via Mugabe sees options from Zim fund to BRICS loans IOL Business November 18 2013 AFP
Zimbabwean President Robert Mugabe is considering raising finance through measures ranging from establishing a sovereign wealth fund to borrowing money from the so-called BRICS nations to revive Zimbabwe’s economy.
A document titled the Zimbabwe Agenda for a Sustainable Socio-Economic Transformation, or Zim Asset, also details plans including the sale of bonds, securitisation of remittances, re-engagement with international finance institutions and the creation of special economic zones.
Financing options should focus on Brazil, Russia, India, China and South Africa, a group of large emerging market nations collectively known as BRICS, according to the document signed by Mugabe and obtained from the Ministry of Finance on November 15.
“My government has formulated a new plan,” Mugabe, 89, said in the foreword to the 129-page document, which details a five-year plan stretching to 2018 for the economy.
The plan is designed to “enable Zimbabwe to achieve economic growth and reposition the country as one of the strongest economies in the region and Africa.”
Mugabe, who won a July election to extend his 33 years in power, is struggling to revive an economy that shrank by 40 percent between 2000 and 2008 after the seizure of white-owned commercial farms slashed exports, inflation surged to a world record and relations with the International Monetary Fund were severed.
Platinum, Chrome
The Zimbabwe African National Union-Patriotic Front party won control of parliament in July after a five-year coalition with the Movement for Democratic Change, which arrested a near-decade long recession.
Measures taken by the coalition included the abolition of the Zimbabwe dollar in favour of the use of currencies including the US dollar and the South African rand.
The country has the world’s second-largest deposits of platinum and chrome and reserves of minerals ranging from coal and iron ore to gold.
Still, investment has been inhibited by a law compelling foreign and white-owned companies to sell or cede 51 percent of their local assets to black Zimbabweans or the government.
Anglo American Platinum Ltd., Impala Platinum Holdings Ltd. and Barclays Plc are among companies that operate in the country.
The “economy experiences a myriad of challenges, which, if not addressed, will reverse the marginal gains recorded,” the government says in the document.
Economic growth has slowed from 11.9 percent in 2011 to an estimated 3.4 percent this year, while manufacturing capacity utilisation was 39 percent in the third quarter of this year compared with 57 percent in 2011, according to the document.
Housing, Rail
The country has a housing backlog of 1.25 million units, while water, sanitation and rail systems have deteriorated, the government said.
Under the plan, economic growth is targeted at 6.2 percent next year, rising to 9.9 percent in 2018.
Government institutions ranging from an agricultural bank to the state mining company will be recapitalised, the government said.
Debt amounting to $80 million owed by farmers to the state power company will be cancelled while biofuel and sugar projects will be implemented.
The government also plans to seek investment to restore existing power plants to their full capacity, adding 300 megawatts of production by 2015, while developing a new 1,600 megawatt hydropower plant on the Zambezi River and a smaller project on the Gairezi River.
Coal-bed methane gas at Lupane may also be utilised for power generation while the Sengwa coal- fired project, a plant once considered by Rio Tinto Plc, may be developed.
‘Look East’
Renewable power projects planned include a 100-megawatt solar plant, solar water heaters and mini-hydro power projects.
The government will also seek to restart a steel mill to produce 700,000 metric tons of liquid steel annually and to attract new investment to that industry.
“The government will continue with the ‘look east’ policy to unlock the inflow of potential investment,” it said in a reference to attempts to garner investment from China and India.
Last week the Export-Import Bank of China agreed to lend Zimbabwe $319.5 million to expand the Kariba South hydropower plant.
The government plans to target increased production of corn, wheat, milk, meat and eggs as well as boosting the amount of irrigated land and putting in place tariffs to reduce dumping of agricultural products, it said.
Agricultural projects planned include fruit juice, honey and avocado-oil plants
Mozambican Pipeline
The construction of 12 dams and three water pipelines is envisaged as well as the completion of existing pipeline projects and the rehabilitation of urban water supply systems.
