Zimbabwe Government Assumes ZW$2.77bn Debt After Farmers Fail To Repay

The 2022 Annual Debt Bulletin has revealed that the Zimbabwean government has been forced to assume a debt of ZW$2.77 billion after the government-guaranteed scheme rolled out by CBZ Bank Agroyield between 2019 and 2020 failed to recover the funds from beneficiary farmers.

The scheme was part of the National Enhanced Agriculture Productivity Scheme (NEAPS) to ensure food self-sufficiency in Zimbabwe through the support of wheat, maize, and soya bean production. The Bulletin reported that out of the ZWL4.5 billion disbursed to maize farmers, only ZWL1.5 billion was recovered, representing a poor 38.5% recovery rate. The Bulletin published this week said:

Out of the ZWL4.5 billion CBZ Bank Agroyield (100% government guaranteed) disbursed to maize farmers for the 2019/20 season, only ZWL1,5 billion was recovered representing a paltry 38,5% recovery rate.

The Zimbabwe Coalition of Debt and Development (ZIMCODD) has expressed concern over the low recovery rate and the burden placed on taxpayers, who are already overtaxed. ZIMCODD also questioned the sustainability of some projects and the lack of disaggregated figures in the Annual Debt Bulletin. Said the lobby group:

We are concerned by a very low recovery rate on publicly guaranteed private sector debt particularly in the Agriculture sector.

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By assuming such debts (ZWL2.77 billion unpaid balance), Treasury has increased the burden on taxpayers who are already overtaxed.

Ironically, the given reasons for contracting those debts are extremely dubious and unconvincing. For example, Treasury borrowed US$249.73 million from Equatorial Guinea in 2005 to finance the procurement of “strategic imports” with no further indication as to what the imports are.

For example, investing in the expansion of airports at a time social infrastructure is crumbling and the majority of citizens are wallowing in abject poverty leads to questions on prioritization.

ZIMCODD has been critical of the government’s practice of assuming debts without transparency or accountability. The group has expressed concern that some debts were incurred by individuals and then transferred to the state, putting the burden of repayment on taxpayers. The farm mechanisation programme initiated by the Reserve Bank of Zimbabwe during Gideon Gono’s tenure is an example cited by ZIMCODD, in which some beneficiaries failed to repay their loans, resulting in the government inheriting the debt. ZIMCODD argues that such practices increase the burden on taxpayers who are already struggling, and raise questions about the sustainability and prioritisation of government projects.

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