Login

Lost your password?

Sign Up

Register

Login

Login

Lost your password?

Register

Thursday, August 11, 2022
  • Home
  • Banking
  • Industry & Trade
  • Investing
  • Money Deals
  • Regional Markets
  • Tech & Biz
  • Countries
  • Opinion

Africa's
Investment
Gateway

The Exchange
  • Login
  • Register
Subscribe
This Month's Edition
Previous Editions
  • Home
  • Banking
  • Industry & Trade
  • Investing
  • Money Deals
  • Regional Markets
  • Tech & Biz
  • Countries
  • Opinion
No Result
View All Result
The Exchange
  • Home
  • Banking
  • Industry & Trade
  • Investing
  • Money Deals
  • Regional Markets
  • Tech & Biz
  • Countries
  • Opinion
No Result
View All Result
The Exchange
LOGIN
Zimbabwean President Emmerson Mnangagwa (right) expressed a strong commitment to work with the African Development Bank and other partners to resolve the country's debt issues during a meeting with Bank President Dr. Akinwumi Adesina in Harare.(Photo/ AfDB)

Zimbabwean President Emmerson Mnangagwa (right) expressed a strong commitment to work with the African Development Bank and other partners to resolve the country's debt issues during a meeting with Bank President Dr. Akinwumi Adesina in Harare.(Photo/ AfDB)

AfDB to lead Zimbabwe’s debt repayment strategy

Zimbabwe has received reassurance of support from AfDB for a strong push to help it clear its debt arrears.

by Albert Nangara
July 25, 2022
in Countries
0
Share on FacebookShare on LinkedIn
  • African Development Bank (AfDB) President Dr. Akinwumi Adesina says he has accepted President Emmerson Mnangagwa’s request for the bank to lead the country’s debt repayment strategy
  • Although Zimbabwe cleared its arrears to the IMF in 2016, it cannot access funding from the Bretton Woods institution because of the money it owes to the World Bank, AfDB, and European Investment Bank
  • Zimbabwe is choking under mounting international debt as it begins to pay the price for borrowing heavily from China for infrastructure projects at the tail end of Robert Mugabe’s rule.
  • The Southern African country is also making token payments to all its foreign financiers’ woes, including the Paris Club, which has 17 members, the World Bank, and the African Development Bank (AfDB)

In May, President Mnangagwa requested the African Development Bank (AfDB) to lead Zimbabwe’s debt repayment strategy as the country sought to expunge its unsustainable debt overhang.

According to New Zimbabwe, the huge external debt has been blamed for the country’s failure to access affordable long-term financing from multilateral and bilateral financiers.

Although Zimbabwe cleared its arrears to the IMF in 2016, it cannot access funding from the Bretton Woods institution because of the money it owes to the World Bank, AfDB, and European Investment Bank.

“As a general rule, the IMF is prevented from lending to any member country that has arrears to other international financial institutions,” the IMF said last year as it explained why Zimbabwe was excluded when it gave African countries such as South Africa and Zambia millions in loans to help them cushion their economies against the impact of the Covid-19 pandemic.

According to an article by The Herald dated May 26, 2022, Finance and Economic Development Minister Prof Mthuli Ncube first revealed the bank’s willingness to assist Zimbabwe with its debt when he met the AfDB President in Washington DC in April where the two were part of the World Bank annual meetings.

“The President of the AfDB has put himself forward as a candidate to help the country come up with good staff monitored programmes which also include the International Monetary Fund (IMF),” Minister Ncube said at the time.

Dr. Adesina said Zimbabwe used to be the region’s breadbasket, and “it’s in everybody’s interest to have a revived, renewed and energised Zimbabwe”.

This statistic shows the national debt of Zimbabwe from 2017 to 2019 in relation to the gross domestic product (GDP), with projections up until 2027. The figures refer to the whole country and include the debts of the state, the communities, the municipalities, and the social insurance. In 2019, the national debt of Zimbabwe amounted to approximately 93.22 per cent of the GDP. (Photo/ Statista)

In an article published by New Zimbabwe on July 20, 2022, a report released by the Finance ministry’s debt management office warns that “arrears on external debt, which amounted to US$6.6 billion, remain a major protracted challenge to restoring debt sustainability and to the economy, resulting in the lack of access to official external financing.”

