Zim reforms lethargic

THE European Union (EU) on May 9 celebrated its 70th anniversary. Zimbabwe Independent assistant editor Owen Gagare and senior reporter Bridget Mananavire (ZI) caught up with the EU ambassador to Zimbabwe Timo Olkkonen (TO) to discuss the anniversary, the European bloc’s relationship with the Zimbabwean government and its views on the progress the country has made in implementing reforms, among other issues.

ZI: What was the highlight of this year’s Europe Day, which came amid the Covid-19 pandemic?

TO: The highlight was the important anniversary of the Schuman declaration, 70 years since the start of the European integration process. We also had around the same time the 75 years anniversary of the end of the Second World War in Europe, the horrors of the wars having been an important impetus to the integration process. It was a time to look back at how modern Europe was built, and the values we share, such as solidarity, which is today as topical as ever.

ZI: What was the highlight of this year’s Europe Day, which came amid the Covid-19 pandemic?

TO: The highlight was the important anniversary of the Schuman Declaration, 70 years since the start of the European integration process. We also had around the same time the 75 years anniversary of the end of the Second World War in Europe, the horrors of the wars having been an important impetus to the integration process. It was a time to look back at how modern Europe was built, and the values we share, such as solidarity, which is today as topical as ever.

ZI:What would you say are the major achievements of the EU since the Schuman Declaration of May 9, 1950, which resulted in the integration of the bloc?

TO: The European integration process has covered a wide range of areas, economic, political and social. The single market, which means Europe together forms one of the global economic powerhouses is, of course, one core element. But there are many more areas which could be outlined, those achievements that touch on Europeans’ daily lives, such as free movement — the value of which we appreciate even more now when it is not a given due to the (Covid-19) pandemic. Without integration, Europe would not be a leader in many global processes, such as the fight against climate change. But if I would have to pick one achievement, that would be peace. For more than a thousand years since the fall of the Roman Empire, European states had been intermittently at war with each other, in different constellations and with devastating consequences. The integration process has put an end to it. At its heart, European integration is a peace process. And in 2012, the European Union received the Nobel Peace Prize for that.

ZI: The 70th anniversary of the Schuman Declaration was celebrated at a time Britain is pushing ahead with Brexit, although it has been slowed down by the Covid-19 pandemic. Does this mean the EU is under threat and will the bloc remain intact going forward?

TO: The EU is not under threat. If you look at the polls about the popularity of the union, you will see that the EU has become more popular amongst the European citizens during and after Brexit. The voices calling for further departures from the EU have become quieter. The international environment would be much colder, more challenging and more difficult for any of the 27 EU member states if they would try to go it alone. Global challenges such as climate change show the need for more, not less, international cooperation and the coronavirus pandemic is further underlining the need for solidarity and cooperation without borders.

ZI: The Zimbabwean government, through Foreign Affairs minister Sibusiso Moyo, congratulated the EU on the 70th anniversary and highlighted that Harare was committed to “overcome the challenges that have restricted the full restoration of mutually beneficial relations”. From the EU perspective, what has slowed down the normalisation of relations between Harare and Brussels?

TO: The relations between the EU and Zimbabwe consist of various sectors and layers. We have seen positive developments on political dialogue, trade accompanied by a substantial increase in EU development and humanitarian assistance for the people of Zimbabwe. On trade, we are expanding our relations by negotiating an agreement that covers trade-related areas such as services. We cannot and should not hide our differences in the political field, though. It is no secret that we have disagreements about governance or human rights, and the very few remaining restrictive measures are linked to the latter. What is disappointing is that our relations could be deeper and more varied if Zimbabwe would be a more welcoming destination for European businesses and investors. This would require further reforms to bring the economy back on track, bring about more transparency, fight against corruption and inclusive good governance. Overall, I would be hoping for many more links not only between our respective private sectors, but people-to-people exchanges in general: civil society cooperation, tourism, student exchanges, to name some. A more conducive governance environment would help in all that.

ZI: How have relations between Zimbabwe and the EU evolved since President Emmerson Mnangagwa took over as Zimbabwe’s leader via the 2017 military coup and how is the dialogue process going?

TO: Before and after the 2018 elections, there was a lot of hope that Zimbabwe would make a break with the past and move swiftly forward with reforms. This was matched by a lot of goodwill in the capitals of Europe. The Transitional Stabilisation Programme reinforced these hopes, as it set out a good pathway forward. The reform process, however, has been slower than hoped for. Obviously, the human rights violations, notably those of August 2018 and January 2019, dented Zimbabwe’s image severely, and it is very important that those violations are investigated and tackled appropriately. The re-establishment of the political dialogue on the other hand was a welcome and positive development, as it provides a forum for frank and open exchange. It also helps us to establish a track-record in outlining mutual understanding and tackle disagreements.

ZI: Is the EU happy with the government’s reform agenda and the implementation pace, including the implementation of the Motlanthe Commission recommendations following an inquiry into the killing of civilians on August 1, 2018 and recommendations made by the 2018 EU Election Observation Mission to Zimbabwe?

