Zimbabwe senate approves two multi-million energy loans

By Bernard Mpofu

The Zimbabwe Senate has adopted two motions proposed by the Finance Minister, Mthuli Ncube, which seek to approve loans to finance the country’s energy projects. 

However, experts have expressed concern over the slow pace of action by the country’s lawmakers.

Zimbabwe has since the turn of the new millennium depended on regional lenders to finance capital-intensive projects. 

The southern African nation is now ineligible to access long-term concessionary funding from multilateral lenders such as the International Monetary Fund (IMF) and the World Bank after it defaulted on loan repayments.

The country is now turning to renewable energy sources such as solar, to offset a deficit caused by ageing power stations and limited investment in the energy sector.

 Official figures show that Zimbabwe owes the IMF, World Bank and the African Development Bank more than US$10 billion, which represents nearly 70% of the country’s gross domestic product

On 19 May this year, the Senate adopted three motions proposed by the Minister of Finance and Economic Development, for the approval of three international loan agreements in terms of section 327 (2) of the Zimbabwe Constitution, under which loan agreements with foreign organisations or entities do not bind Zimbabwe until approved by parliament.  

The Constitution of Zimbabwe is the supreme law of the country and overrides any law, policies and conduct that are inconsistent with it. Section 73 makes provisions for environmental rights.

In June 2019, Zimbabwe entered into a US$19,5 million agreement with the Export-Import Bank of India for Deka Pumping Station and Intake System Project in Matabeleland North Province.

This project aims to improve the supply of Zambezi River water to the expanded Hwange Power Station.  

The government also signed another US$23 million loan with the same Indian financier for renovation of Bulawayo Thermal Power Station.

Parliamentary watchdog Veritas raised concerns over the lawmaker’s delays in approving the loans.

“These agreements were approved by the National Assembly in October 2019 but have only just come before the Senate for approval,” Veritas said in a research note.  

“This means that none of these agreements should have come into force.  Members of Parliament need to check whether they did and if so whether interest has already been paid on these loans – any such payment of interest before parliament’s approval is probably illegal, ” added Veritas.

The potential of renewable sources of energy such as solar energy have not been fully realised in the country. Improved use of renewable sources of energy and the local manufacturing of energy technologies by the private sector in Zimbabwe has the potential to create many green jobs and reduce poverty.

Investing in renewable energy technologies is a promising option for combining the multiple goals of climate change mitigation, a low-carbon economy, employment creation (especially among the youth, thereby taking advantage of the growing number of young people out of work), energy security and sustainable development.

 Green investments are also an important component for supporting entrepreneurial initiatives, skills development and technology transfer, all of which are critical to economic growth and development.

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Post Author: Chido Luciasi

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