has made a clear commitment to engaging with the international community. A new reinvigorated Zimbabwe is good for everybody.”
Ncube said the growing debt has been an albatross on the economy.
“The current level of state debt is a significant barrier to Zimbabwe’s goal of becoming a middle-income nation by 2030,” Ncube said.
“We are grateful that President Adesina has agreed to act as the champion of our debt arrears clearance agenda. If we don’t clear our arrears, it will hamper our development agenda.”
While this is happening, the opposition Citizens’ Coalition for Change has approached the regional bloc, the Southern African Development Community, over the rising cases of political violence and arbitrary arrests of labour union leaders, civil society and opposition activists.
