Two vice presidents of the African Development Bank (AfDB) were in town last week to scout for investment opportunities in another vote of confidence for Zimbabwe in its quest to rebuild the economy.
The visit by two of the bank’s senior executives came barely two months after AfDB president Akinwumi Adesina’s visit to Zimbabwe to help the country come up with a credible roadmap to extinguish its US$13.5bn debt which has hamstrung Zimbabwe’s ability to access concessional financing from multilateral financial institutions.
Treasury described as “historic” the visit by Solomon Quaynor, AfDB’s vice president Private Sector, Infrastructure and Industrialisation and Kevin Kariuki, the bank’s vice president for Power, Energy, Climate and Green Growth as they explored how the Abidjan-headquartered bank would support Zimbabwe.
Quaynor said his primary interest was to see how the bank would support private sector development; the enabling environment the government is putting in place and on infrastructure development that catalyses private sector growth.
The bank is precluded from lending to the government due to the US$800m debt.
However, AfDB has moved mountains to assist Zimbabwe. Early this year, AfDB signed a US$7.5m facility guarantee with CABS which cushions international banks against the non-payment risk arising from the confirmation of letters of credit and similar trade finance instruments originated by the mortgage lender on behalf of its clients.
In July, AfDB advanced a US$25.56m grant under the bank group’s facility meant to raise food production in Africa to plug supply deficits caused by the war in Eastern Europe.
The funds were drawn from the African Development Fund’s Transition Support Facility with the AfDB board providing a waiver to assist Zimbabwe to mitigate against a possible food crisis. Zimbabwe is in debt and in arrears and therefore is ineligible for Transition Support Facility resources.
Kariuki said his main purpose of the visit was to buttress the institution’s support to Zimbabwe’s power sector development, specifically with regards to the US$4bn Batoka gorge hydropower project.
He said the bank wanted to assist Zimbabwe’s transition into green energy.
AfDB is presently helping South Africa transition to green energy under its just energy transition plan. South Africa generates its electricity from coal-powered stations.
Despite its fair challenges, Zimbabwe still attracts top tier institutions.
The coming in of the AfDB executives should be translated into tangible benefits for Zimbabwe. Private sector-led growth is the buzzword meaning that the government has no business in business. Its business is to create an enabling environment. This brings to a key issue: certainty.
Investors want an environment where policies do not change overnight.
They want an environment in which policies are a product of consultations and not in a knee-jerk manner.
They want an environment in which there is respect for the rule of law and property rights.
They are looking for an environment where government agencies such as tax authorities, for example, nurture budding companies so that they can grow and be able to pay taxes.
