Gono hunts for lifeline

RESERVE Bank governor Gideon Gono left for Russia on Wednesday, hardly a month after visiting Moscow and just over a week after returning from South Korea in search of an economic rescue package, it was learnt.

Gono has been looking for a lifeline to save Zimbabwe from headlo

ng decline. Sources said Gono was expected to meet Russian government officials and businessmen for talks on a possible financial and investment package that could help staunch the current economic haemorrhage. His trips are in connection with the recently launched National Economic Development Priority Programme, an economic recovery plan.

It is understood Gono will mainly be targeting investors in the mining sector where Zimbabwe has been trying to secure foreign direct investment although its efforts have largely been scuppered by property rights concerns.

Sources said government had now resolved to use minerals as security to obtain foreign loans and other forms of aid to save the crumbling economy.

This week government secured a US$50 million fuel deal with French bank, BNP Paribas ­— the first with a major European institution in years — with Bindura Nickel Corporation providing part of its product as security.

This raised fears government could mortgage mineral resources to secure lines of credit to prolong its stay in power.

“Zimbabwe has over 40 minerals and we should leverage these minerals, even if they are still in the ground, to get value,” Gono said at the signing ceremony of the fuel deal on Tuesday.

Government has of late been brandishing the country’s platinum and yet to be verified uranium reserves as bargaining chips for economic aid and investment. It is said the Russians are keen to enter Zimbabwe’s mining sector although their concerns over Zimbabwe’s sovereign risk are similar to those of other investors. 

Sources said Gono’s globe-trotting betrayed extreme anxiety in the corridors of power over the economic meltdown.

Zimbabwe has been trying to secure help from countries in the Far East — in particular China — under its “Look East” policy but not much has materialised so far.

China has established its interests in other African countries such as Sudan and Sierra Leone where the economic environments are beneficial despite the countries’ recent civil wars.

Gono’s forays into Russia and South Korea were seen as an attempt to widen the catchment area for foreign direct investment and lines of credit. In March Gono raised a storm in the United States when he tried to capitalise on his visit to the International Monetary Fund meeting to mobilise mining investment. The issue raised concern because Gono tried to use his invitation by a civic organisation to Capitol Hill to drum up investment in what was pitched as a potential violation of his visa conditions as he is under US targeted sanctions.

Zimbabwe has been finding it difficult to get investment and lines of credit due to its hostile business environment and poor credit rating. The country’s high political risk — magnified by blatant breaches of property rights and a bad macroeconomic climate — has also made it hard to get investment and loans.

However, sources said authorities believe the mortgaging of minerals might open lines of credit to import essentials. “Minerals will come in handy as guarantees for lines of credit which have dried up in recent years,” an official source said.

Zimbabwe fell out with multilateral lenders when it embarked on a controversial land reform programme from 2000 that has alienated the international community. Since then foreign direct investment has all but dried up. — Staff Writer