THE Confederation of Zimbabwe Industries (CZI) says there is an urgent need to put closure on the legacy debts assumed by the central bank as delays in paying off the creditors is crippling business operations.
Legacy debts have weakened companies’ balance sheets and remained deterrent to their chances of luring investors as a result of a deficit in their balance sheets.
Reserve Bank of Zimbabwe (RBZ) governor John Mangudya has said it is finalising the legal framework that will allow the issuance of financial instruments to local companies to cover for the toxic foreign debt burden.
But CZI president Kurai Matsheza last week told a Zimbabwe public debt indaba hosted by Zimbabwe Coalition on Debt and Development that until that is cleared, business operations remained crippled.
“The assumption of the debt that we owe as business was taken on a one-to-one (US$1:ZW$1) basis. The RBZ was supposed to pay these external creditors,” he said.
“Without that settlement being made, it chokes our business. Because what they see is still us, our business entities that still owe money and be it raw material that we are looking for or be it capital that we are looking for, it varies what this credit or debt was for.
“Until that is cleared, it really cripples our operations. We are unable to progress because as I said the creditor out there is still seeing the company pay on their book, is the one that is owing.
“So we urge this to be addressed in a timely manner and as quickly as possible. Yes, US$3,3 billion is not small money in the scheme of things but it is critical that it’s settled,” Matsheza said.
He said there was a need to capacitate business, adding that the huge debt position of the country coupled with the high country risk were major obstacles to business operations. Matsheza added that business needed external support as it will not be able to operate efficiently.
“As we worry about the 2030 vision that the government has come up with in terms of those five-year developmental states (NDS1 and NDS2) without external support, which is coming in certain instances as debt, I don’t think that on our own we will be able to move very fast and efficiently in taking this country forward,” he said.
“Now the national debt also causes us other difficulties as we go out there looking for money. The country risk is actually not good and yes in certain instances, we may get it but the cost of that debt is also factoring all these positions and get it at punitive rates. Sometimes we end up not getting it because of high interest rates.”