Last year, the country only spent $59.30 million to repay outstanding external loans.

The payments included $9.60 million in token remittances to multilateral banks and Paris Club creditors.

In September last year, the government started making quarterly token payments of $100,000 to each of the 16 Paris Club creditors as it sought ways to extinguish the mounting debt.

As of the end of May, Zimbabwe had made $8 million in token payments to multilateral banks and $4.8 million to the Paris Club creditors.

The article added that Zimbabwe is already defaulting on active loans from China, which is affecting the disbursement of funds for ongoing projects, the debt management office said in the report.

“The low disbursements of loans are due to accumulation of arrears to active China Eximbank loans (amounting to 4266 million) on projects such as the Victoria Falls International Airport ($54 million), NetOne network expansion ($61 million), and expansion of the Robert Gabriel Mugabe International Airport ($3 million),” the report says.

According to New Zimbabwe, to address the debt crisis, Zimbabwe has the idea of joining the Heavily Indebted Poor Country (HIPC) initiative or undertaking a non-HIPC route involving debt restructuring and arrears clearance through bridge financing and using its resources.

The HIPC initiative, which the World Bank and IMF initiated, facilitates 100 per cent debt relief for poor countries upon meeting set stringent requirements.

Previously, Zimbabwe explored the HIPC route when the late Mugabe formed a joint government with late opposition leader Morgan Tsvangirai between 2009 and 2013, but ruling Zanu-PF hardliners shot the idea down.

The Zimbabwe Coalition on Debt and Development (ZIMCODD) said the latest debt strategy would be meaningless without genuine political and economic reforms.

“It remains to be seen if Harare will honour its debt strategy given the fact that the success of all options proposed in this strategy is highly hinged on the full implementation of political and economic reforms,” ZIMCODD said.

“In its conclusion of the 2021 staff monitored programme, the IMF indicated Harare’s lack of progress in instituting these reforms as per the expectations of creditors and the international community.

“While the two options being considered in Harare’s debt strategy are sufficient to bring a lasting solution to the debt crisis, the strategy has also laid bare the effects of toxic politics on economic progression.”

It also noted that the weakening Zimbabwe dollar will worsen the debt crisis as the country struggles to service external loans.

According to the AfDB, Zimbabwe has received reassurance of support for a strong push to help it clear its debt arrears. The African Development Bank (AfDB) Group President Dr. Akinwumi Adesina, representatives of multilateral finance institutions, the Zimbabwean government, and other partners have agreed to work together to develop an action plan to resolve the country’s debt arrears.

Zimbabwe owes USD13.5-billion to multilateral financial institutions, bilateral partners, and other creditors. President Mnangagwa thanked Adesina for accepting to be the champion for the arrears clearance and debt resolution process. He also commended the AfDB for standing by Zimbabwe through difficult circumstances. “During the COVID-19 pandemic, Zimbabwe received no external help except the AfDB. The AfDB was quick to respond to Zimbabwe’s needs. We had to re-prioritize our budget and, ultimately, we managed the situation against all odds,” Mnangagwa said.

The AfDB added that it supported Zimbabwe with USD13.8-million under the bank’s COVID-19 Response Facility. The AfDB has focused on strengthening the country’s public finance management capacity through a Transition Support Facility.

Meanwhile, According to an article by Africa Global Village dated July 13, 2022, the Board of Directors of the African Development Bank (AfDB) Group approved a USD175 million Trade Finance Funded Risk Participation Agreement facility between the AfDB and the Trade and Development Bank (TDB).

According to AfDB, the agreement is expected to boost intra-Africa trade, promote regional integration, and reduce the trade finance gap in Africa. The bank will provide liquidity of up to 50% (the other 50% to be matched by TDB), to issuing banks on a risk share basis to support trade activities of local corporates and small and medium-sized enterprises in member countries of the Common Market for Eastern and Southern Africa.

Together, the two institutions will provide a ticket size of USD350-million to support trade transactions. This is a strategic effort by the AfDB to support the Africa Continental Free Trade Area’s agenda of reshaping markets and economies across the region by helping to boost output in the services, trade, manufacturing, and natural resources sectors.

