HomeAnalysisLoan: UK nails colours to the mast

Loan: UK nails colours to the mast

THE commercial loan by the United Kingdom of US$100 million to the private sector in Zimbabwe just before the general elections — at a time the European Union (EU) has demanded reforms and credible polls before full rapprochement — has raised eyebrows about Britain’s vested interests in supporting the current Harare administration.

By Kudzai Kuwaza

The move has crystalised the sentiment that the UK has nailed its colours to the mast — it has made it obvious who it is supporting in Zimbabwe. The UK partnered with British multinational banking and financial services group Standard Chartered through the Commonwealth Development Corporation to lend the money, which is the first direct commercial loan to Zimbabwe in more than 20 years.

While the money will not go directly to the government, it is seen as a huge vote of confidence in the Mnangagwa regime. This is buttressed by the fact that loans to the private sector have only resumed now two decades later and only after Mnangagwa came in as president.

The CDC is the UK’s development finance institution, which supports the building of businesses throughout Africa and South Asia to create jobs and sustainability.

Mnangagwa came to power in November last year after former president Robert Mugabe was forced out through a military coup.

This follows earlier efforts by the same two parties to secure a US$262 million loan package to help the country raise US$1,8 billion to clear its debts in order to secure US$2 billion in fresh funding during the Mugabe regime in 2016.

The loan comes at a time the EU has demanded reforms as well as free and fair elections by the government before full engagement can take place.

“The EU reaffirms its availability to engage constructively with the new authorities, including through a structured political dialogue with political actors across the spectrum and with civil society on the basis of a mutual commitment to shared values focussed on human rights, democratic principles and the rule of law,” the bloc said in a statement in January this year.

“The upcoming electoral process will be an essential step. The EU welcomes the commitment of the authorities to hold elections in line with the Constitution, and underlines the importance that the conditions are in place to allow those elections to be peaceful, inclusive, credible and transparent.”

The loan is also coming against a backdrop of the new regime’s failure to implement comprehensive reforms and before elections, which most key players on Zimbabwe — including big powers and investors — have put as a condition for engagement on the way forward.

The loan deal has caused much angst, particularly for opposition parties. People’s Democratic Party leader and former Finance minister Tendai Biti told the Financial Times of Britain that the provision of the loan was an “attempt to put lipstick on a crocodile”. Crocodile is Mnangagwa’s nickname. The expression is putting lipstick on a pig — meaning making cosmetic changes in a futile attempt to disguise the true nature of the Harare regime.

However, the British embassy, through its Twitter account, has been at pains to point out that the loan is not an endorsement of Mnangagwa’s regime.

“It could not be clearer that this is about much-needed credit lines to struggling Zimbabwe private sector on commercial terms,” the British deputy ambassador to Zimbabwe, Simon Thomas, wrote on his Twitter account.

“Not a cent is going anywhere near government, let alone political parties.”

However, this has not stopped Mnangagwa from using the loan advanced to private businesses as a platform to score political points ahead of the make-or-break elections.

Addressing Zanu PF supporters in Mutare on Saturday, Mnangagwa said following the thawing of relations between the two nations, the United Kingdom had given Zimbabwe a US$100 million soft loan to resolve the cash crisis.

“The British Prime Minister (Theresa May) has so far sent three envoys into the country and we had talks with the British this week (last week) and, just last Tuesday, they gave us US$100 million to ease the cash crisis in our country,” he told the crowd at Sakubva Stadium in Mutare on Saturday.

“We are going to receive more money, which is on its way. We want to ensure that everyone can access their money from the bank and be able to use it.”

British ambassador Caitrona Laing has been forced to deny that she has cosying up to Zanu PF. However, a picture of her wearing a replica of the scarf worn by Mnangagwa, associated more with Zanu PF party regalia than national dress, while posing for pictures on the doorstep of 10 Downing Street, which is British Prime Minister Theresa May’s offices in London, has resulted in her denials finding few takers.

Political analyst Eldred Masunungure says although the timing of the loan has caused consternation, he believes it is simply a private sector arrangement.

“Well, there are different ways of interpreting that. It is not a government loan,” Masunungure said.

“They have given the loan to the private sector and have weighed the risks. They have given the loan despite the EU position.”

Masunungure said it could also be interpreted as an endorsement of the Mnangagwa administration. “The loan, because of its timing, has raised discomfort in some circles,” he said. “But I will give them the benefit of the doubt. I believe this is a private sector to private sector arrangement.”

However, political analyst Ibbo Mandaza said the British loan is an indication of Whitehall’s support for Mnangagwa.

“I think the UK has clearly shown its hand,” Mandaza said.
He said it is significant that the British have gone ahead to provide assistance at a time the EU and United States have urged caution.

Economist and MDC-T Bulawayo East legislator Eddie Cross believes the loan, coming at a time there is very little in terms of reform on the ground, is premature.

“I think they have jumped the gun,” Cross said. “We have made a number of demands for reforms and eight out of 10 of them have not been addressed.”

He said the lack of media reforms and the opaque ballot paper handling process are examples of the failure by the Mnangagwa government to implement far-reaching reforms.

Cross said the loan showed support for the Mnangagwa regime, adding that the UK should only provide financial bailout after credible elections.

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