- AFDB advised government to implement reforms to settle the debt crisis
- Zimbabwe’s external debt has accrued to US$18 billion
- About African elections
Harare- Last week Zimbabwe held a follow-up structured dialogue meeting on its arrears clearance and debt resolution process. Key takeaways were the feedback by AFDB President, who was appointed last year as the frontman of the arrears clearance and debt resolution process and Former Mozambique President Josiah Chissano. The Bank’s President highlighted that there was goodwill and willingness to engage on the part of development partners and that there was no sinister regime change agenda. He highlighted a three-part central pin strategy which includes economic reforms, governance reforms and compensation of commercial farmers, which he said has been put in place by President Mnangagwa as a key driver of the process. Mr Chissano, who is the facilitator, highlighted the need to capitalise on the 2023 elections to change the image of the country and put necessary economic and governance reforms in place.
Overall Zimbabwe has a US$18 billion debt overhang inclusive of blocked funds, US$14 billion of which is due to international creditors, US$8 billion of which is publicly guaranteed. About US$2.5 billion is due to multilateral creditors while US$5.75 billion is due to bilateral creditors. A significant chunk of the bilateral creditors are the Paris Club. The biggest chunk of Multilateral debt is due to the World Bank at US$1.5 billion. What is important to note is that the debt overhang has blocked external capital onto Zimbabwe’s shores. This has also increased the country’s risk profile and dragged economic development, entrenched poverty and economic instability.
Zimbabwe has attempted to clear the debt, but given its narrow purse, only token payments are being made via the national budget. For example, Zimbabwe allocated about US$20 million in the 2023 national budget for interest on loan payments, but this is just 0.1% of the total debt. The only realistic chance of clearing the debt is through a restructuring exercise buttressed by some forgiveness. There have been attempts in the past, but this route has so far not yielded any positives. Forgiveness will likely demand substantial reforms on the economic and governance front, but based on past experiences, the government of Zimbabwe is not willing to commit to this route outside of rhetoric. The best-case scenario is some form of restructuring guided by the creditors and with the backing of third parties outside of multilateral and bilateral lenders.
Nigeria Elections
Bola Tinubu, a former governor of Lagos and candidate of the ruling party, was declared the winner of the presidential election in Africa’s biggest economy and one of the most populous states. He garnered the most votes on the ballots accounting for 37% of the total. His closest rival Abubakar garnered 29% while presidential upstart Michael Obi earned 25% of the total. Obi is credited for upending the two-party political set-up in Nigeria and energising the youths across Nigeria, to vote for change. The election was relatively calm although minor skirmishes were recorded. From this result, it is evident that a united opposition would have garnered a higher score than the winning candidate.
The opposition leader Abubakar has run for Presidency six times since 1993. Obi, a former governor defected from the opposition a few months ago and went hard on the incumbent system. It is not always about the aggregate, but rather the values and the vision which should bring opposition together. For example, it is inconceivable that the DA and EFF of South Africa will ever join forces in a Presidential election. The Zimbabwe case is a bit on the extreme. The ruling party has retained power for over four decades and under its watch, the economy has crumbled. There is little that separates the opposition than a lack of mere unity and it is only in such circumstances that collaborations between rival opposition are strategic.
Some of the points worth digesting from the elections in Nigeria and other elections in the region in recent periods include the observation that it is very difficult to unseat the incumbent party. Ruling parties most likely have an advantage of institutional capture, wider networks and highly organised political structures. The case of Kenya shows this clearly. Whereas Ruto went against the pact of Odinga and Kenyatta, he rode on the well-established political structure run by the ruling party, such that the disapproval of the outgoing could not deter the system from delivering. Zambia appears to be an exception to the rule but it is because no single party has had the privilege to consistently be in power for over 10 years and this reduces the chances of the incumbent retaining power and increases the chances of wildcard opposition wins. This scenario is healthier as it leads to increased independence of state institutions.
It is also apparent that the opposition parties across Africa are limiting their exposure and engagement to a metropolitan populace who most likely are their ready supporters. Opposition parties are doing this by concentrating more on social media engagements which is highly consumed by the metropolitan populace. There is a need for opposition political parties to break barriers and increase the value proposition to the rural populace by enhancing engagement efforts. These engagements should be supported by micro-level structures.
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