'Please don't steal $1,5 billion Afrexim loan'

HARARE - The African Export-Import Bank (Afreximbank)’s pledge to inject$1, 5 billion into Zimbabwe  will help boost the economy if put to good use, but falls short of the actual amounts needed to turn around the economy, analysts said yesterday.

Afrexim bank president and chairman Okey Oramah told reporters after a meeting with Mnangagwa and senior government officials that his would shore up the economy by pumping $150 million into cash-strapped banks to help them pay for outstanding critical imports and stem cash shortages.

“We also discussed a number of other areas that involve additional investment from us for something that will be in the order of $1 billion to $1,5 billion that will include certain kinds of guarantees to encourage investors to come to Zimbabwe.

“We...want to make sure that we support the stabilisation of the economy, that means providing liquidity to make sure that the situation where people are rushing everytime to look for cash is dealt with,” said Oramah on Tuesday.

It also pledged a $600 million nostro stabilisation facility, which will help to stabilise the country’s economy in the short term.

Professor of world politics at the University of London’s School of Oriental and African Studies, Stephen Chan told the Daily News that in as far as the amount will be helpful; it falls far short of the needed amount to rejuvenate the country’s economy.

“This will be very helpful, but it is only a fraction of my estimate of the immediate economic need in Zimbabwe - which is in the region of a $10 billion injection. The key is to meet IMF (International Monetary Fund) arrears so that a structured package of economic stabilisation can begin. Western countries will support an IMF package and will indeed await a lead from the IMF before any major commitments of their own,” Chan said.

Southern African director of the International Crisis Group, Piers Pigou, said the deal must be accepted with a pinch of salt, urging Zimbabweans not to throw caution to the wind.

He said it is important for both the government and the bank to be transparent about the content and terms of these deals.

“This is still not the case regarding the facility that was reportedly provided to underwrite the introduction of bond notes in 2016. We do not know what has been negotiated and for what. Debt is already 86 percent of GDP (Gross Domestic Product) and unsustainable.

“Borrowing more may well provide some short term relief but it is important to see how this contributes to the long term solution as the country digs an even bigger debt hole. It would therefore be prudent the government and Afreximbank are unambiguous if they want to build the trust of the Zimbabwean people. This opportunity remains,” he said.

Mining activist Farai Maguwu said the country’s does not have honest leadership to channel the cash into productive sectors of the economy.

“Do we have the correct composition in Cabinet? Absolutely no! Some of the people in this government are the most corrupt people the country has ever seen, dating back to the time of Cecil John Rhodes.

“To anticipate good management of the nation's resources from such people who have no honour is akin to entrusting a hyena with the safe keeping of a goat,” Maguwu told the Daily News.

Economic analyst Christopher Mugaga said the injection will help to restore confidence with the Bretton Woods institutions.

“We hope the $600 million nostro stabilisation facility will help to stabilise the forex challenges that we are experiencing. This is not the solution, however, but it will work in the short-term,” Mugaga said, adding that president Mnangagwa can use this goodwill gesture to spruce up the country’s dented democratic principles’ record and gain trust of the international community.

Political analyst Maxwell Saungweme said the injection will be a game changer in the short-term if put to good use.

“It will help boost the economy, it will ease current debilitating cash crunch. In the long-run it’s just another way of mortgaging the future of the country to debt.

“What is not clear is the catch, what are the conditions? I hope it will not be siphoned out via corruption again. Otherwise we keep drowning in debt. They should use this to resuscitate our agriculture and manufacturing sectors.”

Political analyst Vivid Gwede said there is no doubt that the economic body of the country has been anaemic due to lack of funding.

“So such support is welcome and hopefully there will be no misuse of the stabilisation package for which there must be full accountability and transparency regarding its terms and the country's eventual liabilities.

“However, it remains clear that Zimbabwe needs to attract investment way above that figure to get out of the current economic low point. Therefore the package does not exclude the need for long-standing governance reforms and international engagement that will lead to even more financial support and investment,” he said.