ZIMBABWE registered an historic milestone this week with the highlevel reengagement of bilateral creditors and an investment conference in the British capital, London. The meeting with the Paris Club, an informal group of officials from creditor countries whose role is to find coordinated and sustainable solutions to the payment difficulties experienced by debtor countries, is a key step in Zimbabwe’s attempts to return to the international fold, particularly to interfacing with international capital.
The delegation led by Finance and Economic Development Minister Patrick Chinamasa, which included Reserve Bank of Zimbabwe Governor Dr John Mangudya and other senior Government officials, engaged the Paris Club last Thursday. They also addressed an investment conference organised by Africa Confidential under the theme: “Zimbabwe 2016, Rebuilding and Rebooting”, the first of its kind in nearly two decades. At the conference, the delegation reiterated Zimbabwe’s commitment to clearing its arrears with multilateral creditors and pledged to compensate white former farmers for land, developments and equipment.
We trust that this earned an ear from the creditors and from investors who thronged the conference. Reengaging the creditors who fall under the Paris Club is a critical step in so much as it advances Zimbabwe’s commitment to solving its debt overhang. The debt has become an albatross around our neck, affecting our capacity to attract new capital while discouraging foreign direct investment. It is one of the single biggest threats to Zimbabwe’s resuscitation. Investors and financiers cannot extend lines of credit if our record for repaying debts is negative. A bad debt repayment index is in itself an indicator that a country is not ready for international capital.
As such, confronting the dead situation head on is a major development that sets Zimbabwe in good books with the international capital. Zimbabwe is not a delinquent member of the international community. Admittedly, we have had a number of challenges, in particular, honouring our financial obligations, but we remain a member of the global family. We have been isolated for a long time, there has not been direct discussion on the debt situation and this worsened our position.
But this meeting could be the breakthrough that we needed. We are not oblivious to the fact that a solution will not come overnight. Neither are we naïve to believe that only this meeting will do the magic. We have only started and the road ahead towards full reengagement could be long and gruelling. Many impediments could be thrown on the road, but as a country we are committed to ensure that we return to the international fold. Zimbabwe is a member and signatory to many international agreements and treaties.
For the past two decades we have not benefited from being a member and a signatory to most of the international treaties because of our isolation. However, now that we have come clean on our situation and laid bare our plan to clear our arrears, we hope international actors will accept us back. We do not expect our colleagues in the international community to switch goal posts after we have made such serious commitment to clear our arrears. Zimbabwe is acting in good faith and we can only hope for the same from our partners. We have just faced political and economic challenges, but we remain fully committed to our obligations and to the dictates of international customs and norms.
What is also critical is that London is the hub for international capital. And therefore, addressing a fully attended conference on rebuilding Zimbabwe will take the country forward. We have addressed critical investment laws and are in a process to clean the doing business environment. This is the time for investors, local and international, to pick positions. Zimbabwe is ripe for business.