Zimbabwe: There is no free lunch

Zimbabwe: There is no free lunch

Zimbabwe’s strong international relations have seen funds and capital goods worth billions of dollars flowing into the country from China, Russia, India, Belarus and Brazil, among other friendly nations.
As a result of this financial capacitation, major projects are taking off in crucial sectors such as infrastructure development, energy, agriculture and mining.
Hopefully, in the foreseeable future, dividends will start paying off.
With the indigenisation policy that seeks to empower locals well on course, such developments couldn’t have come at a better time.
In recent years, foreign direct investment has been the missing link in Zimbabwe’s quest for economic transformation.
However, a gentle reminder is crucial here, lest some local folks get carried away with the bucket-loads of greenbacks and forget the crux of these mega deals.
Locals have an obligation to fulfil their end of the bargain!
While donations have trickled in here and there, most of these funds are not free handouts; they are either credit loans that are supposed to be paid back in due course, or investments that are expected to eventually award those who ploughed them in.
After all, Zimbabwe is not and will never be a basket case.
We do not beg for handouts, rather, we look for well-meaning investors who are willing to do business in a mutually beneficial way.
And, therefore, these Russians, Chinese, Brazilians and Indians who have shown faith in our nation and are committed to assisting us get to solid economic ground are businesspeople in every sense of the word.
When they looked our way, they saw opportunities and grabbed them, and when they make their investments, they understandably expect dividends in return.
One can choose to hate or love them for that, but that is a pure business objective.
However, the good thing about the funds is that they are not putting the nation in a tight corner. Long term investments by their very nature only start paying dividends after some time.
On the other hand, the credit lines are coming on flexible re-payment schemes.
Take the Brazil agricultural equipment scheme, for example, where Zimbabwe is benefiting from a US$98.6 million loan facility under that country’s Food for Africa Programme.
The irrigation and mechanisation agricultural equipment has capacitated smallholder farmers, especially in the wake of erratic rainfall.
With all those benefits for the taking, the loan facility has a 15-year repayment tenure and concessionary interest rate of 2 percent.
In another deal that recently got financial closure following Chinese President Xi Jinping’s December 2015 visit, which saw 10 major deals being signed between Harare and Beijing, the Export-Import Bank of China provided the Zimbabwe Power Company with a US$1.2 billion loan to upgrade two generators at Hwange Thermal Power Station.
Some 80 percent of that loan, according to officials, will attract an interest rate of 2 percent and the balance around 5 percent.
What am l driving at?
These foreign institutions are clearly confident in Zimbabwe, and because of that, we cannot let them down.
If we hope to maintain these highly cherished cordial relations with our investors, then the country simply has to meet its end of the bargain, period.
Investments will have to pay dividends, and huge dividends at that. Loans will have to be paid back to the very last cent within the stipulated time-frames.
Otherwise the country will start accumulating fresh debt and Finance and Economic Development Minister Patrick Chinamasa’s debt clearance efforts will come to naught.
Towards the end of last year, Minister Chinamasa and Reserve Bank of Zimbabwe governor Dr John Mangudya were in Lima, Peru where they successfully hammered out a strategy to clear the close to US$10 billion that Zimbabwe owes major multi-lateral institutions.
That commitment alone worked magic and improved Zimbabwe’s standing with international lenders and investors. It was a game changer that revealed that Zimbabwe could be trusted as a business partner.
So, that is the advantageous position that Zimbabwe finds herself in, with suitors trooping to her doorstep every now and then.
Possibilities abound if only this clean slate can be maintained.

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