DIVERSIFIED telecommunications group Econet Wireless Zimbabwe effectively gave the cash-strapped government a US$30 million facility last year to pay civil servants salaries and other critical bills in an arrangement in which the loan will be repaid starting this month, the Zimbabwe Independent has established.

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Kudzai Kuwaza/Victoria Mtomba

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Econet is the country’s largest provider of telecoms services in mobile and fixed wireless telephony, internet access and payment solutions.

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Informed sources said this week Econet, through its wholly-owned banking subsidiary Steward Bank, formerly TN Bank, in July last year gave the virtually bankrupt government US$30 million to help it meet pressing obligations, including the wage bill.

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“The Econet funding deal gave government a six-month grace period before it starts repaying the loan which is mainly to pay civil servants’ salaries. So government will start paying the first instalment this month,” a senior government official told the Independent this week. “Government will pay the loan in installments of over US$1,3 million every month for 24 months.”

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Negotiations for the deal were said to have been facilitated by former Econet chairman Tawanda Nyambirai and monetary and fiscal authorities. The wording of the agreement was done by officials at the Attorney-General’s Office, it was said.

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Another senior government official confirmed that Econet had entered into an agreement with government over US$30 million to help it address critical problems, not necessarily for civil servants wages alone.

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“We received the money in July last year but for government expenditure, not just salaries. We will soon be repaying the loan and the first payment is due this month,” the official said.
\nEconet said the US$30 million was not a loan but a NetOne debt settlement arrangement with government.

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“Econet did not lend any money to government. We entered into an arrangement whereby government took over and settled interconnection debt owed to us by NetOne and TelOne,” Econet corporate communications manager Rangarirai Mberi said yesterday.

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“On the other hand, Steward Bank acquired government Treasury Bills with a face value of US$30 million as part of its capital preservation strategy. It is correct that Mr Tawanda Nyambirai was involved in the arrangement and negotiation of the debt settlement and the structuring of the Treasury Bills as a consultant.”

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Prior to that, Econet and other companies were reportedly pressured to help fund the controversial 2013 general elections won by President Robert Mugabe and Zanu PF with a crushing albeit tainted victory.

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Finance minister Patrick Chinamasa’s US$4,1 billion 2015 national budget — now reduced to US$3,5 billion — exposed a deep fiscal crisis gripping government amid shock revelations that Treasury will spend 92% of revenues in recurrent expenditures, leaving a negligible 8% for capital projects and service delivery.

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Government is spending over 80% of its revenues to pay the 236 000-strong civil service about US$210 million a month. At one time last year the unsustainable wage bill was said to be US$248 million a month.

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Government, which has been hard hit by a shrinking revenue base as the economy continues to nosedive, is struggling to effect civil service reforms, particularly rationalisation of the size of its bloated professional bureaucracy and wage bill.

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Since last year, the Civil Service Commission (CSC) has been undertaking a restructuring a. During his 2015 national budget presentation last November, Chinamasa indicated government would start retrenching civil servants this year to contain the wage bill.

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Senior officials in the Public Service ministry have told the Independent the restructuring exercise aims to align ministries’ staffing with their mandates, and also identify any duplications and redundancies.

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The CSC is also modernising and decentralising the Salary Service Bureau (SSB), an exercise that will involve placing a payroll assistant in every district, and this is expected to be completed by end of this year. This will hopefully improve the SSB’s grip on the wage bill and put it in a better position to flush out any irregularities, including ghost workers.

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Government’s arrangement with Econet is a further indication of the dire straits gripping the state Treasury. Government will this year, through what is known as the reconstruction fund, use US$15 million for the civil service audit before retrenchments. – ZimInd