'Pay your debts,' says Mugabe

STABILITY in the financial sector and economic recovery are being hampered by a culture of failing to honour debts, President Robert Mugabe said yesterday. President Mugabe compared failing to pay debts to a disease, pointing out that responsible borrowing could spur productivity and return many companies to profitability.

"You should pay debts. We've a disease in Zimbabwe, that of receiving and forgetting that debt should be settled. It's a very bad culture and it's happening in our companies, even in the government it's happening. Even in your Ministry of Finance it's happening," the Zanu-PF leader said while addressing 10,000 war veterans in Harare yesterday.

He added: "We borrow and borrow and continue to borrow, but when you borrow, you become a borrower or a debtor. You must realise that you've an obligation to pay tomorrow.

"That must sink in our minds, in our population. It has, I'm afraid and I must admit, it hasn't sunk in the minds of my ministers yet. Not in the minds of my civil servants.

"We can borrow, oh yes let's get the debt, let's get that, but what's the commitment? The commitment is yes, we get the debt, but get the debt to produce more! By the time we pay, we'd have made much more money from it.

"That's good business acumen if you do that. You use the loan to create more money for yourself and then by the time you pay, you can say I've created this business, I've done this business, I've this structure, this road, this bridge.

"Anyway, we're also learning. I'm sure my ministers are also learning but I'm saying this because it must be part of our ideology. It's an ideology that makes for good relationship and good neighbourliness."

The President spoke of his disappointment at learning that Zimbabwe had defaulted on a US$20 million debt to Malawi, one of the country's key regional allies.

"We were assisted sometime when we were short of maize. We got some maize from Malawi and we owed Malawi, I think it was $20 million or so, it was before President Joyce Banda, during the time of [President Bingu wa] Mutharika the first, but we couldn't pay back and I think it's only perhaps this year that we managed to pay back the $20 million. Only $20 million!"

Zimbabwe makes money, although receipts are down due to low exports and a poorly performing economy, and "it has to pay its debts." "Yes it has credits, it has its own debtors, but our debtors, our companies for example, they owe each other. That's not good and all those things must be looked at."

Reserve Bank governor John Mangudya has in the past spoken of the need for Zimbabweans to pay their debts to keep the economy moving. Zimbabweans, he said, must stop expecting deliverance from the economic challenges from central government without playing their part.

"The government is you and the economy is us," he said in 2014, adding individuals should stop pointing fingers at the government for failing to pay its debts, yet at a personal level they were also not honouring their obligations.

"It's now a culture. It's now cascading from the government right to individuals," he said. "People aren't even paying their water and electricity bills."

Mangudya said discipline in personal finance was a crucial ingredient in the efforts to revive the economy to work. Self-control was critical particularly in addressing high levels of imports which were drowning the economy.

Zimbabwe's trade deficit is currently hovering around $3 billion, mostly due to non-productive imports flooding the country.