Latest News Editor's Choice


News / National

Mthuli Ncube engages US over reforms, Zidera

by Staff reporter
10 Feb 2019 at 05:42hrs | Views
Finance and Economic Development Minister Professor Mthuli Ncube is set to leave for the United States of America next month to apprise that country's government officials on positive developments the country has achieved in recent months.

The engagements are expected to play a pivotal role in convincing the US to lift the ruinous two decades old economic sanctions imposed on the country under the Zimbabwe Democracy and Economic Recovery (Amendment) Act.

Zidera was initially signed into law by former President George W. Bush in December 2001, but had its amendments signed by current President Donald Trump in August last year.

Devastating effects of the Sanctions

The law, which opposition politicians and the civic society campaigned for and are still lobbying the US government to retain, empowers Washington's representatives in multilateral financial institutions such as the World Bank to vote against the extension of any financial support to Harare, among other constraints.

The economic sanctions, which are said to be targeted at senior Government officials by players in opposition politics, civic society and non-governmental organisations, have seen the country losing at least 80 lines of credit.

Prof Ncube told The Sunday Mail Business in an exclusive interview on the sidelines of his presentation to students of the Defence Course Intake 7 of 2018, at the Zimbabwe National Defence College in Mazowe last Thursday, that sanctions under Zidera, together with the absence of an acceptable arrears clearance plan, have caused the country to lose credit lines.

He said it was imperative for the country to obtain these through local banks, to support the productive sectors of the economy, which makes a strong case for Zidera to be removed.

Said Prof Ncube: "We have lost about 80 credit lines over time, because of Zidera and also because of the arrears clearance. So the two have contributed to the loss."

He said he needed time to quantify the extent of the loss of the 80 credit lines.

Some researchers have suggested that Zimbabwe has lost donor support amounting to about US$36 million per annum since 2001; US$79 million in loans from the IMF; the World Bank and AfDB; commercial loans of US$431 million and GDP reduction of US$3,4 billion.

Government research has revealed the sanctions could have cost the country over $42 billion in lost investment opportunities, hence the call for their immediate removal.

Arrears Clearance Strategy

Harare is now making frantic efforts to see through the current arrears clearance plan, which was accepted by multilateral financial institutions in Bali, Indonesia in October last year.

In a bid to have Zidera rescinded, Prof Ncube said he had already submitted a report to US government officials, detailing the country's reform programme that is enunciated in the economic blueprint, the Transitional Stabilisation Programme (TSP).

The TSP has since been accepted by key global economic players as the panacea to the country's challenges if implemented in its entirety.

Prof Ncube said the envisaged trip to Washington next month or early April, is aimed at updating them on the progress made so far, and potentially, explore how sanctions could be removed to spur the country's economy.

"Early December last year, we had that hearing on Zimbabwe and I submitted a report to the Foreign Relations Senate Committee on our reform agenda," said Prof Ncube.

"We have done that (and) now we follow that up with a visit, of course, so we will be able to do that in March or early April. This is to engage, to explain what we are doing.

"We hope that will contribute actually to the lifting of Zidera. And we are also aware that this is a process."

Need for Peace Going Forward

But Prof Ncube believes the country should be peaceful going forward if it is to attract investors and grow economically, noting that the recent MDC Alliance-instigated violent demonstrations "caused some turbulence" against the giant strides that had been recorded in the country.

The protests, which resulted in orgies of looting, road blockages, arson, injuries and deaths of ordinary citizens and a member of the Zimbabwe Republic Police, saw retailers and manufacturers losing infrastructure, business and stock of up to US$1,5 billion.

"Of course it (protests) has caused some turbulence you know. The advice (from the West including Bretton Woods institutions) has been look, let's be peaceful.

"But they support our position to stay on the course of the reform agenda. But it's recognised that there is some turbulence as a result of the protests," said Prof Ncube.

Firms and individuals that suffered heavily from sanctions

Companies and private individuals have been negatively impacted by the US's two-pronged sanctions regime on Harare.

There is Zidera and "targeted sanctions", which started in March 2003 after the then President Bush issued Executive Order 13288.

The Industrial Development Corporation (IDC), a wholly State-owned enterprise that was under sanctions until 2016, had a US$2 million loan sourced from the PTA Bank (now the Trade and Development Bank) in 2013, seized by the United States' Office of Foreign Assets Control (OFAC).

IDC, which intended to use the money for raw materials and plant rehabilitation, had interests in Olivine, Sable Chemicals, Chemplex Corporation and the Zimbabwe Fertiliser Company.

It has now divested from Olivine. ZFC says it had US$5 million frozen by OFAC. In total, IDC says it lost over US$20 million to seizures by OFAC.

In 2016, Standard Chartered directed IDC to close its accounts with the bank, fearing that it would be fined by the US Treasury Department for dealing with a firm under sanctions.

The US Treasury had penalised Barclays Plc US$2,5 million for processing 159 transactions worth US$3,4 million between 2008 and 2013, for IDC. The bank was accused of assisting the firm in busting the sanctions.

In 2014, a Zimbabwean technopreneur, Mr Takunda Chingonzo, appealed to then US president Barack Obama that his small business was reeling from the sanctions.

ZB Financial Holdings, which was under sanctions until 2016, said it could not access affordable lines of credit for its clients due to the debilitating sanctions.

CBZ was fined US$385 million by OFAC reportedly for handling ZB Bank transactions while it was under sanctions.

Agribank was also unable to deal directly with its clients and needed to conduct transactions through third parties due to sanctions, of course with serious consequences when caught by the US Treasury Department.

Econet founder Mr Strive Masiyiwa recently told a meeting of Afreximbank clients that "when sanctions hit the country, every credit line disappeared (and) you could not talk to anyone, they were shutting down. . ."

Former Deputy Prime Minister Professor Arthur Mutambara once said there is no company that can be a "superstar" under an environment of sanctions.

Source - sundaymail

Subscribe

Email: