RESERVE Bank of Zimbabwe (RBZ) governor Gideon Gono and Indigenisation minister Saviour Kasukuwere could be headed for a clash after the central bank chief announced new measures to monitor and evaluate vendor financing schemes bankrolling the ongoing empowerment programme.
Report by Bernard Mpofu
Presenting his first monetary policy statement of the year last Thursday, Gono said all loans exceeding $5 million that were either contracted by the government or the private sector would be scrutinised by the RBZ to contain the country’s ballooning external debt estimated at $10,7 billion.
The huge debt overhang represents 110% of the gross domestic product.
Kasukuwere could not be reached for comment on this development, but the minister and Gono have differed on the implementation of the empowerment policy enacted in 2007.
“There are incidences where credit lines or facilities are contracted on behalf of government outside the purview of the External Loans Co-ordination Committee (ELCC) or involvement of the Reserve Bank of Zimbabwe,” Gono said.
“Against this background all institutions in private and public sectors need to send their loan proposals, loan applications through the ELCC prior to approval or announcement because if the conditions of those loans are eventually determined to be unattractive to the country, it will just lead everybody to be in awkward position.”
This development, according to the central bank chief, will ensure Zimbabwe contracts debt in a structured and co-ordinated way to avoid non-concessionary debt that would sink the country deeper into a debt trap.
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Gono said the new measures will apply to vendor financing schemes that have emerged in the recent past, including indigenisation and empowerment loans that were above $5 million.
“They will need to be submitted to the central bank for evaluation and if the conditions of those loans are outside the parametres that have been approved by government, those pronouncements may end up being null and void,” he said.
Vendor financing involves the lending of money by a company to one of its customers so that the customer can buy products from it. By doing this, the company increases its sales even though it is basically buying its own products.
Kasukuwere’s ministry, which is spearheading the empowerment programme compelling foreign-owned companies operating in Zimbabwe to sell 51% stakes to locals, has adopted the vendor financing model to acquire stakes in large mining companies that have partially complied with the respective law.
