News / Africa

    Botswana Extends $70M Credit Line to Zimbabwe

    Zimbabwe's Finance Minister Tendai Biti addresses a news conference in Harare, Zimbabwe, Aug. 23, 2011.
    Zimbabwe's Finance Minister Tendai Biti addresses a news conference in Harare, Zimbabwe, Aug. 23, 2011.
    HARARE — Botswana has extended a credit facility of about $70 million meant to revive Zimbabwe's ailing industrial sector. The line of credit, announced Monday, comes at a time when Zimbabwe has no access to international lenders like the World Bank and International Monetary Fund.
     
    According to the African Development Bank, Zimbabwe needs at least $4 billion in lines of credit so its struggling industries can get back on their feet.  

    Speaking after the signing ceremony for the Botswana credit facility, Zimbabwean Finance Minister Tendai Biti outlined the rise and fall of his country's economy.

    "In 1996 we were the second largest economy in the SADC [Southern African Development Community]," said Biti. "In 2012 we are marginally higher than Malawi, marginally higher than Lesotho, marginally higher than Swaziland. Let us put our house in order."

    Biti has repeatedly criticized government policies of seizing white-owned farmland and "indigenzing" foreign-owned companies to give a majority stake to black Zimbabweans. Those policies crippled farm production and scared away investors. As a result, the economy has struggled for more than a decade, and the country‘s external debt is now about $10 billion.

    Biti said he hopes other countries will follow Botswana in extending credit lines to Zimbabwe. Zimbabwe cannot get credit from lenders like the IMF and the World Bank since it defaulted on loans from those organizations about a decade ago.

    The Botswana credit facility is being bankrolled by commercial banks who get a guarantee from the Gaborone government. This follows an appeal from SADC leaders to make funds available to help Zimbabwe's industries recover.

    Botswana's Finance Minister Kenneth Matambo said he hopes his country's companies will benefit from the deal as well.

    "The two governments have signed the Bilateral Investment Promotion and Protection Agreement (BIPPA) in order to protect investments by nationals and companies of both countries," said Motambo. "It is important that when nationals and companies invest here, they must be ensured that they can freely have dividends transfers from here to wherever they are."

    In recent years, international investors in Zimbabwe have found it difficult to transfer their dividends to their home countries.

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    Comment Sorting
    Comments
         
    by: Big Picture
    September 04, 2012 11:23 AM
    Until genuine stability returns to Zimbabwe including the political and all sectors of the economy, justice included, no external investments shall happen, as the risk far outweighs expansion and development. The masive influx of Zimbabwean refugees to RSA is indicative that instability, unemployment and health care is a reality apart from other
    affected sectors. "Resuscitation" on its own, simply wont work

    by: lovemore diya from: Gaborone
    September 04, 2012 6:40 AM
    Idling manufacturing industries in Zimbabwe need resuscitation for the sake of progress and economic boom in zim . I am one zimbabwean guy in Botswana who want make sure this works and are already in the process of implementing that for the benefit of both countries . Lets all make this work .

    by: Good Governance
    September 04, 2012 12:23 AM
    Tragically no amount of international loans will put right what has happened. This is a harsh fact given the collapse of the economy
    including agriculture a disasterous policy which is key to the survival of the Country. It created unemployment and claimed the lives of many. Sadly the World looked.

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