Latest News Editor's Choice

Opinion / Columnist

The economic impact of Zidera

04 Nov 2022 at 01:34hrs | Views
No doubt there are many opinions and interpretations out there with regard to the issue of sanctions and I thought it's important to try and unpack the Zimbabwe Democracy and Economic Recovery Act (Zidera) signed into law by the US President George W Bush on December 21 2001.

There is also the Zidera amendment Act of 2018, which went into further details particularly on the electoral reforms and economic issues.

We must first have the facts.

According to the Zidera statement of policy, "It is the policy of the United States to support the people of Zimbabwe in their struggle to effect peaceful, democratic change, achieve broad-based and equitable economic growth, and restore the rule of law."

Prior to the Act becoming law, The United States Congress made the following findings which I quote:

Through economic mismanagement, undemocratic practices, and the costly deployment of troops to the Democratic Republic of the Congo, the Government of Zimbabwe has rendered itself ineligible to participate in International Bank for Reconstruction and Development and International Monetary Fund programmes, which would otherwise be providing substantial resources to assist in the recovery and modernisation of Zimbabwe's economy. The people of Zimbabwe have thus been denied the economic and democratic benefits envisioned by the donors to such programmes, including the United States.

In September 1999 the IMF suspended its support under a ‘‘Stand by Arrangement'', approved the previous month, for economic adjustment and reform in Zimbabwe.

In october 1999, the International Development Association (referred to as the ‘‘IDA'') suspended all structural adjustment loans, credits, and guarantees to the Government of Zimbabwe.

In May 2000, the IDA suspended all other new lending to the Government of Zimbabwe.

In September 2000, the IDA suspended disbursement of funds for ongoing projects under previously-approved loans, credits, and guarantees to the Government of Zimbabwe.

There is then the United States policy stance on multilateral financing restrictions where, the Secretary of the Treasury shall instruct the United States executive director to each international financial institution to oppose and vote against any extension by the respective institution of any loan, credit, or guarantee to the Government of Zimbabwe; or any cancellation or reduction of indebtedness owed by the Government of Zimbabwe to the United States or any international financial institutions;

This, according to the Act, would be rescinded if and when there is United States Presidential certification that certain conditions are satisfied. These conditions include:

Rule of law
The rule of law has been restored in Zimbabwe, including respect for ownership and title to property, freedom of speech and association, and an end to the lawlessness, violence, and intimidation sponsored, condoned, or tolerated by the Government of Zimbabwe, the ruling party, and their supporters or entities.

Presidential election
Zimbabwe has held a presidential election that is widely accepted as free and fair by independent international monitors, and the president-elect is free to assume the duties of the office.

Pre-election conditions
In the event the certification is made before the presidential election takes place, the Government of Zimbabwe has sufficiently improved the pre-election environment to a degree consistent with accepted international standards for security and freedom of movement and association.

Land reform
The Government of Zimbabwe has demonstrated a commitment to an equitable, legal, and transparent land reform programme consistent with agreements reached at the International Donors' Conference on Land Reform and Resettlement in Zimbabwe held in Harare, Zimbabwe, in September 1998.

DRC conflict
The Government of Zimbabwe is making a good faith effort to fulfil the terms of the Lusaka, Zambia, agreement on ending the war in the Democratic Republic of Congo.

Militarily, police
The Zimbabwean Armed Forces, the National Police of Zimbabwe, and other state security forces are responsible to and serve the elected civilian government.

In addition to the above, Zidera specified actions to be taken against individuals responsible for violence and the breakdown of the rule of law which include:

Identification and sharing of information regarding individuals responsible for the deliberate breakdown of the rule of law, politically motivated violence, and intimidation in Zimbabwe;

Identify assets of those individuals held outside Zimbabwe and implement travel and economic sanctions against those individuals and their associates and families.

From the above it is clear that Zidera has had socioeconomic impact on Zimbabwe's economy as a whole simply by restricting access to offshore funding and by not allowing our debt restructuring or cancellation which now stands at $17,2 billion. However, Zidera does not restrict Zimbabwe international trade directly but has an indirect impact if traders are unable to access offshore trade finance.

For me therefore to argue that Zimbabwe only has targeted sanctions against individuals is not factual; it has financial restrictions which affect the generality of citizens through the inability of the government to fund developmental projects.

The lack of access to offshore credit affects every economic sector, especially the poor. The inability to restructure or cancel our debt puts a financial squeeze as government revenues must raise funding elsewhere -from taxing citizens and businesses more.

Yes we need electoral reforms, there is no question about that.

We need to see a violence free political environment which respects individual choice, we need to see freedom of association, the rule of law and seriously address corruption.

These are key fundamentals for a prosperous Zimbabwe and must be taken seriously.

But the fact of the matter remains that Zidera financial restrictions are a blunt instrument which needs to be removed in order to allow Zimbabwe's economy to recover. An economy cannot recover when you financially strangle it.

Musewe is an economist mvtmusewe@gmail. comse These weekly New Perspectives articles published in the Zimbabwe Independent are coordinated by Lovemore Kadenge, an independent consultant, past president of the Zimbabwe Economics Society and past president of the Chartered Governance & Accountancy Institute in Zimbabwe (CGI Zimbabwe). — kadenge.zes@ or mobile: +263 772 382 852.

Source - Zimbabwe Independent
All articles and letters published on Bulawayo24 have been independently written by members of Bulawayo24's community. The views of users published on Bulawayo24 are therefore their own and do not necessarily represent the views of Bulawayo24. Bulawayo24 editors also reserve the right to edit or delete any and all comments received.