Botswana mulls $70 million credit line as SADC States struggle to raise cash

Zimbabwe’s new unity government has appealed for international help to rebuild its shattered economy, after a decade of economic contraction, hyperinflation and chronic shortages of basic goods. It says it needs about $8.3 billion for the task.

A Botswana delegation, led by the secretary for Economic and Financial Policy, Taufila Nyamadzabo, met Zimbabwe’s Finance Minister Tendai Biti in Harare to discuss details of the financial package.

Speaking after the meeting, a senior Zimbabwean official told reporters Botswana had pledged to help selected industries.

"Botswana is proposing to provide $70 million in credit support for some industries, all that is left is to tie up the agreement," the official said.

Botswana was one of the fiercest critics of President Robert Mugabe but has softened its line since the formation of the unity government that includes new Prime Minister Morgan Tsvangirai’s Movement for Democratic Change.

Nyamadzabo, whose delegation included officials from Botswana’s central bank and the Botswana Export Development Agency, said his government would provide the money, subject to certain conditions being met.

"We’re looking at providing some credit lines for Zimbabwe, especially for industries where there could be mutual benefit, such as the steel, leather, pharmaceutical, agro-industries and manufacturing sectors," Nyamadzabo said. 

"We need to do some due diligence in those industries."

Regional leaders last month agreed to make proposals on how their government could help Zimbabwe.

On Thursday Botswana’s Finance Minister Baledzi Gaolathe said his government could not offer direct budget support because of its own financial constraints due to the global financial crisis.

"We might also look into assisting through joint ventures with Zimbabwe companies as the country’s industry is currently unable to take off because of lack of funds," Gaolathe told Reuters.

Biti said the credit lines would help resuscitate Zimbabwe’s manufacturing sector, which he said was currently operating at below 10 percent of capacity.

Zimbabwe’s crisis has been exacerbated by the withdrawal of aid by Western donors critical of Mugabe’s policies, including the seizure of white-owned commercial farms for redistribution to inexperienced black farmers.

Donors are demanding the unity government undertakes political and other reforms before offering support, but this could be undermined by reports of new farm invasions affecting white commercial farmers who had survived earlier land seizures as well as some black resettled farmers.

"We cannot be working hard, while others are busy undoing what we are trying to build," Biti said.

"There has to be patience and policy consistency, particularly in those areas…relating to the outstanding issues in the global political agreement, farm invasions and the issue of political prisoners."