Nedbank Zimbabwe has applauded the debt re-engagement efforts the Government initiated saying this may be the antidote to unlocking opportunities for fresh international support for the fiscus and potentially stabilising the economy if successfully concluded.
Zimbabwe has been reeling under an unsustainable debt overhang which has made the cost of borrowing by and in the country high as the country is perceived as risky due to its huge debt.
However, Zimbabwe has committed to resolving the country’s long overdue debt arrears and re-engaging with development partners and creditors to reposition the economy for sustained growth anchored on partnerships and multilateral financial support.
“The debt re-engagement process that was initiated by the Government is a welcome development,” said Nedbank chairman Mr Shepherd Shonhiwa.
Speaking recently in Egypt, President Mnangagwa rallied development partners and international financial institutions to support the country’s arrears clearance and debt resolution process.
The Government adopted the Arrears Clearance, Debt Relief, and Restructuring Strategy to help resolve the country’s long, outstanding debt overhang, “which is weighing heavily on our development agenda,” the President highlighted.
Former Mozambique President Joaquim Chissano, is the high-level facilitator of the arrears clearance and debt resolution process while AfDB president Dr Akinwumi Adesina, is the champion of the process.
According to the Treasury, Zimbabwe’s total consolidated debt stands at US$18,7 billion. Debt owed to international creditors stands 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.
Most of the country’s debt is in arrears, including liability to the African Development Bank, the World Bank, and the European Investment Bank. While token payments are being made to service the debt, the country now wants to move towards comprehensive arrears’ clearance, debt resolution and debt restructuring.
The challenges are not unique to Zimbabwe alone but a headache across the region, weighing on the region’s growth agenda, despite being endowed with resources.
Civil society from across the region has stepped in to help the region to address the complex challenges that define Africa’s debt landscape and its implications for development, which Dr Adesina has previously said was tantamount to climbing uphill of “economic recovery carrying a heavy backpack of debt on its back.”
So topical is the subject of debt in the region that stakeholders from across Africa are currently in Dakar Senegal for the third edition of the African Conference on Debt and Development (AfCoDD III) hosted by the African Forum and Network on Debt and Development (AFRODAD) and Trust Africa in collaboration with partners.
The conference, running from August 30 to September 1, 2023 is themed “The 4Rs for Africa Rule-Maker: Reimagining, Rethinking, Reorganising, and Remobilising for an African World Order.”
Director for the Public Policy and Research Institute of Zimbabwe Dr Gorden Moyo said he was upbeat the conference will provide practical solutions to the debt crisis affecting the region, according to AfricaBrief.
“I am looking forward to the meeting of the minds that will go beyond the diagnosis of the debt crisis and provide, instead, the prognosis with practical remedies to this pandemic in global Africa,” he said.
AFRODAD founder Mr Opa Kapijimpanga the region is in a debt crisis. Its cumulative debt as of 2022 was around US$720 billion spurred by the global financial crisis of 2008, the Covid-19 pandemic and more recently, the war in Ukraine. Now African countries are in line for debt restructuring with Zambia being the first and to be most likely followed by Ghana and then others.
He suggested the need to delink from ideas, processes, and institutions that keep the region trapped in a debt mode, creating borrowing terms that are unfavourable to the region. Instead African countries should value add and export their products, taking advantage of the Africa Continental Free Trade Area. “External trade must be an extension of domestic trade. This is where the large development leakage lies and causes unemployment and a low financial base to sustain any borrowing! If we do not do this, Africa will remain in perpetual unsustainable debt,” he said.
Herald
Positive Eye
