The Sunday Mail
Langton Nyakwenda
Dishonouring debts is a bad culture and companies that are not paying back loans extended to them by external lenders could dent Zimbabwe’s international relations, President Mugabe has said.
At his meeting with national liberation war veterans in Harare last Thursday, President Mugabe implored companies to use borrowed money wisely and create more business opportunities.
Recently, the Mines and Mining Development Ministry said some mining firms that borrowed millions of US dollars from Chinese institutions did not appear intent on paying up.
Chinese insurance giant Sinosure no longer wants to guarantee loans for Zimbabwean projects due to the high default rate.
President Mugabe said: “We have resources. MaChinese are there to help us, the Japanese are there to help us. The Indians are prepared to help us. Vanozongoti chete zvimwe zvikwereti muchipota muchibhadharawo. Zvino tine chirwere muZimbabwe chokuti tinoda kungopihwa chete, tokanganwa kuti zvikwereti tinosungirwa kubhadhara.
“It’s a very bad culture, and its happening nemacompanies edu. Even in Government, it’s happening; even in our Ministry of Finance that’s happening. We borrow and borrow and borrow and continue to borrow.
“But when you borrow and become a borrower or a debtor, you must realise that you have an obligation to pay tomorrow. That must sink into our minds. Isu, population yedu, it has, I am afraid . . . and I must admit, it has not sunk in the minds of our ministers yet.”
President Mugabe continued: “I am saying this because it must be part of our ideology. It’s an ideology that makes for good relationships and good neighbourlyhood. We can borrow ooh yes, let’s get that but what is a commitment? The commitment is yes, we get the debt, but get the debt and we use the debt to produce more.
“By the time we pay, we will have made much more money from it . . . that’s good business. Kana uchidaro, you use the loan to create more money for yourselves and then by the time you pay it, you would say, ‘Aaah, I have created this business. I have done this with it. I have this structure, this road, this bridge.’
“Anyway, we are also learning. I am sure my ministers are also learning. The country makes money, but it has debts; debts to pay. Yes, it has credits. It has its own debtors, yes. But madebtors edu one unto another, our companies, for example, they owe each other. Ah, that’s not very good and all those must be looked at.”
Non-performing loans reached 20,45 percent of all lending in 2014, and US$577 million in 2015.
In 2014, Government amended the Youth Development Fund eligibility criteria after being hit by a 92 percent default rate.
In February 2016, Finance and Economic Development Minister Patrick Chinamasa approached the High Court to compel agro-equipment supplier Farmers World Holdings to pay back over US$12 million advanced by China Export Import Bank and underwritten by the Zimbabwe Government in 2010.
The company had paid just US$6 000 by 2012.
Government has itself committed to clearing its debts with multi-lateral institutions as expressed in the Lima Agreement (Debt Clerance Strategy) of 2015.