TO: As mentioned earlier, we think human rights violations should be tackled and investigated, and we would like to see implementation of the recommendations of the Motlanthe report. Zimbabwe has unresolved issues from the past, and the events of 2018 and 2019 should not add to this baggage. We should now see a break with the past. We are soon halfway to the elections of 2023 and, as the EU, we would also hope for speedier process in electoral reforms. The EU Election Observation Mission recommendations are there — not as demands, but tools meant to be supportive of the reforms. We have seen some positive steps, such as the new strategy for the Zimbabwe Electoral Commission, but the clock is ticking for addressing many other crucial lessons that were learnt in the previous elections.

ZI: The Zimbabwean government maintains that the EU “sanctions” are hurting the economy. On the other hand, the EU has consistently said its measures have no effect on the economy as they are now limited to an arms embargo and the Zimbabwe Defence Industries. What in your view is hurting the Zimbabwean economy?

TO: If one would have to name one single factor, that would be corruption. The figures are staggering: Zimbabwe Anti-Corruption Commission chair Loice Matanda-Moyo said early this year that US$2 billion is lost to corruption annually. Imagine what could be done with that money. The Auditor-General’s report paints a bleak picture. Reforms are urgently needed to address these issues, but there are also other structural bottlenecks, such as lack of transparency and security of tenure in areas that could be engines for growth, such as agriculture and mining.

ZI: There is still very limited investment from the EU coming to Zimbabwe. What are you doing to promote trade and investment and what are the major hurdles?

TO: We would like to see many more European investors and traders in Zimbabwe, but the hurdles lie with the overall challenges of the landscape: Serious European investors are not looking for privileged treatment, flexibility or tailor-made solutions; they seek transparency, recourse to rule of law and a level playing field. That’s why we are supporting and encouraging reforms first and foremost for Zimbabwe and Zimbabweans themselves to benefit. But it would also be a win-win situation for increased investment and trade. We support the Zimbabwean private sector and trade facilitation through our development cooperation. ZimTrade, for example, is one of our partners. And we have engaged in the process of expanding the Economic Partnership Agreement with Eastern and Southern African States of which Zimbabwe is a partner. Investments are one of the areas to be covered in this.

ZI: Zimbabwe was recently added to the list of states that pose financial risk to the EU because of anti-laundering and terrorism. What does this mean and why was Zimbabwe added onto the list?

TO: Zimbabwe was some months ago listed as a risky country in terms of money-laundering and terrorism financing by the Financial Action Task Force (FATF). The decision by the European Commission to list Zimbabwe in the same terms is the EU’s way of implementing the FATF ruling. The FATF decision itself was taken as a consequence of a process with Zimbabwe, where the country was given a set of recommendations that were not fulfilled in the given timeframe. The European Commission decision means that European banks need to exercise enhanced due diligence when processing financial transactions to and from Zimbabwe. The listing will be active from 1 October onwards, as it was deemed appropriate to delay it because of the corona pandemic.

ZI: What should Harare do, to be removed from the above list?

TO: Zimbabwe has an action plan agreed with FATF. The implementation of that plan would go a long way in addressing the concerns. The EU has resources to support countries to implement the required actions and Zimbabwe could make a request for that support.

ZI: Finance minister Mthuli Ncube recently wrote desperate letters to International Financial Institutions, asking for debt rescheduling or cancellation to avoid an impending economic collapse. He also asked for support in the fight against the Covid-19 pandemic. Is the EU supportive of debt rescheduling or cancelation?

TO: Debt rescheduling or cancellation is not a prerogative of the EU institutions, but in the European context that of EU Member States. Zimbabwe owes significant debts to several EU Member States bilaterally, and Member States are shareholders and represented in the boards of the International Financial Institutions, including that of the European Investment Bank. In general, the European Commission has announced its support for a debt service moratorium for developing countries struggling with the response to Covid-19. A moratorium of payments would not be applicable to Zimbabwe, since the country unilaterally stopped servicing its debts to most IFIs and bilateral creditors years ago.

ZI: What can Zimbabwe do to normalise relations with IFIs and members of the Paris Club?

TO: Reforms. The IMF Staff-Monitored Programme was seen as a starting point for creating macroeconomic balance, and there is still a hope that serious economic reforms would pave a way towards closer engagement with IFIs, which could also be a stepping stone towards addressing the debt issue. In addition to purely macroeconomic measures, – governance and addressing the leakages in the economy would be crucial.

ZI: What will it take for the EU to assist Zimbabwe with budgetary support?

TO: Reforms. At the moment, budget support is not on the table. Currently, we are not in the clear what is happening with government revenue and expenditure. The Auditor General’s report shows massive misuse of public funds. That is not a fiscal environment where I would be willing to see European taxpayers’ money go. The EU has been supporting the government in public financial management through the World Bank managed ZIMREF (Zimbabwe Reconstruction) fund, but there is still much more to be done to create transparency and predictability.

ZI: The EU recently unveiled a US$75 million package to help Zimbabwe fight Covid-19. What are the funds meant for and what measures have you put in place to ensure the funding goes towards its intended beneficiaries?

