On December 1st, 2020 a landmark High Court ruling was made in favour of the transparency of Mnangagwa’s government. The Court demanded a truthful disclosure of the country’s debts entered into between January 2019 and the 1st December, 2020. The terms of a substantial US$500m loan facility from Afreximbank to back the Zimbabwe currency and enable imports in US$ are also to be gazetted on 1st January, 2021.
As the ruling said: “Looking at the debt alone would not do justice to the matter at hand. We have problems with the absence of transparency, low accountability and pervasive corruption.“
However, it stands to be seen to what extent the government agrees to comply with the ruling which is backed by the wording of the Zimbabwe Constitution.
This comes when the government has been seeking to introduce constitutional amendments that would make the executive unaccountable to Parliament regarding all foreign debts. Such an amendment would be a big blow to the quest for transparency.
The public is increasingly dissatisfied with the lack of transparency concerning the country’s loans and debts. It is feared that natural resources are being used to settle these without disclosure. Thus it is thought that platinum was used as a collateral in the case of the Afreximbank facility without Parliament’s approval. Natural resources are said to be used in the case of the Chinese deals. Payment for military planes was also thought to have been made by means of minerals.
A further lawsuit has still to be heard concerns the demand by another lawyer of the disclosure of all debts, external and local. This sets a precedent in terms of citizens holding their government to account. Conflation of state and party business has resulted in growing public debt. The Human Rights Watch Southern Africa’s director viewed Zimbabwe’s debt problem as a human rights concern apart from economic issues. The government’s capacity to deliver socio-economic rights was undermined by corruption, poor public finance management and debt. An example was the US$3 billion, which financed the “Agricultural Command System” and was never accounted for.
There has been no detailed reporting of debt operations.
Since 1997 Zimbabwe has been barred from access to lenders such as from the World Bank or Paris Club because of its debt arrears. In October 2016 the government settled the IMF arrears with US$107.9 Million. However other debts to financial institutions must be settled before Zimbabwe is granted further loans.
Debts are often contracted without parliamentary permission and beyond permissible limits. Finance Minister Mthuli Ncube had to pass a law to allow additional US$10 billion expenses between 2015-2018. In 2018 US$3.5 billion were spent under Mnangagwa. His government contracted further US$2.5 billion between July 2019 and July 2020, pushing the external debt to US$4.8 billion. Mnangagwa also contracted US$3.5 billion compensation for white farmers affected by the fast track land reform. This is to be paid by a long-term debt instrument of 3 years’ maturity on international capital markets.
The optimistic 2021 budget of the country still in economic crisis does not offer any strategy concerning the settlement of the foreign debt, which continues to balloon. Only a vague statement said: „ External debt arrear clearance and debt relief to restore sustainability will be considered in line with progress made with Government’s engagement and reengagement with the international community.”
The IMF advised that the government should take up contact with creditors to work out a strategy to deal with the problem of payment and relief. The original debt is US$2.2 billion, so that arrears comprise 76% of the total. Without any agreement the debt will continue to balloon.
Analysts see Mnangagwa’s goal of achieving middle income status by 2030 doomed unless the external debt issue is tackled. This means structural and political reform, which up to now he has not implemented.
It is interesting that the issue of the original debt of US$700 was raised, that is Ian Smith’s debt which arose during the time of his bush war against the country’s liberation movements.