dyton mupawaenda
Golden Guvamatanga-Herald Correspondent
Zimbabwe’s ongoing efforts to service its huge debt overhang cannot be fully explained without exploring the devastating effects of Western-imposed illegal economic sanctions.
This is further compounded by the often conveniently “ignored” fact that the country inherited a colossal debt from the colonial regime at independence.
The country has, since November 2017, embarked on a relentless drive to engage and re-engage the international community after more than two decades of sustained efforts by the West to isolate it. This drive to isolate it from the world hinged on discussions to clear its arrears through the High-Level Structured Dialogue Platform commencing in December 2022.
In order to fully appreciate the octopus-like nature of the events that have led to the current efforts to clear the country’s debt, it is important to bring to the fore some historical facts on the challenges that have confronted the country since independence.
While it has been known for a while that the black Government inherited what was already an economy choking under mismanagement by the Ian Smith regime, it is crucial to bring to the fore how that debt severely negated Zimbabwe’s prospects for a stable economy.
Last month, an Australian researcher and board member of the Zimbabwe Information Centre in Sydney, Jane Woods, revealed that her research on sanctions against Harare indicated that it has been paying for that mammoth Smith legacy debt.
“The freedom that Zimbabwe regained in 1980 was actually short-lived,” said Woods. “It (Zimbabwe) inherited a whopping debt from Rhodesia to the tune of US$700 million. The mind boggles when you try to calculate what the interest on that amount could be, from 1980!
“So, in signing (the peace deal) in London, the new political leaders agreed to take on the debt that had been incurred by Ian Smith and his regime for the purchase of weapons that were used to kill black Zimbabweans!”
The UK-based Debt Justice organisation backs Woods’ findings, proclaiming on its website: “At Zimbabwe’s birth in 1980, the country inherited a US$700 million debt from the Rhodesian government of Ian Smith.
“The loans were used to buy weapons in the 1970s, breaking UN sanctions. The new Government came under international pressure to take on the debt, whilst being promised over US$2 billion by Western governments for reconstruction and development.”
That money never came. Buckling under pressure from an expectant population that had been ostracised from their own economy by successive colonial governments for a century, the new black Government, hamstrung by many unfulfilled Lancaster House Conference promises, embarked on an agonising process of giving back to its rightful owners control of the means of production — land.
With the “willing-buyer, willing-seller” Lancaster House clause fast approaching expiry date, Zimbabwe would grudgingly accept the disastrous IMF and World Bank’s Economic Structural Adjustment Programme (ESAP) in October 1990.
ESAP was ostensibly meant to stabilise Harare’s economy which was reeling from the huge expenditure for infrastructure projects drawn largely from its own coffers after “donors” who had pledged to support its rebuilding efforts suddenly developed cold feet.
The programme introduced measures such as the removal of price controls and wage controls, cuts in Government spending (in essence halting of development projects), a 40 percent devaluation of the Zimbabwean dollar, lifting of State subsidies on basic consumer goods, the lifting of protection of import-substituting industries and increased profit remittances abroad.
The IMF and World Bank were not done with Zimbabwe yet. They also introduced what they said would be the “Framework for Economic Reform”, between 1991 and 1995, which focused on culling State-Owned Enterprises (SOEs), themselves key contributors to GDP.
By then, the strategic emasculation of the Zimbabwean economy was well and truly in force.
“The effects of all this were dramatic. From 1991 onwards, the Zimbabwe dollar had been devalued massively,” reads part of an April 25 2008 report by The Economist titled “Which way out of the Zimbabwean nightmare?”
“The lifting of protectionist measures opened up the home market to cheaper imports. This resulted in the closing down of many local industries leading to massive redundancies and rising unemployment which reached 60 percent by 2003.
“Manufacturing productivity fell by 11,9 percent and 4 percent in 2001. 1991-2001 GDP declined, ending up with a real decline in GDP of 11,5 percent.”
Crucially, ESAP was a ploy to derail the inevitable redistribution of land and other resources to the masses. By the time the country discarded ESAP in the late 1990s, the damage had already been done, with the IMF and World Bank cutting Harare’s access to lines of credit over its alleged failure to service its debt in 1999.
The Land Reform and Resettlement Programme of 2000 gave Western countries yet another reason to further stifle the Zimbabwean economy. On December 21 2001, the US announced it had imposed sanctions on Zimbabwe.
The EU followed suit on February 18 2002. Zimbabwe was “convicted” of violating human rights and suffocating the democratic space, among other flimsy reasons. With the country having effectively limped from 2001, current efforts to service its debt, including the one that was incurred by Smith, will, among other things, unlock concessional funding.
This will put closure to yesteryear challenges, create a new balance sheet, improved creditworthiness and open fresh lines of credit. The sanctions have cost the country more than US$50 billion and have largely contributed to its debt overhang due to lack of fresh lines of credit.
“The successful implementation of our Arrears Clearance and Debt Resolution Strategy is key for Zimbabwe to unlock new concessional external financing, critical for our economic development objectives,” said President Emmerson Mnangagwa in his address to the 6th High-Level Structured Dialogue Platform: Arrears Clearance and Debt Resolution Process.
“I call for the continued support of the international financial institutions, development partners, our creditors and the international community for the Arrears Clearance and Debt Resolution Process. “As Zimbabwe transitions to the implementation of the National Development Strategy 2 (NDS2), access to external concessional financing will be key for long-term funding of our projects and programmes.”
The return to the league of nations can only be successful when sanctions are removed in toto. — The Patriot
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