Explainer: Zimbabwe’s US$21 billion debt concerns highlighted in parliament

In a recent parliamentary session, the Member of Parliament for Mbizo representing the Citizen Coalition for Change (CCC), Corban Madzivanyika, expressed profound concern regarding Zimbabwe’s escalating public debt, which has now surpassed US$21 billion. This alarming issue was highlighted during the debate concerning the 2024 Mid-term Budget and Economic Review, where Mr Madzivanyika lamented the absence of transparency surrounding the assessments of foreign investments in the country.

The Chairperson of the Budget and Finance Parliamentary Committee, Clemence Chiduwa, informed Deputy Speaker Tsitsi Gezi that the public debt had notably surged in 2023, raising doubts about the nation’s economic growth prospects as it strives towards achieving Vision 2030. Mr Madzivanyika raised a salient point, stating, “Let us be honest with each other. Only last year, by December 2023, our debt stood at US$17 billion, yet it has inflated by over US$3 billion to reach US$21 billion.”

He elaborated on the recent government actions that contributed to this debt increase, specifically pointing to the US$1.9 billion recapitalisation of the Mutapa Investment Fund, alongside its acquisition of a 35% stake in Kuvimba for US$1.6 billion. Mr Madzivanyika questioned the valuation of Kuvimba, hypothesising that if 35% of Kuvimba is valued at US$1.6 billion, the entire entity’s worth would amount to an implausible US$4.6 billion. He firmly contended that the current evaluation processes seem questionable.

Kuvimba Mining encompasses foreign-owned enterprises such as Sandawana Mine, Freda Rebecca, Jena Mines, Zim Alloys, Shamva Gold Mine, and Great Dyke Investments. Mr Madzivanyika challenged the integrity of these valuations, asserting, “Can you honestly maintain that those companies are collectively worth US$4.6 billion?” He further urged a reevaluation of government priorities, asserting that significant investments in large-scale projects have not yielded tangible benefits for the struggling economy.

He cited the example of the Batoka Energy Hydroelectric Power generation project, which has the potential to alleviate the country’s electricity shortages, as a more beneficial investment.

Mr Madzivanyika emphasised the dire consequences of escalating debt, noting that recurrent expenditures are draining resources from critical social protection programmes.

“Funds that ought to address pressing social issues, such as providing aid to street children and tackling drought challenges, are being diverted towards debt repayments,” he stated. Additionally, he explained that this indebtedness prevents the nation from borrowing further from international financial institutions, thus hampering economic recovery efforts.

Mr Madzivanyika called for structural reforms in the management of national debt, insisting that no borrowing or guarantees should occur without the approval of Parliament, in order to safeguard the nation’s economic future and ensure accountability in financial governance.