ZIMBABWE – Zimbabwe and Botswana will on Monday sign a memorandum of agreement that will see Gaborone opening up 500 million pula in lines of credit to revive its neighbour’s comatose industry.
Botswana pledged the lines of credit four years ago after President Robert Mugabe formed the inclusive government with his archrival and now Prime Minister Morgan Tsvangirai.
The Southern African Development Community (SADC) extra-ordinary summit in 2009 urged member states to support Zimbabwe’s Short Term Emergency Recovery Programme (STERP).
Botswana’s Finance and Development Planning minister Kenneth Matambo will visit Harare to seal the agreement.
Tshwaragano Mmereki, the spokesperson for Matamabo’s ministry said the release of the money had been delayed by budgetary constraints.
“It was agreed that 70 percent of the facility would be earmarked for the manufacturing sector whilst the remaining 30 percent would go towards other sectors,” he said.
“However, some flexibility would be allowed on some projects depending on circumstances.
“The two governments agreed on the principle of mutual benefit in the implementation of the credit line facility.”
Botswana hopes to benefit by exporting goods and service to Zimbabwe.
The facility would also support joint ventures between Botswana and Zimbabwean companies as well as investments by its nationals in Zimbabwe.
The credit facility would be a once off deal although it would be reviewed after five years.
Zimbabwe’s manufacturing sector collapsed under the weight of the 10 year long economic and political crisis.
The formation of the inclusive government has failed to reverse the trend because of the continued bickering by coalition partners.
Companies in the second city of Bulawayo continue to close down due to competition posed by cheap imports and lack of finance.
Foreign direct investment has also been low due to the uncertainty about impending elections and a referendum on the new elections.
President Robert Mugabe wants elections held this year but SADC leaders are insisting on credible reforms before the polls. Radiovop