The government of Botswana is waiting for Parliament to ratify the implementing of a P500 million credit facility to Zimbabwe through commercial banks, says Kelapile Ndobano, the Ministry of Finance’s deputy permanent secretary for macroeconomic policy.
He said this when addressing the Botswana Confederation of Commerce Industry and Manpower (BOCCIM) annual general meeting during the week. Ndobano said the government engaged in extensive consultation with the private sector, the Bank of Botswana, commercial banks and other ministries over the matter.
The consultation led to the agreement on the eligibility criteria for the Zimbabwe lines of credit by Botswana, which was used as a basis for negotiations.
“The commercial banks have all agreed to participate and it was concluded in August 2010,” said Ndobano.
He stated that the two governments agreed on the principle of mutual benefit in the implementation of the facility. He said it could be in the form of export of goods and services from Botswana to Zimbabwe and also in support of joint ventures between the two countries’ companies as well as investment by Batswana in Zimbabwe.
Ndobano revealed that it will be a one-off arrangement up to a maximum of P500 million and its continuation will be determined by adequate and beneficial implementation of the initial drawdown.
He said at the end of the five year period, there will be a review to determine whether to continue the facility or wind it up.
“The manufacturing sector will get 70 percent while 30 percent would go towards other sectors,” said Ndobano.
The deputy permanent secretary said the facility would benefit Botswana’s economy through the income earned by participating banks, open business opportunities for the investors and strengthen trade partnerships between the two countries.
He also stated that the facility is in line with the decision made at SADC’s extraordinary summit held in Swaziland on March 30, 2009. The summit urged member states to support Zimbabwe’s Short Term Emergency Recovery Programme (STERP).
According to Ndobano, the government has decided to assist Zimbabwe via lines of credit through commercial banks using the bank’s resources as opposed to government resources. The decision was prompted by budgetary constraints.
He said the two governments agreed on the terms and conditions of the lines of credit, which include interest rate, repayment period, arrangement fees, guarantee fees and loan thresholds per project.
“The draft agreement was submitted to Zimbabwe in April 2011 and hopefully this will be concluded soon and give way to the launching of the facility,” said Ndobano.