Johannesburg-based Rand Merchant Bank (RMB) has emerged as a key player in a potential South African loan to Zimbabwe. The bank was reluctant to provide details but its head of project finance, Peter Gent, told the Mail & Guardian: “Our involvement in such a transaction — to the extent that we get involved — would be as a facilitator in what is essentially a government-to-government deal.”
Pressed on whether RMB would lend its own money and the nature of its facilitating role, he said: “Obviously there is a reality about the credit- worthiness of the counterparty.”
It is not clear why a merchant bank would be involved, unless the South African government is trying to avoid recourse to its own budget. It could do so by providing security for a commercial facility arranged by RMB, which would be unlikely to lend money to a serial defaulter like Zimbabwe in the absence of firm guarantees. Several meetings have taken place between officials of the Zimbabwe government and RMB with a view to arranging finance for food and fuel, ZimOnline reported on Thursday.
Zimbabwe, on Wednesday, made a payment of $120-million toward its $294-million loan arrears with the International Monetary Fund (IMF), a spokesperson for the fund confirmed.
Reserve Bank Governor Gideon Gono told the local press that “exporters funds” and “free funds holders” had bailed the country out. Other reports suggested that an assistance package from China had topped up what the government had scrounged in the local forex market.
The surprise payment has raised questions about the prospects of the proposed $500-million loan package from South Africa, the first tranche of which was set to go toward the arrears.
An IMF team spent 10 days in Harare investigating the situation ahead of a board meeting on September 9 that may decide to impose “compulsory withdrawal” on Zimbabwe.
The IMF’s resident for South Africa, Vivek Arora, accompanied the delegation. The presence of Arora may have indicated the fund’s concern over progress on the South African loan, which appears to have stalled over Zimbabwean resistance to the tough conditions attached to it.
“It’s not normal for an IMF assessment team to have, as a member of its delegation, another of its representatives from another country, unless there is [a] sticking [point] on a relevant issue,” an economist who met the delegation told the M&G.
And it is unclear whether the payment alone will be enough to prevent the IMF from taking action.
“We can still be expelled, there is still that risk. We have only minimised it, not eliminated it,” economic consultant Eric Bloch said. “On the other hand, the IMF can recognise this commitment on the part of Zimbabwe to repay.”
Gono also indicated that despite the payment there would be ongoing negotiations with South Africa.
Mugabe’s flexi Constitution
On Tuesday Zanu-PF pushed through Parliament constitutional amendments designed to deny travel visas to government critics, remove legal recourse to protect property rights and reintroduce the Senate. The latest changes are the 17th time Zimbabwe has tampered with its Constiution since independence in 1980. The Lancaster House Constitution, crafted in 1979, stated that the Bill of Rights was not to be tampered with for 10 years. The key changes are:
Abolition of seats reserved for whites in Parliament (Act 15 of 1987) The Lancaster House Constitution provided that the white minority would have 20 guaranteed seats in Parliament for five years to have their economic and political interests represented.
Creation of the Executive Presidency (Act 23 of 1987) It did away with the ceremonial president and created an executive president. Robert Mugabe, the then prime minister, became head of government with executive powers and privileges that included immunity from prosecution for offences committed during his term of office.
Introduction of the unicameral Parliament (Act 31 of 1989) The two-chamber legislature of the Senate (upper house) and Parliament (lower house) was dropped. The new Parliament allowed for 150 MPs, 20 appointed by the president, and 10 seats were reserved for chiefs.
Introduction of the Office of the Attorney General (Act 4 of 1993) The attorney general assumed the role as chief legal adviser and sat in on Cabinet meetings.
Creation of second vice-president (Act 15 of 1990)
In 1987 Zanu-PF and PF-Zapu signed a unity accord. The second vice-president was created to accommodate Joshua Nkomo, the then leader of PF-Zapu. The amendment was designed to unite the two major ethnic groups (Shona and Ndebele) and ensure equal representation in the presidium.
Bestowment of powers to compulsorily acquire land without the obligation to compensate (Act No. 5 of 2 000) This provision was further amended by the changes that were pushed through Parliament this week denying legal recourse to aggrieved farm owners. — Godwin Gandu