Debt trap diplomacy and its devastating effects on Zimbabwe

By Rawlings Magede

During a recent interview with Bloomberg news, Finance Minister, Mthuli Ncube revealed government’s plans to settle with global lenders, sell assets and make the difficult spending decisions needed for financial recovery.Ncube’s well read script is in line with government’s new trajectory on the Zimbabwe is open for business mantra which it hopes will set the country on a recovery path.

With the country set to complete an International Monetary Fund Staff Monetary Program in January 2020, there is optimism at least within government that the end of the monitored programme will bring good fortunes. An SMP is an informal agreement between country authorities and IMF staff in which the latter agree to monitor implementation of a nation’s economic programme. SMP does not entail financial assistance or endorsement by the IMF executive board. It aims to implement a coherent set of policies that can facilitate a return to macroeconomic stability. The completion of the monitored programmed is believed to have the potential to bring debt relief and improve the country’s borrowing power. While Mthuli insists that the monitored programme will help promote structural and policy reforms that will usher in macro-economic stability, the programme is not a silver bullet in itself as the history of the Structural Adjustment Programmes (SAPS) of the 1990s have proved otherwise.

Wither social services?

While the government is busy trying to impress external lenders, the economy continues in its free fall mode with a crippling social services infrastructure that cannot cater for low income earners. This vast majority consist mostly of civil servants who have to grapple with a wage compression which has been exacerbated by adjustment of prices which has not been met with a corresponding increase in wages. The neoliberal policies of the government have seen it warming up to a series of reforms such as privatizing state-owned enterprises, addressing corruption and promoting private sector investments. Of course on the issue of corruption, its sincerity is yet to be demonstrated. Social services such as education and health have grounded to a halt .Of special mention is the privatization of health services. The proliferation of privately owned clinics and hospitals that cater for the affluent and rich highlight the devastating impact that the new route taken by government. The few public operational clinics and hospitals have become death centers where even painkillers are hard to come by. The 2013 constitution which has been hailed for its comprehensive bill of rights underpinned by fundamental human rights and freedoms have remain on paper with its benefits on social services yet to be enjoyed by citizens. Since the introduction of the austerity measures, there has been less prioritization of these services by government.

Repayment terms for mega deals remain secretive!

As a way of warming up to global capital, President Emerson Mnangagwa soon after the November 2017 coup went on an international offensive in a bid to charm capital. The Zimbabwe is open for business soon became the new swan song as the country inked several mega deals in the form of lines of credit even from countries such as Belarus and Khazakhstan.While the country is yet to derive benefit from some of these deals, the repayment for some of these loans and investments remains shrouded in mystery. Instead of celebrating that the country will receive investment, it is important for the government to make public the repayment terms. The secretive approach by government especially in the disclosure of repayment of loans is not new. In 2017, government announced that it was geared towards clearing foreign debt so as to attract fresh lines of credit. The announcement came after the country had in October 2016, settled a whooping 107 million arrears to the IMF.While international lenders continue to make inroads in creating bilateral relations with the government so as to extend lines of credit, it must be worrisome that the debt trap diplomacy by some of these lenders will keep the country in perpetual debt for the unforeseeable future. Added to this, so as to please these lenders, government will neglect the important role of providing social security to its citizens who have been hard hit by its neoliberal policies.

In the final analysis, it seems there is no going back on neoliberalism.Government is bent on austerity for prosperity never mind its devastating effects. The looming debt crisis will create a trap for future generations to come.

Rawlings Magede is a Development Practitioner and writes here in his personal capacity. Feedback vamagede@gmail.com