Zimbabwe, alongside Somalia and Sudan, have outstanding arrears to the bank and the facility in place is on a first come first served basis, Ebrima Faal, AfDB’s director for the Southern Region told Standardbusiness last week.
The US$500 million is provided under the African Development Fund (ADF), a concessionary window of the bank that provides loans and grants to regional member countries.
A proven record of policy implementation and commitment is a key requirement to qualify for assistance under the programme.
“Approximately US$0,5 billion has been set aside to help with the clearance of arrears of Zimbabwe, Sudan and Somalia. The country that is ready will be the first to access the facility. We think Zimbabwe is well-placed to access the facility,” Faal said.
Faal said governors would review whether to continue with the facility at a mid-term review meeting in September.
He is hopeful the governors may ring-fence the facility, “given that tangible progress has been made in all the three countries”.
Zimbabwe’s arrears to AfDB, headed by Donald Kaberuka, are estimated at about US$500 million.
Faaal said there has been tangible progress in Zimbabwe’s macroeconomic issues as the country had crafted a home-grown debt and arrears clearance strategy — the Zimbabwe Accelerated Arrears Clearance, Debt and Development Strategy (ZAADDS).
ZAADDS uses a combination of debt relief and resources pledging to clear the country’s debt.
“We believe this (ZAADDS) is implementable during this ADF 12 period. Good progress has been made at the technical level because there are requirements that are needed including an SMP (Staff Monitored Programme) with the IMF,” he said.
ADF 12 is the 12th resource replenishment programme for the Fund’s activities in the period 2011 up to 2013.
Last year, the AfDB’s board of directors approved a US$8 million loan to finance Lake Harvest Aquaculture project on Lake Kariba, the bank’s first private sector investment in Zimbabwe after several years.
Zimbabwe cannot borrow from multilateral and bilateral institutions due to the country’s negative arrears situation.
Zimbabwe has an estimated
US$9,1 billion external debt and Zaadds provides strategies on how the debt and arrears would be cleared.
AfDB was mandated by the AU and Sadc to help Zimbabwe re-engage with the international community. This culminated in the bank hosting several Friends of Zimbabwe meetings, including an indaba of Zimbabwe’s creditors in Tunis in March.
Another meeting was held on the sidelines of the IMF/World Bank Springs meeting in Washington in April. Discussions also took place during the AfDB Annual General Meeting that was held in Arusha last week.
Private sector eligible to access funds: Faal
Faal said despite the arrears the country is facing, the private sector could access the bank’s funds, as long as it presented bankable projects and good financials.
“If we see good bankable private sector projects that come to us, we will look at it.
“At the moment Zimbabwe’s borrowing capacity with the bank is low because of the arrears. We look at private sector investments on exceptional basis depending on their merits,” he said.