Matambo to sign P500m credit line for Zim

CHAKALISA DUBE
Staff Writer | Thursday August 30, 2012 00:00

 

This is nearly four years after it was muted, Ministry of Finance and Development Planning officials have announced.

The principal public relations officer (PRO) at the Ministry of Finance and Development Planning, Tshwaragano Mmereki said Finance Minister Kenneth Matambo will sign the agreement on behalf of the Botswana government.

The government of Botswana has committed credit lines of up to P500 million through commercial banks.  This is in line with the decision of the Extraordinary Summit of March 2009 held in Swaziland to urge SADC member states to support Zimbabwe's Short Term Emergency Recovery Programme (STERP) and promote investment.

Mmereki said Botswana decided to assist Zimbabwe through lines of credit through commercial banks' resources thanks to government's budgetary constraints, adding that negotiations with the financial institutions were completed in August 2010. Botswana and Zimbabwean negotiating teams met September 2010 in Gaborone. The Botswana delegation was led by the former Assistant Minister of Finance and Development Planning, Charles Tibone while the Zimbabwean delegation was led by Tendai Biti, Minister of Finance.

At the meeting, the two governments agreed on terms and conditions of the lines of credit, which included amongst others, interest rates, repayment period, arrangement fees, guarantee fees and loan thresholds per project. 'It was agreed that 70 percent of the facility would be earmarked for the manufacturing sector whilst the remaining 30 percent would go towards other sectors. However, some flexibility would be allowed on some projects depending on circumstances,' he said. The two governments agreed on the principle of mutual benefit in the implementation of the credit line facility.

The benefit is in the form of export of goods and services from Botswana to Zimbabwe and also to use the facility to support joint ventures between Botswana and Zimbabwean companies as well as investments by Batswana in Zimbabwe.

The spokesperson added that the draft agreement was submitted to Zimbabwe for her input in April 2011.Comments from Zimbabwe on the draft were received May 2011. He said that the credit line facility will be a once-off arrangement.

Its continuation will be determined by adequate and beneficial implementation of the initial drawdown.  That is, at the end of the five-year period, there will be a review to determine whether to continue or wind up the facility. The credit line facility will help participating local banks earn income as well as open business opportunities for local investors in Zimbabwe.

Income to Botswana businesses investing in Zimbabwe by way of joint ventures, promotion of trade between the two countries, strengthened partnership between the two countries are some of the benefits of the credit line facility to Botswana.

The government of Botswana undertook extensive consultations with the Botswana Confederation of Commerce Industry and Manpower (BOCCIM), Bank of Botswana, commercial banks, other ministries and government departments before agreeing on a consultative plan to fund Zimbabwe's emergency recovery plan.