Mugabe Pleads for Financial aid

PRESIDENT Mugabe yesterday pleaded with “Zimbabwe’s friends” for assistance to finance a US$5 billion economic recovery plan as the government struggles to attract bilateral support to kick-start the economy.

The inclusive government will sell off state enterprises and dispose of its equities in state-owned companies to raise funds. It will also soon launch a plan to attract foreign investors to partner the state in overhauling loss-making parastatals.

 

 

 

The authorities are currently engaged in talks with multilateral and bilateral lenders and donors to secure funding.

After Finance minister Tendai Biti presented in parliament a US$1 billion budget on Wednesday, President Mugabe yesterday launched the new economic blueprint, the Short Term Emergency Recovery Programme (Sterp), pleading for international assistance.

“I, on behalf of the inclusive government and the people of Zimbabwe, say: ‘Friends of Zimbabwe, please come to our aid’,” Mugabe said.

Mugabe said Zimbabwe should move away from “engaging in unproductive, divisive and destructive activities” and “devote ourselves to constructive and beneficial socio-economic reconstruction programmes”.

Biti in his budget review statement said government had opened dialogue with the international community to secure bridging finance, including lines of credit, for his budget and to support Sterp.

Sources said government would target loss-making parastatals for privatisation or partnerships.

Public enterprises which are owned 100% by the government include the National Railways of Zimbabwe, Zesa, Noczim, Zinwa, DDF, GMB, Air Zimbabwe, Arda, TelOne, NetOne, Industrial Development Corporation, Zimbabwe Mining Development Company, Minerals Marketing Corporation of Zimbabwe and CMED.

Government has equities in Wankie Colliery and Zisco.

Sources said Biti would propose to cabinet the need to privatise or seek partnerships for some of these companies.

Government has extensive stakes in various key sectors of the economy such as agriculture, manufacturing and mining. This was in addition to many public enterprises operating under different ministries.

Between 1991 and 1995, during the Economic Structural Adjustment Programme, government undertook public enterprise reforms to unlock value through disposal of public entities and commercialisation.

Under the parastatal reform framework, companies such as Dairibord, Cottco and CBZ Holdings were privatised as government disposed of its controlling shareholding.

“Government will be looking at various ways of raising funds to boost economic recovery. This will include privatisations, commercialisations and disposals of equities in some state or public enterprises,” a source said.
“This process will follow soon because this is going to be their most reliable source of revenue.”

Privatisation and commercialisation improve foreign exchange and foreign direct investment inflows, as well as performance and contribution to the broader economy.

The Sterp document to hand says government requires US$1,15 billion to support industry and as much as US$2 billion to repair electricity generation plants and to build new ones.

Agriculture, water and sanitation activities require US$980 million and US$740 million respectively. US$440 million is needed for education while health requires US$300 million. Other expenditures are US$255 for local authorities and US$100 million for vulnerable groups.

The government says it requires “substantial amounts in funding terms which will be well beyond the capacity of the inclusive government”. It is therefore hoped that bilateral and multilateral parties will play their part in this process.

“The reintegration of Zimbabwe into the community of nations is essential. Traditional bilateral and multilateral partners will be fully engaged. In this regard, the complementary roles that traditional funding instruments can play such as debt relief, infrastructural development funds, equity funds, technical and humanitarian assistance will be welcome,” the Sterp document says.

Government said it would channel proceeds from the sale of the state assets to the Consolidated Revenue Fund (CRF) under Treasury.

“In this regard, resources in the CRF will be augmented by resources from the disposal of non-strategic government assets and shares in state-owned enterprises,” the Sterp document said.

It added: “Given current budgetary resource constraints, there is scope for tapping the large potential resource base through selective listing on the stock exchange as well as targeted direct foreign investor participation on a joint venture basis”.

This week Biti announced huge budget cuts in response to the government’s failure to raise revenue through traditional sources such as individual income and corporate taxes. Biti announced on Wednesday government plans to pare US$900 million from the initial US$1,9 billion budget announced by then Acting Finance minister Patrick Chinamasa in January.

As part of the privatisation, the government said it will also pursue joint ventures “with competent consortia of foreign and local partners to raise financial and technical resources for investment in expansion”.

BY BERNARD MPOFU