Pay back the debt, German envoy implores Zimbabwe

Pay back the debt, German envoy implores Zimbabwe

HARARE, May 10 (The Source) – Germany will consider offering financial help to Zimbabwe, but only after the country has settled a 505 million euro ($550 million) debt, the country’s ambassador told Parliament on Wednesday.

Germany, along with the European Union, suspended budgetary support to Zimbabwe in 2002 citing allegations of rights abuses by President Robert Mugabe’s administration. The EU has since lifted the sanctions,  citing improvements in the political environment after the adoption of a new constitution and peaceful, if disputed polls, in 2013.

Mugabe and his wife, Grace are the only ones still subject to a travel ban, while a state-owned arms firm is also under an arms embargo.

According to Parliamentary data, Zimbabwe owes 465 million euro ($507 million) to the German Development Bank (Kreditanstalt fur Wiederaufbau — KfW).

KfW, which is majority owned by the German government, is also owed 40 million euro ($43 million) by the mothballed Ziscosteel which borrowed the funds to construct a steel plant in 1998.

“(The Zimbabwe) government has issued a statement saying they have the money available to pay back arrears of World Bank and the WB is not under obligation to offer any fresh loans to Zimbabwe because of the arrears.  We are guided by the same policies,” the German ambassador to Zimbabwe, Thorsten Hutter said when he appeared before the Parliamentary Portfolio Committee on Foreign Affairs.  

“The next step would be that government would have to pay back the arrears of WB, AfDB and Paris Club which we are part of, partly because we have learnt money to Zimbabwe before which has not been paid back.  That will have to be addressed.  It may look like we do not want to give money to Zimbabwe for political reasons – that is not true.”

In 2004, KfW took its case to the International Court of Arbitration (ICA) after the cash strapped Harare government defaulted on repayments.  

Hutter also said the business environment in Zimbabwe was not conducive for investment, citing too much government interference in businesses, cash shortages, brand integrity challenges and unfriendly laws.

“We believe  business and investment is possible and we need to address challenges that exist for companies to come to Zimbabwe, and I believe that there are differences in perception of Zimbabwe’s investment climate. German businessmen want to know your government policies and conditions to do business, and whether they will be able to access foreign currency which is needed if one has to do business,” Hutter said.

He said the mindset of German companies is that they want to have less government interference in their businesses.

“They know they have to pay taxes, but apart from that they want to do business, and the more government interferes with their businesses, the less happy they are.  They look at constraints of laws and their application.  They say there is a law but different authorities apply that law differently and that  brings confusion in policy implementation.”

The companies were also worried about the integrity of their brands wherever they invest.

“They are concerned about how much they put on the table and brand integrity.  If it is a large company, they want to ensure their standards remain the same.  They want to control the quality of their brand.  They bring in foreign currency inflows as investment, but that company needs to be able to access that money, and if that company makes a profit, it must be up to them to decide what they want to do with it,” he said.