AFDB, Zim cooperation flourishes against odds

Chris Mahove

Cooperation between Zimbabwe and the African Development Bank continues to blossom against all odds, with the financial institution continuing to support the Southern African nation at a time it is being snubbed by multi-lateral institutions.

Saddled with a $11 billion public debt and having been in default since 2000, Zimbabwe suffered a blow after the collapse of the Staff Monitored Programme with the International Monetary Fund (IMF) meant to help the country implement its economic policies.

With international financial institutions reluctant to help Zimbabwe, it meant the country had to look for alternative funding, including domestic resource mobilisation.

And in stepped the AfDB, funding several projects in the country when it appeared there was no one willing to lend to the African nation, also reeling under the effects of sanctions imposed by the West. This despite some questions and cynicism regarding some loans by the bank from some quarters.

The financial institution signed a Letter of Agreement (LOA) with Zimbabwe for the disbursement of funds of four projects to the Republic of Zimbabwe, paying out a total grant of about US$30 million.

Three of the projects with a grant totaling US$28 million were managed by the Project Management Unit (PMU) established under the Ministry of Finance and Economic Development.

These are Capacity Building for Public Finance and Economic Management Project (CBPFEM), Youth and Tourism Enhancement Project (YTEP) and Governance and Institutional Strengthening Project (GISP).

The fourth project with a total grant of US$1.9 million managed by the Parliament of Zimbabwe is called Strengthening Institutions of Transparency and Accountability (SITA).

These projects are being supported by the ACBF through mechanisms to facilitate implementation and ensure conformity of agreed compliance procedures.

In 2020, the AfDB also approved a $13.7 million grant to finance the COVID-19 response in Zimbabwe.

 Plans by the bank to have its Headquarters in Harare can only be a reflection of the confidence it has and its desire to further strengthen cooperation with Zimbabwe.

And last week, at a special event on the sidelines of the Africa Investment Forum Market Days 2022 in Abidjan, Côte d’Ivoire, the AfDB President Dr. Akinwumi Adesina committed to support Zimbabwe to the tune of $270 million for three projects in mining, infrastructure development and ICT.

Adenisa invited President Mnangagwa to the event which sought to explore investment opportunities in Zimbabwe.

He assured Zimbabwe of the bank’s support in pushing to have the country clear its debt.

Adesina agreed to work with representatives of multilateral finance institutions, the Zimbabwean government, and other partners to develop an action plan that will resolve the country’s debt arrears.

The AfDB boss said Zimbabwe could count on the African Development Bank’s strong support, confirming the bank’s approval of a $4 million grant to support the development of a secretariat to move the country’s debt arrears clearance issue forward.

“Zimbabwe is strongly committed… Zimbabwe will again be the breadbasket of Africa. I will swim right beside you. I know the story of Zimbabwe, the opportunities and potential of Zimbabwe. I think Zimbabwe is not as risky as you think…Private sector opportunities are limitless,” he said.

The bank, he said, was lending support in areas such as steel, agriculture, and ICT, which he said had great potential to lure investors.

President Mnangagwa took advantage of the meeting to assure investors that Zimbabwe was a safe investment destination. He called on investors to take advantage of the huge investment opportunities and not be swayed by the false narrative of risk.

“Our mission here is to explain ourselves, assure investors that Zimbabwe is a safe investment destination. The focus is to persuade global capital assembled in this city to realize that there are opportunities for investment in Zimbabwe,” he said, adding that private sector opportunities in the country were limitless.

In a statement, the AfDB said it had helped Zimbabwe improve its public finance management systems since 2012.

“This includes oversight bodies like the Office of the Accountant General and the Parliament. The Bank also offers specialized technical assistance on debt management and support for the restoration of state-owned enterprises,” read the statement.

The bank quoted Adesina saying Zimbabwe’s debt arrears clearance and resolution would create a new growth trajectory for the country, making it a more vibrant economy.

“The African Development Bank supported Zimbabwe with $13.8 million under the Bank’s Covid Response Facility. The Bank has focused on strengthening the country’s public finance management capacity through a Transition Support Facility. It will also provide Zimbabwe with $4.2 million in technical support for the implementation of its arrears clearance and debt resolution strategy,” the statement said.

It noted that it was also keen to see Zimbabwe  play an important role within the Africa Continental Free Trade Area through manufacturing, agriculture, human capital, ICT, and other sectors.

The statement said the  debt clearance process to be led by the African Development Bank President would emphasize the importance of implementing prior land compensation commitments and additional political and economic reforms.

“Ambassadors and representatives of several G7 countries, the World Bank and International Monetary Fund (IMF) met with Adesina in Harare. They pledged to work with the African Development Bank to develop a debt clearance and resolution roadmap, as well as a re-engagement agenda.

“It is going to take more than one person. It is going to take all of us, locked hand in hand, working together to chart this course,” Adesina told the partners,” read the statement. .

The Bank chief also met with Zimbabwe’s private sector operators to discuss their role in the anticipated arrears clearance action plan. The meeting explored opportunities for leveraging private sector financing. 

The Africa Investment Forum is Africa’s premium investment platform and was set up by the African Development Bank together with its seven partners to attract investment and capital to Africa.

The forum’s Market Days 2022, which included boardroom sessions aimed at promoting flagship sectors where Africa has relative advantage, ran from November 2 to November 4.

In July this year when he met with President Mnangagwa in Harare, where he accepted to be the country’s champion of the country’s debt clearing strategy, Adenisa noted that Zimbabwe was  now reliable and committed to keeping its obligations.

He said his decision to accept the role had been necessitated by the fact that the continent needed to have a stronger Zimbabwe as a member of the AfDB.

He noted that the Southern African country had been a reliable member of the bank and had religiously paid its subscriptions, even under very harsh conditions, adding that its economic challenges had not affected the cooperation between the two.

 “Zimbabwe is reliable. Zimbabwe is committed to keeping the commitments that it made,” said Adesina.

Zimbabwe has continued to make token payments all the foreign financiers including the 17 member  Paris Club, , the World Bank and the AfDB.

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