The President of the African Development Bank Donald Kaberuka told diplomats in Harare, four months after the formation of the inclusive government, that Zimbabwe was the biggest liability on the AFDB books.
He said that the AFDB was providing Zimbabwe technical assistance in the form of US$6 million to the Ministry of Finance and would soon provide Finance Minister Tendai Biti with a senior advisor.
The AFDB was also working with the World Bank on Zimbabwe’s arrears. The bank was willing to offer US$100 million of its own money and could accept contributions from donors for arrears clearance when the time comes.
He, however, told the diplomats that it was not yet time for full-scale re-engagement with Zimbabwe.
Kaberuka said that local bankers had expressed scepticism that the inclusive government either would not hold or that there would be policy reversals.
Viewing cable 09HARARE488, AFRICAN DEVELOPMENT BANK: NOT YET TIME TO REENGAGE
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SUBJECT: AFRICAN DEVELOPMENT BANK: NOT YET TIME TO REENGAGE
¶1. (SBU) Ambassadors and aid agency heads attended a briefing by
African Development Bank (AFDB) President Donald Kaberuka on June 9.
Kaberuka, who we met just after the COMESA summit in Victoria Falls,
related his impressions of Zimbabwe and the content of various
meetings with political and business leaders during his visit.
During meetings with both Prime Minister Morgan Tsvangirai and
President Robert Mugabe, the leaders touted the new arrangement as
workable. Kaberuka said that investors will continue to be
skeptical about Zimbabwe until further changes have been achieved.
Finally, he advised that the time has not come for full-scale
reengagement. END SUMMARY.
Message to the Private Sector
¶2. (SBU) Donald Kaberuka, President of the African Development Bank
was in Harare on June 9 following the recent Common Market of
Eastern and Southern Africa (COMESA) meeting in Victoria Falls,
Zimbabwe. During our meeting on June 9 with Kaberuka and
representatives from the UK, Germany, Netherlands, Sweden, Denmark
and France, Kaberuka said that his message to the Zimbabweans at the
COMESA meeting focused on the importance of creating business
confidence as a means of creating economic growth.
Mugabe and Tsvangirai Upbeat
¶3. (SBU) Kaberuka also told us of his discussions with both
President Mugabe and Prime Minister Tsvangirai regarding the
prospects of the inclusive government and land reform.
Unsurprisingly, Tsvangirai was upbeat and said that the government
is working. He acknowledged unresolved issues and appealed to
Kaberuka to advocate for international engagement.
¶4. (SBU) Mugabe also told Kaberuka that the inclusive government is
working, but described it as a temporary arrangement. On land, the
president said, “this is nothing new.” He told Kaberuka that the
government would allow people to take possession of their land as
part of the land reform. Mugabe also cited an alleged ongoing land
audit and repeated his claim that the government will not allow land
for prestige purposes. (COMMENT: Although the need for a land audit
was cited in the September 15 Global Political Agreement (GPA), no
progress towards an audit has yet been made. In fact, many of the
recent farm seizures have been led by ZANU-PF leaders who have
already received one or more farms. END COMMENT.)
¶5. (SBU) When Kaberuka noted the international skepticism of the
Q5. (SBU) When Kaberuka noted the international skepticism of the
GPA, Mugabe commented that those who are skeptical “have always
been.” Kaberuka reiterated to Mugabe that international support
will not increase substantially until further progress towards
fulfilling the GPA has been achieved.
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AFDB Programs and Concerns
¶6. (SBU) Turning to Zimbabwe’s financial woes, Kaberuka said that
Zimbabwe is the biggest liability on the AFDB books. He outlined
the Bank’s current programs in country and said the AFDB will
establish an in-country presence as soon as possible, in addition to
bank staff already in Harare based at the Ministry of Finance.
7 (SBU) The AFDB is currently providing Zimbabwe technical
assistance in the form of US$6 million to the Ministry of Finance
and will soon provide Finance Minister Tendai Biti with a senior
advisor. In addition, the bank is providing assistance for water
and sanitation systems in coordination with UNICEF.
¶8. (SBU) The AFDB is also working with the World Bank on Zimbabwe’s
arrears. Kaberuka told us the AFDB is willing to offer US$100
million of its own money and could accept contributions from donors
for arrears clearance when the time comes. Kaberuka noted that this
process took 18 months in Liberia but more recently the clearance of
Cote d’Ivoire’s arrears took just six months due largely to a
contribution from the French. Kaberuka was very clear that budget
support was “a long way off” and noted that the Bank’s
recently-approved short-term strategy would not be expanded any time
¶9. (SBU) Kaberuka further related that local bankers had expressed
skepticism that the inclusive government either won’t hold or that
there will be policy reversals. Until further political and
economic change is achieved and is seen as irreversible, investors
will continue to steer clear of Zimbabwe’s troubled economy.
¶10. (SBU) In closing, Kaberuka told donors, “the time has not come
for full scale reengagement.”
¶11. (SBU) As in previous meetings and his public statements,
Mugabe’s comments to Kaberuka clearly indicate that the intransigent
leader sees the current arrangement as a short-term deal. Mugabe
remains stuck in the past and is not thinking about long-term
development. In contrast, Tsvangirai remains focused on the future.
In the present, however, the business environment remains
unappealing to private investors. As Kaberuka says, it remains
clear that neither donors nor businesses can reengage with further
assistance or investment until further change has been achieved.