via Govt in desperate move to raise cash – The Zimbabwe Independent May 9, 2014 by Chris Muronzi
Fears the economy will collapse owing to tight liquidity conditions heightened this week amid indications President Robert Mugabe’s government last week ordered diamond mining companies to deposit sorted and valued diamonds with the Reserve Bank of Zimbabwe (RBZ) to securitise a loan government it has structured with an offshore financier.
A letter to diamond mining companies dated April 28 from Mines secretary Francis Gudyanga, seen by the Zimbabwe Independent, shows government is desperate to access offshore funding and ease the liquidity crunch gripping the country.
Reads the letter: “The Zimbabwe government is engaging strategic financiers to assist the government with funding.
You are therefore requested to prepare parcels of all your currently produced diamonds which must be sorted and evaluated with the involvement of the Minerals Marketing Corporation of Zimbabwe (MMCZ) in the usual manner by Wednesday 30 April 2014.
“The parcels will be deposited with the Reserve bank of Zimbabwe and used to securitise a government loan.”
Gudyanga said payment for the parcels would be made soon after they were deposited.
Without giving information on how the diamond miners would be paid, he wrote: “the details of the processes will be discussed shortly.”
However, diamond mines are worried government might not pay them for the diamonds.
This lends credence to comments by Chinese Ambassador to Zimbabwe Lin Lin who this week told delegates to a Southern African Political Economy Series Trust (Sapes Trust)-organised international conference on Zimbabwe that Harare and Beijing were locked in discussions on the provision of a financial package to fund Zim-Asset that would see government “securitising” its national resources.
Zimbabwe is in desperate need of liquidity to stimulate the country’s faltering economy. Government needs at least US$10 billion for its ambitious Zimbabwe Agenda for Sustainable Socio-Economic Transformation (Zim-Asset), an economic
blueprint covering 2013 to 2018, unveiled after disputed elections last year by the Zanu PF government.
The Chinese envoy said the country was ready to provide lines of credit, but Zimbabwe would need to“securitise” the loan using its vast mineral resources.
While it seems government is immediately securitising its diamonds, informed sources said China is looking at gold and chrome as well.
Even after government puts up an acceptable collateral for the loan believed to be above one billion United States dollars, the country is also under pressure to repay all outstanding loans to the Chinese government, sources said.
“My government is committed to give our support to Zimbabwe’s economic recovery,” Lin reportedly said. “What I can say now is that the two sides are carrying out discussions on lines of credit provided by Chinese financial institutions as proposed by the Zimbabwean side using your minerals as kind of security. We are looking forward to reach a kind of an agreement on that issue and I hope sometime this year.”
With Zimbabwe’s checkered investment policies, analysts believe this could be the only feasible option to attract liquidity, but many fear this is tantamount to mortgaging the country’s resources to the Chinese.
Traditional sources of liquidity such as exports and Foreign Direct Investment have all but dried up.
Industry is operating on obsolete equipment and is not competitive and cannot export meaningfully, while government’s indigenisation policy has not helped the situation.
In line with the Indigenisation Act, foreign investors are supposed to dispose controlling stakes in business to indigenous Zimbabweans.
Although Mugabe and his Zanu PF government have toned down on their indigenisation mantra in recent months, analysts don’t believe the shift in policy will help attract the much needed investment in the short-term.
The Chinese diplomat also defended his Premier Li Keqiang’s decision to omit Zimbabwe from his itinerary on his four nation tour of Africa, saying this did not mean that relations between the two countries were not sound.
COMMENTS
To hell with “Borrow from Peter to pay Paul”
Lets just “Steal from Peter to Borrow from Paul”…
Which brainless turd came up with THAT idea!?
p.s. “However, diamond mines are worried government might not pay them for the diamonds.”
Understatement of the century!!!!
Do I feel sorry for the Diamond companies, a big no. These are the same people who have been bankrolling the Zanu rigging and war machine. War against the populace.
Let the walls of Jerico fall.
The Zanu ZZimasset is pure arigame , all paper and no substance.
There is no way out for these losers. They are doing the same old Gono trick of raiding other people’s accounts. It will not work. Its going to drive them back to the 2008 situation. We are in for a bumpy ride . Grace yourselves,.
And the MDC is still in parliament supporting their idols ,Zanu.
I don’t understand that one either.
What on earth do they think they will accomplish, these MDC guys sitting together with ZANU trash in Parly?
Diamonds are a myth sustained by monopolies, particularly De Beers. Synthetic diamonds manufactured in laboratories are superior but cheaper than diamonds mined at such great expense to human life and the environment. Why do we allow ourselves and our world to be held hostage by a mere symbol; that has no real use; that can be simulated effectively and cheaply for those who absolutely must wear some bling? The fur trade (which actually should have been sustainably managed for the benefit of wildlife) was broken through “green” activism. Perhaps the relevant Watchdogs should now mount a campaign to encourage people to choose synthetic gems and put an end to the political abuse of the gem market.
Tell the Chinese that zanu is an unlawful regime and that any loans made to it will not be honored by the Mdc With no cash comming in zanu will collapse
All efforts failing. Zpf slowly disappearing. A dream of being allowed to critisize the president come true
Obviously they will never be paid back. All Zimbos know that
These wonderful good citizens from the diamond business deserve every rip off ZANU imposes upon them.
The miners will react to this move by selling their diamonds outside of government channels.
The only certain thing is that Zimbabwean tax payers and the general population will not benefit from this wealth until ZANU is gone.
what a circus! the robber is robbing a robber who wants to be paid for what he robbed. True there was never any honour among thieves!
Meanwhile Zimbabwe is raped over and over.
Access offshore funding? And for the past year offshore banks have been closing Zimbos private bank accounts. Why? Illegal gold and diamond dealing AND the firearms factory that exists in Harare. PULLEEEASE!!!!!
This is the time Zimbabwe would have made use of an organized opposition and whoever has orchestrated the current turmoil in the biggest opposition must be on ZANU PF’s payroll for they have effectively made sure the opposition cannot organize, at least, for the time being.
So filthy imperialist money (usd) is great so long as it’s coming from the Chinese. What’s wrong with yuan?
Hey that’s so the powers that be can steal the last resort – only zanupf will benefit and the money taken outside to mugabes Singapore account
P.S Besides Singapore Account, Malyasian Accountt,Hong Kong Account, Swiss Account etc! Pity no one has a strategy to locate these accounts
Of cause the diamond companies will not be paid!! Its our indegenisation policy at play stupid!! We have appraised it from 51 percent to 100 percent. That is why our manfacto was an election winner! Kkkkkkkk!!!!