Zimbabwe’s Mugabe hopes reengagement will open foreign funding taps

Zimbabwe’s Mugabe hopes reengagement will open foreign funding taps

HARARE, August 25 (The Source) – Zimbabwe hopes that re-establishment of ties with the West, which have been frosty for more than a decade due to differences over policies and alleged human rights abuses, will lead to financial support for the capital starved country, President Robert Mugabe said on Tuesday.

Zimbabwe is implementing the International Monetary Fund’s Staff Monitored Program (SMP) — the third since 2013 — an informal agreement between a government and IMF staff to monitor the implementation of its economic reforms, which however, does not entail resumption of funding.

But its successful conclusion could lead to a debt rescheduling by the Paris Club, an informal group of official creditors whose role is to find coordinated and sustainable solutions to the payment difficulties experienced by debtor countries.

Harare owes the IMF and the World Bank $124 million and $1 billion respectively, while its external debt stands at around $10 billion.

It is also battling a dollar shortage since the start of 2012 due to a lack of dollar inflows on foreign investor concerns over government policies, notably its 2008 indigenisation law which requires foreign owned companies valued at over $500,000 to cede 51 percent to black locals. Analysts have said the law is not ideal for an economy battling to recover from a decade-long recession.

But while delivering a rare state of the nation address before Parliament, Mugabe said his government recognised the importance of strengthening re-engagement with the international community.

“Current re-engagement efforts with both bilateral and multilateral partners including the African Development Bank (AfDB) and World Bank under various initiatives should see improvement of relations and opening up of new financing avenues for long overdue reforms and development cooperation,” said Mugabe.

He also said the government would start a programme to reform 10 state enterprises, beginning with the Grain Marketing Board (GMB) and the Cold Storage Company (CSC).

The Bulawayo-headquartered CSC, which at one time was the largest meat processor in Africa, has been struggling since it lost its lucrative EU export market in 2001.

The parastatal has lurched from one crisis to another, underlined by a $25 million debt and the closure of its plants in Kadoma, Marondera and Chinhoyi in recent years. It has also run up losses of around $6 million annually for the past decade.

GMB owes farmers $49 million and over $20 million to its workers while its infrastructure around the country is crumbling.

Mugabe acknowledged flaws in the country’s procurement system, promising an overhaul of the State Procurement Board (SPB).

“A new procurement bill will be tabled in parliament before the end of 2015. The new bill will incorporate COMESA procurement guidelines which include devolution of power,” he said.

Corruption at state enterprises and local authorities was rampant and corporate governance standards were below acceptable international thresholds.