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Zimbabwe sanctions repeal signal excites, but .
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Economists have warned that Zimbabwe should not get carried away by the United States' plans to repeal the Zimbabwe Democracy and Economic Recovery Act (ZDERA) sanctions, highlighting the stringent conditions the country must meet before the restrictions can be lifted.
ZDERA has been in place for 24 years, restricting long-term funding and foreign direct investment (FDI) into Zimbabwe. While the potential repeal is being hailed as a diplomatic victory, experts stress that Harare must first fulfill requirements set by Washington.
Under the proposed terms, Zimbabwe would need to commit, within 12 months of approval for any new or expanded funding, to remit all outstanding arrears owed under the Global Compensation Deed, adjusted for inflation to the date of enactment. The compensation cannot be made in Zimbabwe-issued securities. Failure to comply would result in the immediate cessation of U.S. support for further funding from multilateral institutions.
Christopher Mugaga, CEO of the Zimbabwe National Chamber of Commerce (ZNCC), said that while the repeal could send a positive signal to investors, it was unlikely to trigger an immediate surge in FDI. He urged Harare to focus on delivering results and warned that any missteps, including constitutional amendments, could have repercussions.
"With the removal of sanctions under the Trump administration, the impact will be limited because of the aggressive stance of Trump towards African countries, especially regarding visa restrictions for Zimbabweans," Mugaga said. "It will be a wait-and-see approach, especially with Harare under scrutiny by Washington."
One of the U.S. conditions is for Zimbabwe to compensate former farm owners under the Global Compensation Deed, amounting to US$3.5 billion. Since the agreement in 2020, the country has paid less than US$50 million. Economist Vince Musewe expressed skepticism that Zimbabwe could meet the requirement within 12 months given its fiscal constraints.
Despite the challenges, some economists view the potential repeal as a major diplomatic achievement. Dr. Prosper Chitambara described it as one of Zimbabwe's greatest diplomatic victories in recent years, noting that removing ZDERA would help normalise international trade relations, reduce high-risk premiums, and improve access to multilateral financial institutions.
Zimbabwe Economics Society vice-president Misheck Ugaro also welcomed the development, emphasizing that the condition of committing to clearing arrears is manageable. "By entering the Global Compensation Agreement, the government has already committed. This is great news for business, as it will boost trade finance and credit lines," Ugaro said.
While the repeal of ZDERA is celebrated as a breakthrough, economists stress that Zimbabwe's full benefit from the move will depend on the country meeting all conditions set by Washington.
ZDERA has been in place for 24 years, restricting long-term funding and foreign direct investment (FDI) into Zimbabwe. While the potential repeal is being hailed as a diplomatic victory, experts stress that Harare must first fulfill requirements set by Washington.
Under the proposed terms, Zimbabwe would need to commit, within 12 months of approval for any new or expanded funding, to remit all outstanding arrears owed under the Global Compensation Deed, adjusted for inflation to the date of enactment. The compensation cannot be made in Zimbabwe-issued securities. Failure to comply would result in the immediate cessation of U.S. support for further funding from multilateral institutions.
Christopher Mugaga, CEO of the Zimbabwe National Chamber of Commerce (ZNCC), said that while the repeal could send a positive signal to investors, it was unlikely to trigger an immediate surge in FDI. He urged Harare to focus on delivering results and warned that any missteps, including constitutional amendments, could have repercussions.
One of the U.S. conditions is for Zimbabwe to compensate former farm owners under the Global Compensation Deed, amounting to US$3.5 billion. Since the agreement in 2020, the country has paid less than US$50 million. Economist Vince Musewe expressed skepticism that Zimbabwe could meet the requirement within 12 months given its fiscal constraints.
Despite the challenges, some economists view the potential repeal as a major diplomatic achievement. Dr. Prosper Chitambara described it as one of Zimbabwe's greatest diplomatic victories in recent years, noting that removing ZDERA would help normalise international trade relations, reduce high-risk premiums, and improve access to multilateral financial institutions.
Zimbabwe Economics Society vice-president Misheck Ugaro also welcomed the development, emphasizing that the condition of committing to clearing arrears is manageable. "By entering the Global Compensation Agreement, the government has already committed. This is great news for business, as it will boost trade finance and credit lines," Ugaro said.
While the repeal of ZDERA is celebrated as a breakthrough, economists stress that Zimbabwe's full benefit from the move will depend on the country meeting all conditions set by Washington.
Source - Business Times
