HARARE – Reserve Bank of Zimbabwe governor John Mangudya over the weekend reiterated the country’s commitment to repay its external debts.
“Zimbabwe owes many people money and we owe it to pay everyone; there is no favouritism. If you borrow money from the World Bank, you need to pay the World Bank, if you borrow from China, you have to pay the Chinese, if you borrow from Malaysians, you need to pay Malaysians; so we are paying everyone according to availability of resources,” he said.
This comes as the country, which is currently saddled with a $10,8 billion debt overhang, is currently ineligible to access long-term finance from the World Bank, the International Monetary Fund (IMF) and African Development Bank over non-payment of arrears since 1999.
The reality is that there is nowhere to run and Zimbabwe should just go back to the basics of repaying what it owes, whether it is to the Western-linked IMF and other institutions or the favoured eastern Chinese economic giant.
As such, it is important that the country walks the talk and starts implementing its debt repayment strategy if Zimbabwe entertains any hope of attracting foreign investment to grow its economy — including the agriculture sector.
It is widely accepted that the country will forever be dependent on aid unless the commercial farming sector — destroyed by the contentious land reform exercise — is rebuilt in some form.
In order to rebuild the sector, foreign investment will need to flow into Zimbabwe and some displaced farmers will need to return.
The Zimbabwean government will also have its part to play, and indeed there are some confidence-building measures that President Robert Mugabe’s government could undertake.
For many years, various governments have been demanding that Zimbabwe honours its obligations pursuant to bilateral investment treaties, whereby the country promised to pay foreign investors compensation in the event of expropriation.
Several business delegations that have visited Zimbabwe from different countries including Australia, France, Britain and even the Chinese, have been singing from the same hymn book.
They have demanded that the government creates a conducive business environment by among other things clarifying economic polices such as the indigenisation laws while also respecting property rights among other things.
Mugabe may find that if his Zanu PF-led government makes serious attempts to honour Zimbabwe’s public international law obligations to investors, then the foreign investment and the engagement by the West that have been absent for so long may return.