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.