Home » Governance » ’Zim Needs to Attract Low-Cost Funding’

Zimbabwe should put in place incentives to attract international private capital into the economy rather than rely too much on loans and lines of credit for development, Acting Foreign Affairs Minister Christopher Mutsvangwa has said.

Ambassador Mutsvangwa said enticements like special economic zones were one way Zim-Asset could attract low-cost funding.

He was speaking after meeting a Chinese delegation that is in the country for a three-day visit.

The delegation, led by Mr Ji Peiding, a member of the Foreign Policy Aisory Group of the Ministry of Foreign Affairs of China, also had closed door meetings with Acting President Emmerson Mnangagwa and Vice President Phelekezela Mphoko yesterday.

Ambassador Mutsvangwa said it was high time Zimbabwe abandoned the focus on loans and lines of credit.

“All the elements are there in place to attract business investment, that is, a good resource base and the highest human resource index in Africa,” he said.

“What is needed are incentives to attract the biggest money, which is in international private players. Because people like the Chinese are risking, let us give them incentives.”

He said the Special Economic Zones Bill, if passed, would be a signal to the world that Zimbabwe was ready to engage with international private players. In special economic zones, business and trade laws differ from the rest of the country due to easier terms such as tax holidays and lax labour laws to promote trade, investment, job creation and effective administration.

“If we go through the International Monetary Fund or the World Bank, we will be dealing with a go between,” Ambassador Mutsvangwa said.

“This is a new thrust because Zim-Asset cannot be supported by the IMF and the World Bank on the scale which makes it possible to grow an economy. Loans shift the burden to Government, which in turn places it on the taxpayer because only the Government has taken the risk to service the loan. The Zimbabwe economic agenda has focused on engaging them (lending institutions) and there is a challenge in that because these are not generating new capital. They are basically asking for the servicing of capital which has already been committed to the country and which did not perform as good as it should have been.”

In any case, Ambassador Mutsvangwa said, the amount of money available in international loan portfolio of multinational agents was very limited.

Mr Peiding said the Zimbabwean economy was “picking up” and needed support from progressive forces.

“I briefed VP (Mphoko) that the Chinese are willing to enter into joint ventures with friends in Zimbabwe in the manufacturing and infrastructure sectors,” he said.

“The progress on projects we are implementing is satisfactory. Now we are at a time we should be looking further into our future. We should consider other big projects,” Mr Peiding said. “Zimbabwe is a best friend. We have supported each other in the old days before Zimbabwe got independence.”

He said with Acting President Mnangagwa they had reviewed their friendship and ways in which bilateral relations could be strengthened.

Source : The Herald