Read: Zimbabwe: President Mnangagwa’s measures to restore investor confidence

Tags: AfDBAfrican Development Bank (AfDB)IMFpresident of AfDBTDBTradeWorld Bankzimbabwe

STATE OF ECONOMY - GET THE REPORT

ASSESSING EAST AFRICA

Loading...

Albert Nangara

Albert is a Chemical Technologist and Author. He is passionate about mining, stock market investing, Fintech and Edutech.

Related Posts

From three landfill sites, more than 70MW of power will be generated enough to power 185,000 homes, and then sent to the national grid. www.theexchange.africa
Countries

Harare cancels waste-to-energy deal with Netherlands-based company

August 11, 2022
Some of the highest paid African presidents. theexchange.africa
Countries

Africa’s highest paid presidents and their annual salaries

August 10, 2022
Countries

Kenyan elections and NSE, investors to adopt precautionary behaviour

August 3, 2022
Next Post
Ghana parliament Approves Plan to Borrow $750 Million Loan From Afreximbank www.theexchange.africa

Ghana parliament approves US$750 Million borrowing from Afreximbank

www.theexchange.africa

Kenya: Centum Real Estate's operating profit hits $5.5 million

www.theexchnage.africa

Kenya: Airtel pays $39.6 million to acquire an additional 60 MHz spectrum

Please login to join discussion




This months edition

Features

The leaders of the BRICS nations meet at the group’s summit in Osaka in June 2019. Concerns are India might pull out of the group over tensions with China. (Photo/ Reuters)
Countries

What does Russia’s invasion of Ukraine mean for Southern Africa?

by Albert Nangara
August 3, 2022
0

When the United Nations General Assembly voted overwhelmingly on March 2 to condemn Russia’s invasion of Ukraine, African countries accounted...

Read more
Logistics and transport startups will play a major role in enabling Africa’s largest free-trade area (Photo/ Quartz Africa)
Industry and Trade

Trends shaping the future of logistics in African markets

by Albert Nangara
August 3, 2022
0

Digitization of logistics and compliance with sustainability policies will shape the future of logistics in African markets. Digitalization involves the...

Read more
Biometric systems are expected to lead the market for airport security systems in growth over the next five years, as the market increases at an 8 per cent CAGR through 2024 (Photo/ Biometric Updates).
Tech & Business

Machine learning, Artificial Intelligence changing Africa’s Airports

by Albert Nangara
August 2, 2022
0

According to Frontiers, AI has been recognized to have a wide potential to reduce human workload or increase human capabilities...

Read more
www.theexchange.africa/
Investing

ESG global mining and the social license

by Laurence Sithole
August 2, 2022
0

In terms of achieving net zero carbon emissions, the largest mining companies in the world have several options – each...

Read more
Some of the group members learning the components of the new briquette making machine. The machine can produce 500 briquettes per day. www.theexchange.africa
Investing

Reusable, organic charcoal: Answer to Africa’s cooking fuel challenges

by Njenga Hakeenah
August 2, 2022
0

United for Green is working to ensure that Africans do not get to these extremes. By empowering women, the plan...

Read more

News

Banking
Industry & Trade
Investing
Money Deals
Regional Markets
Tech & Biz
Opinion

Countries

Kenya
Tanzania
Uganda
Burundi
Rwanda
Southern Africa
Ethiopia

More

My Account
Contact us
Advertise
About us
Help Center

Subscribers Center

E-paper
Premium Stories
Education Rates
Corporate Subscriptions
Weekely Newsletter

  • My account
  • About us
  • Advertise
  • Contact
  • Privacy Policy
  • Refund Policy – The Exchange
  • Sitemap

No Result
View All Result
  • Home
  • Banking
  • Industry & Trade
  • Investing
  • Money Deals
  • Regional Markets
  • Tech & Biz
  • Countries
  • Opinion
  • Login
  • Sign Up
  • Cart

© 2021 The Exchange - Powered by MediapixManaged by Supported by Digihandler,

Welcome Back!

Login to your account below

Forgotten Password? Sign Up

Create New Account!

Fill the forms below to register

All fields are required. Log In

Retrieve your password

Please enter your username or email address to reset your password.

Log In