Despite a more buoyant mood since Emmerson Mnangagwa ascended to the presidency in November, Zimbabwe is faced with a crippling shortage of hard currency that is making it hard for businesses to operate.
ADB president Akinwumi Adesina told Business Day this week that Zimbabwe, which he termed “an important member of the bank”, owes it $645m while its debt to the World Bank stands at $2bn.
Earlier this year, Business Monitor International (BMI), a member of the Fitch group, said it is unlikely that the Zimbabwe government will be able to clear all of its $2bn arrears to the International Monetary Fund (IMF) and the ADB without substantial debt forgiveness.
But Adesina said the country has cleared its arrears with the IMF using its special drawing rights facility — a reserve asset meant to supplement each member country’s official money reserves.
Discussions with other lenders were ongoing, according to Adesina, but he would not commit to a time frame. “These conversations are continuing; I’m hopeful that we will be able to reach a solution with all the parties concerned.”
In December, the Cairo-based African Export-Import Bank (Afreximbank) said it would avail a loan to the tune of $1.5bn to Zimbabwe to assist with the economic recovery process.
Adesina said the ADB would provide funding for the long-mooted upgrade of the Beitbridge border post, among the busiest and most congested, crossings on the continent. “Its a critical part of regional infrastructure and we will be delighted to finance it.”
Adesina spoke on the eve of the launch of the Africa Investment Forum, a new initiative by the bank, that aims to be “100% transactional, with no political speeches”. This will be an annual platform, happening in November, strictly to facilitate business transactions meant to contribute to closing Africa’s huge infrastructure funding gap.
The idea is to leverage the trillions of dollars available though global fund managers for projects on the continent. Through a “core guarantee platform”, the ADB — together with its partners — would fund bankable projects while mitigating the risks of the investments.
These partners include the World Bank, the International Finance Corporation, the Asia Infrastructure Investment Bank, and the Multilateral Investment Guarantee Agency. “This is the first time globally where multi-lateral agencies will get together to de-risk projects from any part of the world and leverage private-sector investment,” said Adesina.
The forum would also address policy, regulatory and other constraints that often preclude investments from happening.
Last year, the ADB lent out $7.4bn and Adesina is fully aware of the massive demand for funding. “The issue for us is that our money will never be enough” hence the move towards partnering with other funders.
“We have been pretty good at leveraging our balance sheet for impact,” said Adesina, citing the bank’s $1bn loan for Eskom, which he described as the biggest such loan in Africa to date. In SA, the ADB has an active portfolio totaling $4.9bn, which includes funding to the Land Bank.