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Finance and Economic Development Minister, Cde Patrick Chinamasa

Conrad Mwanawashe and Tinashe Makichi Harare Bureau
ZIMBABWE and the European Union have signed five financial agreements amounting to €89 million (about $97,9 million) and expect to add a further 40 million euros under the 11th European Development Fund (EDF) 2014-2020 National Indicative Programme (NIP) by year end. By the end of the year, the European Union expects to release more than two thirds of the 234 million euros under the NIP.

Finance and Economic Development Minister Patrick Chinamasa, however, called for the complete removal of the political and trade embargoes for the normalisation of relations if Zimbabwe is to see foreign direct investment coming into the country. Minister Chinamasa said although the intervention by the EU is commendable, investors “remain standing on the fence” until political differences between the Zimbabwe and the bloc are resolved.

“The signing of the deals marks a major milestone to the normalisation of relations between Zimbabwe and the European Union and this is key. “We have so far for the past two years been working step by step towards full normalisation of relations and I’m reasonably satisfied that on the economic front we have made some very good progress,” said Minister Chinamasa during the signing ceremony.

“I’m hopeful that as we go forward we can remove the remaining obstacles to full political normalisation between the EU and Zimbabwe. “I’m quite hopeful and optimistic that we will come about because without that political normalisation I believe that the delegations which come to Zimbabwe, both trade and investments, will remain standing on the fence not entirely because our environment is not ripe to receive them but because they get their cue from their political leaders.

“Until normalisation of political relationships I don’t think we can find many investors from Europe coming to Zimbabwe. “Once that is sorted out my belief is that they will come off the fence and come to invest in Zimbabwe. When the time is ripe I’m sure they will come,” he said.

The 89 million euros ($259,74 million), a draw down from the total 234 million euros NIP signed in February this year, will go towards; Improving Health outcomes for the Population of Zimbabwe -$60,5 million; Resilience Building and Food & Nutrition Security – $16,7 million; Public Finance Management Enhancement Programme – $11,1 million; Support to National Authorising Office and the Technical Cooperation Facility – $6,7 million; and Promoting Migration Governance $3,3 million under the Zimbabwe –European Cooperation.

Minister Chinamasa said the signing of the financing agreements will go a long way in accelerating economic development in the country. “The intervention by the European Union in the three identified focal areas dovetails into our national development thrust as enunciated in the Zimbabwe Agenda for Sustainable Socio-Economic Transformation (Zim-Asset) as well as The Ten Point Plan announced by His Excellency, the President during his State of the Nation Address to Parliament,” said Minister Chinamasa.

Following the signing of the NIP in February, the EU immediately committed €34 million for urgent needs, notably to fill the funding gap of the Health Transition Fund and to provide immediate institutional support to the legal drafters, the Judicial Service Commission and the Parliament in the framework of the new Constitution.

The Head of the EU Delegation to Zimbabwe Ambassador Philippe Van Damme said the bloc and its member states have initiated a policy and political dialogue with the government to come to mutual understanding. “The EU and its member states are engaging Zimbabwe and not only on the aid front. We have also seen numerous exploratory trade and investment missions travelling to Zimbabwe and conversely also several high level missions travelling to Europe,” said Van Damme.

However, Van Damme said the investors’ community, are attracted by the potentialities of the Zimbabwean economy, but are hesitant to take the final hurdles and to pledge funding because of lack of clarity on property rights, doubts about the predictability of the legal framework and its application and difficulties in doing business.

“The commitment of funds is the easy part. Now comes the contractualisation and the implementation of all those ambitious programmes over the next years.

“The way we can effectively absorb those funds have a significant impact, both on the implementation of your country’s economic and political reform agenda as well as on the well-being of its people will determine whether or not we will be able to benefit from a possible topping up of the National Indicative Programme during the mid-term review planned somewhere in 2017,” said Ambassador Van Damme.

Van Damme said the European Investment Bank is assessing the possibility to extend new credit lines to the local banking community for on-lending to local SMEs.