/ 19 April 2013

Editorial: Loans should be conditional

Editorial: Loans Should Be Conditional

We have been here before. In 2011 Swazi officials trumpeted a R2.4-billion loan from South Africa as the answer to its deepening fiscal crisis. What they didn’t say was that the bailout was dependent on both political and fiscal conditions that the kingdom’s rulers were not prepared to sign up for.

This week Zimbabwe’s finance minister, Tendai Biti, appears similarly to have jumped the gun, announcing South Africa’s “positive” decision on a R900-million loan package.

 Reading between the lines, it seems Finance Minister Pravin Gordhan had offered an agreement in principle, but crucial details about the loans conditions remain to be worked out.

There are good reasons for South Africa to support Zimbabwe’s efforts to return to stability, and good reasons to be very cautious in how it does so. Clear signs are emerging that the tried-and-true tactics of Zanu-PF voter intimidation are being rolled out. And there is a fierce fight within the party over indigenisation, the outcome of which will seriously affect the interests of specific South African companies and the regional economy.

The loan should be granted then, not just on narrow fiscal conditions but on political ones that will help to secure the environment for a more democratic process. These should include a large and robust monitoring process aimed at truly preventing violence, and the acceptance by Zimbabwe of the United Nations funding that it has dropped its application for. Certainty in the investment environment should also be guaranteed.

For South Africa, this increasing role as a lender of last resort and a de facto donor to its neighbours means the need for a clear policy on how it helps and when, rather than an ad hoc explanation each time a controversial new loan comes into view. The Zimbabwe request is an opportunity to develop one.