Botswana government has pumped in P 500 million into Zimbabwe in a bid to assist the northern neighbour to address some of the critical needs brought about by the-ten-year misrule under President Robert Mugabe.
Speaking to journalists on Tuesday before flying to Washington for the International Monetary Fund meeting, Finance Minister, Baledzi Gaolathe, said the P 500 million guaranteed by Botswana government will be directed at specified purposes.
The funds will be loaned by local commercial banks and parastatals and guaranteed by Botswana government.
The decision is said to have been premised on the notion that a total collapse of the Zimbabwean economy, which was once referred to as the bread basket of Africa, could have ghastly repercussions on Botswana .
Mention is made of the impact of the current influx of migrants into Botswana on the national resources, as a result of the instability and tensions that arose in that country following a fiercely contested national and presidential election whose legitimacy became a subject of international debate.
The bail-out decision follows an Extra Ordinary Summit of SADC Heads of State and Government that took place in Swaziland on 30th March, 2009, that urged member states to support Zimbabwe to implement her STERP ( Short Term Recovery Programme) in the form of budget support, lines of credit, joint ventures and toll manufacturing.
“The resource requirements of STERP amount to US$8.4 billion in the short term, and in the immediate term it has been projected that US$ 2 billion which consists of US$1 billion as direct budgetary support and the other billion for self liquidating lines of credit, will be needed,” he said.
“Government has found it appropriate to accordingly contribute through opening a line of credit of up to P500 million and promotion of joint ventures between selected corporations of the two countries,” he added.
He said the fact finding mission, comprising government officials and representatives from some of the relevant parastatals and the private sector, had to be dispatched to Zimbabwe from 16th-17th April, 2009 with a view to consulting, exploring as well assessing areas that are worthy of assistance.
Some of the benefits that are expected for Botswana include boosting Zimbabwe power plant that will in turn feed Botswana, the resuscitating of steel plants in that country will see the revival of the Ramotswa steel plant.
These come at a time when the southern African region is faced with power shortages that has led to load shadings while the price of steel has gone through the roof due to higher demand.
The revival of the Zimbabwe economy is also expected to have direct benefits for Botswana in the areas of sugar packaging, hides and skins and exportation of salt from Soda Ash Botswana.
“In the same vein, this would naturally translate into a plus for our coal exports of which bulks have been directed to powering up the Bulawayo electricity plant,” stated Gaolatlhe.
The prohibitively high costs of manufacturing and processing steel products locally, which for the most part in the past were imported at cheaper prices from Zimbabwe, is expected to be vastly reduced once the situation is normalized in that country.
Before things got to their worst, Zimbabwe used to import salt from Soda ash, whereas Botswana is presently far from meeting its milk and sugar requirements “which we used to get from Zimbabwe before things got where they are now. Thus you can see it is a strategic imperative for us that government has taken this position,” added Gaolatlhe.