European Union (EU) ambassador to Zimbabwe, Timo Olkkonen, says Government should address corruption, transparency and rule of law issues, among bottlenecks stifling business, the economy and investment.
Zimbabwe has suffered from years of under investment and western sanctions, but the new administration has embarked on cross cutting reforms since taking over in 2017 and its starting to pay off. The new Government is mobilising a US$3.5 billion fund to compensate white former farmers who lost their land during the historic land reform programme.
The EU diplomat said problems constraining business, the economy and investment in Zimbabwe are well documented and these included challenges of access to long term capital.
He was speaking during a virtual ceremony this week for a Euro 15 million loan by the European Investment Bank (EIB) to CABS; the first such investment in 2022 years and first ever to a local bank.
The EIB has agreed to support with Euro 15 million new long term financing for entrepreneurs and business in Zimbabwe, through CABS, to build resistance to the negative impact of Covid-19.
Olkkonen said a vibrant private sector was a precondition for any economic growth, adding the public sector does not exist in a vacuum but depends on the private sector, which also pays taxes.
“In Zimbabwe, private sector faces many challenges, I don’t need to innumerate all of these here, I am sure many of you . . . know them very well, many of you are also following these issues in the media,” he said.
Olkkonen said the Government should address the bottlenecks facing the private sector, through reforms that cover increasing transparency, promoting rule of law and reducing corruption.
This comes as Government is working on a number of reforms that encompass engaging and re-engaging the west, improving ease of doing business, constitutional changes and property rights issues.
The EU’s top diplomat in Zimbabwe said addressing contentious issues to create a level playing field was the best way to encourage “both domestic and foreign investment in the country.
Olkkonen said one of the biggest constraints faced by private sector in Zimbabwe was access to affordable long term finance, which has been compounded by the outbreak of Covid-19.
It is against this background the Olkkonen said he had no doubt that the EIB’s approval of a Euro 15 million loan to CABS would go a long way in addressing challenges of business finance.
This is particularly the case, Okkonen said, in light of long standing access to finance issues in the country as well as new challenges presented by the advent of the Covid-19 pandemic.
He said the funding facility to CABS was the first in decades and demonstrated the fact that there was scope for joint efforts with EIB to promote private sector investment in Zimbabwe.
“Ensuring access to finance by Zimbabwean entrepreneurs is essential to overcome business uncertainties and economic challenges enhanced by Covid-19,” Okkonen further said.
He stressed that the EIB, CABS partnership was part of Team Europe’s efforts to provide liquidity, sustain jobs amid the pandemic, grow investment and build post Covid-19 resilience in Zimbabwe.
The seven year EIB loan will allow new financing to be provided to private sector businesses, notably small to medium enterprises, across the length and breath of the southern African nation.