Fund-raising goes into overdrive

Golden Sibanda Senior Business Reporter
ZIMBABWE has gone on an overdrive to raise foreign capital and lines of credit as it seeks to mobilise financial resources to spur economic recovery and growth that has slowed down due to poor performance in agriculture and mining.Government has since appealed to the African Development Bank to scale up financial support and also provide technical assistance on various economic issues.

Finance Minister Patrick Chinamasa told a Press conference in the company of AfDB officials in Harare last week that the latest engagement was meant to explore ways to increase cooperation between Zimbabwe and the bank.

The country faces huge challenges to fund its economic programmes in light of a US$3,6 billion National Budget that will be spent mostly on consumptive expenditure.

This is in spite of the fact that the country faces huge capital requirements to support the manufacturing industry, mining, tourism and agricultural sectors.

Manufacturing requires in excess of US$2 billion to retool and raise output; mining US$5 billion to US$7 billion for recapitalisation, agriculture requires at least US$2 billion annually while tourism is also in need of capital.

According to a research conducted by the AfDB, Zimbabwe requires about US$15 billion for infrastructure alone, an amount far out of the country’s reach.

Against this background the country will have to explore alternative ways to raise capital and lines of credit to support its economic programmes.
Zimbabwe has in the last few years pursued lines from various countries including US$70 million from Botswana and R2,65 billion from South Africa. While the Botswana facility has been secured, a deal is yet to be reached with South Africa.

As part of efforts to re-engage other multi-lateral funders Zimbabwe is working on a staff monitored programme of the International Monetary Fund, which would also clear the country’s path to re-engaging the World Bank.

All these efforts form part of concerted efforts to secure scarce capital and lines of credit to support economic recovery and growth that is losing steam.

To that end, Zimbabwe has sought increased financial support and technical expertise from AfDB on leveraging minerals to raise capital and lines of credit and also crafting of bankable agricultural projects to ensure food security.

The AfDB engagement marks Minister Chinamasa’s first major efforts in engaging multilateral institutions for resources to jerk the slowdown in economic growth.

Minister Chinamasa made the remarks after meeting with AfDB regional director Mr Ebrima Faal who expressed the bank’s commitment to help Zimbabwe.

“I invited Mr Faal who is the regional director of the African Development Bank to come and have a chat with me so that we could explore ways of increased cooperation between Zimbabwe and the African Development Bank” he said.

“We discussed quite some diverse issues touching on the areas where we would want to see the AfDB assisting Zimbabwe,” Minister Chinamasa said.

The issues include an appeal for AfDB to scale up its multi-donor financial support through the ZimFund chaired by AfDB which was established by a group of donors to support priority recovery activities of the Government.

Zimbabwe has in the past benefitted significantly from funds mobilised under the ZimFund and used in rehabilitation of water systems and other infrastructure.

Zimbabwe is getting funding support under a number of facilities including the US$125 million multi-donor trust fund and the US$2,7 million Africa water facility.

The country is also benefiting from the UD$16 million capacity building project and US$8 million private sector window,US$3 million special relief fund, US$6 million fragile state facility pillar an US$1 million African legal facility.

But Mr Faal said while AfDB could not extend concessional funding due to Zimbabwe’s arrears; it would use other avenues to support economic recovery.

“We want to try to assist in the process of reengagement within the international community, a mandate that Sadc gave to us, which we are trying to fulfill.

“We have discussed amicably and I think from our side the understanding is that we are honoured to be the partner of choice to move the process forward together with other partners for smarter partnerships,” said Mr Faal.

Minister Chinamasa said he had also requested that the regional bank considers increasing its support to the country’s financially distressed industry.

Further, he revealed that Government had discussed with the AfDB innovative ways of clearing the country’s arrears with the bank so that the country can reclaim its rights to borrow from the bank at concessional rates.

Zimbabwe owes US$1,5 million to the AfDB of which US$528 million of the amount is already in arrears. Other multilateral financiers the country owes include International Monetary fund (US$124 million and World Bank (US$2,2 billion). The country’s overall debt overhang stands at US$10 billion, much of it being accumulated arrears.

Minister Chinamasa said Government was anxious to invest heavily in agriculture and do the right things in agriculture, manufacturing and mining.

In that respect, he said Government would seek technical and financial support to come up with bankable projects especially for agriculture.