TO: In reality, the numbers are much higher: in addition to new funding and programmes, we have redirected a number of ongoing actions to support the population in this difficult moment.

The EU in Zimbabwe is one of the major donors to the health sector, and our support goes through the UNICEF-administered multi-donor Health Development Fund (HDF). In the wake of the Covid-19 pandemic, we have released an additional US$40 million to the HDF, which brings our overall support to the health sector to 126 million EUR (about US$138 million). About US$15 million of that top-up has already been allocated for equipment (including Covid-19 testing kits and PPE), for mass awareness campaigns and for financial support to front line staff – whilst we maintain our support to access to health care for the general population.

A new US$14 million support to small farmers to restart farming in the 2020/21 cropping season combined with food provision and support to water and sanitation is in the making. The ongoing EU-financed the Zimbabwe Resilience Building Fund has been increase with additional US$16 million that will be partly used to strengthen the Covid-19 response by improving water and sanitation facilities at community level.

This comes on top of US$18 million allocated from the European Commission Humanitarian office to alleviate the ongoing humanitarian crisis with provision of food and water and sanitation, as well as protection of vulnerable people. The EU is looking into further humanitarian support for the population in Zimbabwe, in both rural and urban areas, and including Covid-19 related needs.

The European Commission has clear reporting and oversight requirements for our implementing partners, and this pertains particularly to the use of resources. We apply strict control measures for the management and disbursement of funds by implementing partners, including in depth assessments prior to contracting, continued monitoring and regular financial controls during implementation, and ex-post evaluations. In addition, we also take the issue of the need to make sure aid goes to those most in need in our dialogue and discussions with other partners and government.

ZI: The Covid-19 pandemic has come at a time Zimbabwe is experiencing an economic implosion while more than half of the population is food insecure. How do you view Zimbabwe’s humanitarian crisis and what role is the EU playing to alleviate suffering?

TO: Other countries in as much need of outside assistance as Zimbabwe are all conflict-ridden countries, and many of them have a vulnerable arid environment. Climate change-induced droughts are a fact in southern Africa, but Zimbabwe is well-endowed with natural resources and agricultural potential. It should not be a recipient of food aid. However, grain productivity now stands at only 0,7 tonnes per hectare. Despite massive subsidies into the agricultural sector by government, this is less than 30% of what is produced in the region, while Zimbabwe had the highest average production until 2000. This is telling: the agricultural sector is dysfunctional and needs to be resuscitated. I sincerely hope Zimbabwe will in the medium-term future not require food-aid, which is so desperately needed in other countries of the world. This is an important reason why the EU is engaged in supporting agriculture in Zimbabwe. The other is to boost agriculture as an engine of economic growth. We have an approximately 100 million Euro (US$107,8 million) programme to support both small-scale and medium-scale producers in drought resilience, market access and value-chain development.

I do not want to downplay the reality of the crisis and I am aware of the real suffering of many. In Zimbabwe, the situation is exacerbated by what is a multi-faceted crises: economic, social and humanitarian. For immediate needs, the EU has during the past year or so contributed around 30 million Euro (US$32,4 million) in humanitarian aid. I hope to be able to make announcements of further humanitarian aid very soon.

ZI: The EU recently unveiled a US$75 million package to help Zimbabwe fight Covid-19. What are the funds meant for and what measures have you put in place to ensure the funding goes towards the intended beneficiaries?

TO: In reality, the numbers are much higher. In addition to new funding and programmes, we have redirected a number of ongoing actions to support the population in this difficult moment. The EU in Zimbabwe is one of the major donors to the health sector, and our support goes through the Unicef-administered multi-donor Health Development Fund (HDF). In the wake of the Covid-19 pandemic, we have released an additional US$40 million to the HDF, which brings our overall support to the health sector to 126 million Euro (about US$138 million). About US$15 million of that top-up has already been allocated for equipment (including Covid-19 testing kits and personal protective equipment), for mass awareness campaigns and for financial support to front line staff — whilst we maintain our support to access to healthcare for the general population.

A new US$14 million support to small-scale farmers to restart farming in the 2020-2021 cropping season combined with food provision and support to water and sanitation is in the making. The ongoing EU-financed Zimbabwe Resilience Building Fund has been increased with additional US$16 million that will partly be used to strengthen the Covid-19 response by improving water and sanitation facilities at community level.

This comes on top of US$18 million allocated from the European Commission humanitarian office to alleviate the ongoing humanitarian crisis with provision of food and water and sanitation, as well as protection of vulnerable people. The EU is looking into further humanitarian support for the population in Zimbabwe, in both rural and urban areas, including Covid-19 related needs.

The European Commission has clear reporting and oversight requirements for our implementing partners, and this pertains particularly to the use of resources. We apply strict control measures for the management and disbursement of funds by implementing partners, including in-depth assessments prior to contracting, continued monitoring and regular financial controls during implementation, and ex-post evaluations. In addition, we also take the issue of the need to make sure aid goes to those most in need in our dialogue and discussions with other partners and government.