Government borrows from Old Mutual and NSSA to fund referendum

The government said it has raised $40 million by borrowing from Old Mutual and the National Social Security Authority (NSSA) to help fund this Saturday’s referendum.

Finance minister Tendai Biti said on Monday they were able to raise the funds through a “voluntary bond” sold to Old Mutual Plc’s local unit and NSSA. Zimbabweans will vote on Saturday in a referendum on a draft constitution, a crucial step toward a general election expected around July.

The government has been struggling to raise money to fund the presidential and parliamentary elections that require $132 million.

Biti said treasury has so far released $31m to print ballot papers, buy indelible voting ink and for the transport and training of 70,000 polling officers. The Minister said things are ‘excruciatingly tight’ in funding the referendum and election, which are just a few months apart, but remained optimistic that ‘Zimbabwe will hold a successful referendum.’

Economic analyst Bekithemba Mhlanga told SW Radio Africa that what government has done was simply approach the two well-resourced companies and asked for funds.

‘This is a special debt where government has gone to Old Mutual and NSSA to say can you borrow us $40 million and guarantee that you will get your money back at an interest rate of 7 percent,’ Mhlanga said.

The economic analyst explained that the deal allows government to start its repayments after a year-long grace period.

‘It is clear the government has failed to raise enough money for the referendum and elections and therefore this has forced them to go to the two pension funds to raise income for the Saturday vote,’ Mhlanga added.

Some questions will be raised as to why Biti sought help from Old Mutual, which was recently criticized by Roy Bennett, the MDC-T treasurer-general, for its involvement in the diamond sector.

Old Mutual is an indirect shareholder in the Mbada diamond mining firm, one of the companies in a joint venture with the Zimbabwe Mining Development Corporation in Marange. The ZMDC in turn is on the European list of targeted sanctions, because of its links to the Mugabe regime.

Although Old Mutual has defended its position, serious concerns have been raised about the group’s involvement in a trade that human rights defenders believe is propping up the Mugabe regime.

It is for this reason that a UK parliamentarian has called for an investigation into Old Mutual’s role in Marange. MP Kate Hoey has said that Old Mutual needs to be probed for its working relationship with a company on the sanctions list.

Bennett has also warned that the diamond sector remains under ZANU PF control and the profits that are not benefiting Zimbabweans are instead being used to help cleanse the party’s reputation. –SW Radio Africa News

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