It also plans to identify companies to be taken over by the government or black Zimbabweans and assess which mining exploration concessions are not being utilised.
The production and polishing of 1.2 million carats of diamonds a year is set as a target.
A second fuel pipeline from the Mozambican port of Beira is planned as is the development of a biofuels policy, which would include the planting of jatropha and the expansion of sugar cane plantations.
“What is critical for this document is funding and that appears to be the missing link,” Best Doroh, chief economist at ZB Financial Holdings in Harare, said in an interview.
“They did a decent job in identifying what needs to be done and in identifying the issues but the key component of funding has to be addressed.” – Bloomberg News
COMMENTS
“What is critical for this document is funding and that appears to be the missing link,” Best Doroh, chief economist at ZB Financial Holdings in Harare, said in an interview.
So what else is new? ZANU-PF thinks the people will think they are trying to change things if they talk of all the big projects that they would do – IF THEY ONLY HAD THE MONEY!
Does Chinamasa think that people are idiots? None of this will happen until Zimbabwe begins to act financiallly responsible and starts protecting property rights.
Where has China been? Their past support is directly tied to the exponential benefits they receieve in return. Is Mugabe turning to BRICS because he thinks they’ll be less concerned with his high probability of financial default and lack of good governance when considering their support?
Or is this just a cynical PR ploy to impress the povo? After all, Zimbabwe is already engaging individually with China, SA, Russia, Brazil & India. If they haven’t given him any money yet, why should that change? It’s not as if there’s a BRICS bank that he can beg from.
Too much bomboclaat bark and no rasclaat bite. Toothless old dogs.
Strangely. now Mugabe wants ” securitisation of remittances”. Finally Mugabe has acknowledged the importance of diaspora remittances. He needs to be reminded, diaspora should e rewarded with citizenship and voting rights.
Tafadzwa, that’s not what Mugabe is thinking. “Securitisation of remittances,” is just a fancy way for him to say he wants his cut. Think of it as the indigenization of foreign money entering the country, and you’ll better understand the ZANU-PF perspective. It ain’t about acknowledging anyone else’s economic power or contribution to society, it’s simply a legal sounding method to shake people down and get at their money.
And when no-one gives them any loans because they know it will be stolen and not repaid, they are going to blame sanctions, or the drought or the colonialists instead of their own greed and corruption!Let the house of cards collapse fully this time, no agreements with MDC to save the day.
Naive economic bogus academic wishful dreams. Can’t you puffed up “expert analysts” ever face hard reality. Endless pointless debating
It appears we cant tell it as it is . Anyway suffer we will.
Loans needs to be serviced. IMF is willing to give but your payment records is bad you want to change to these other countries? What difference will it make? Just retire that’s all!
“My government has formulated a new plan….”. What happened to the old plans? Can someone tell this political dinosaur that even if he gets loans from the BRICS nations they still except them to be repaid, just as the IMF and World Bank do. There are no freebies!
Reading through these plans one can be forgiven to think they are coming from a guy who has come to power for the first time, not one who has been at it for over 3 decades.
I m easily fooled by the planting of the jatropha, does it grow and be ready for harvest in 3 days? It needs time, money and resources to harvest it for “fuel” production. The best source of diesel is the Chinhoyi curves.
BRICS has ever been there, we have loans with BRICS which we failed to service and now we are servicing in kind of unequitable means such as pledging diamond resources to China
TO all that have commented above, please answer this question directly and honestly: do u wish Zanu the worst in their efforts at managing the economy?
What about you ?
Shallow minds, dealing with ignorant people is very difficult, especially when they dont know they are ignorant. I said the budget is not yet out and Chinamasa is busy balancing the funding issue. Wait for the budget before celebrating.
Whatever you say,only you know the truth.
this is the problem Shebah, such people are actually celebrating our difficulties……i believe that such thinkers will actually hope that the economy remains stagnant until the next elections so that their party/s stand a better chance of success…..what direction do we turn to when we have such negativity in our country (at least i think these people are Zimbabweans?????)
@ROB & SHEBAH : http://www.globalwitness.org/sites/default/files/library/Financing_a_parallel_government_Zimbabwe.pdf. READ FIRST, SPEAK AFTERWARDS
The simple solution is to pay what you owe first before you borrow more. Is that so hard to see. Guys we have to be serious. Who can lend money into a bottomless pit. The problem is that in Zimbabwe we have immature politicians who do things to “fix the people”. Why do they underestimate the power of the people? People have their own effective passive resistance methods. This economy shall collapse sooner rather than later if the people are not involved. Zimbabweans abroad have the cash and the capacity to assist, but who can place hies or her wallet near a hungry lion. There is no rule of law…or at least that’s the perception everywhere. Besides seizing “white’ farms (which is fascism)a ZPF person can take property of anyone on the pretext that the victim belongs to the ‘opposition’. Is ZPF trying to achieve the impossible 100% loyalty where all citizens vote for it? Can that happen. Can you burn the house because people oppose your viewpoint. There is a Schism dividing the nation where brother has been turned against brother because of poverty politics which promise perpetrators heaven on earth!! My people. We need sanity and simple logic. Money is there but the macro environment in Zimbabwe is frightening for locals….what of for foreigners of “white race”.
THIS IS FOR ORDINARY PEOPLE, NOT FOR MONSTEES.
THIS IS FOR ORDINARY PEOPLE, NOT FOR MONSTERS.
Fix good governance, the rule of law and in no time our situation will change, does take a rocket scientist to figure that. We can write a big story about Zimbabwe and its glorified economic plans if we do not fix one page on how to return the country to the people who put you in power in the first place, forget about your dreams Bob.
For 33 years we have blamed somebody else, how foolish. First it was the colonialists who had already before UDI, now you blaming sanctions which in truth are restrictive measures on a few who know the sh*#t they have done, what next? Drought, because Zanu PF has failed doesn’t mean Zimbabwean are foolish but oppressed, Shame, Shame, Shame on you Cde Mugabe!! Given, you would have retired long ago but your cronies need you to avoid long jail terms and loss of their illgotten wealth, that is why you’re still there. Because they know when you gone all will be lost, but how long can you remain alive, you’re not immortal!!
AMEN
extending loans to Zimbabwe this time is sucidial for any government. Zimbabwe government under Mugabe ZANU PF is not recognised by the majority as they rigged the election. Reports of their rigging is everywhere.
IT IS NOT A GOVERNMENT. IT IS DICTATORSHIP. FULL STOP.
Rob, ZANU wish the worst for their own people, They are incompetent clueless self serving thieving morons, and to answer your question Yes I and millions of Zimbabweans wish the worst for ZANU
Prophecy of doom in session. Like I said dealing with ignorant people is very difficult. You dont even know how balance of payment / budget support work. This balance of payments, where in, we used to get part of our budget funding from IMF for recurrent expenditure just dried up with sanctions. Remember recurrent expenditure include loan repayment, and if you pay part of loan repayment by another loan you are not in default. They call it revolving funding/ borrow from Peter to pay John. If Peter can not lead, then you can not pay John. IMF is no longer supporting the budget so we can not repay. But because we are in a weak position membership voting wise, we will have to pay up from somewhere before they can allow us to borrow. And they know we have no capacity and they play around with us.
shebah. Why would Zimbabwe need budget funding when we have an income stream from diamond sales.Is it necessary to buy an MP a vehicle when there is a drought looming?Zimbabwe has the resources and human capital to take itself out of the doldrums if we become pragmatic.
Continuous emphasis on the wrong things is not wise.
Several examples come to mind.
With the continuous retrenchments ,the emphasis should be on the rehabilitation of agriculture.It is a major employment creator and would give impetus to consumption.
The proposed sovereign wealth fund could house all the funds from the community trusts and then placed as collateral against foreign debt.
the list goes on.
Too many contributors spend too much time insulting each other where we should be analysing and giving critique.
YOU WASTE YOUR TIME WITH THIS ZANU-PF FOUNDING FATHER