By Rutendo Matinyarare
TO target the heart of the Zimbabwean economy, agriculture, which contributes 17 percent of the national GDP and a major employer, the West imposed sanctions on AgriBank, ZB Bank, Scotfin and Intermarket Holdings in 2008.
AgriBank, Scotfin, Intermarket
and ZB Bank.
By imposing sanctions on four very critical financial institutions, the US was aiming to cripple land reform and, as a result, over 300 000 small scale farmers were left without funding to farm, finance and insure drought relief and irrigation programmes to mitigate climate change.
Since 2008, AgriBank lost credit lines in excess of US$98 million and corresponding international bank relationships.
ZB Bank and InterMarket Holdings.
Both ZB Bank and InterMarket Holdings fell under ZB Financial Holdings and were instrumental in giving business loans, mortgages, project finance, commercial loans, insurance and small unsecured loans to small scale businesses and farmers.
As illustrated above, CBZ faced a fine of US$3,8bil which was later negotiated down to US$385mil for processing ZB Bank payments. This handicapped a lot of housing development, business setup, industrial development and farming financing.
Sanctions were also imposed on the Infrastructure Development Bank of Zimbabwe to stop it from fulfilling its mandate of building and maintaining electricity, road, rail, water, sanitation and telecommunications infrastructure, hence Zimbabwe’s infrastructure is dilapidating and in need of US$24 billion to upgrade.
Small and Medium Scale Development Corperation, which is not even on the so-called list, had US$3 million confiscated by OFAC, prejudicing the funding of small and medium scale youth enterprises in Zimbabwe. So, in this case, the US government chose to target and deprive innocent youth of funding and development.
As a result of these coercive measures on our banks and development institutions, more than 102 international correspondent banks have cut ties with Zimbabwean banks. Sadly, even some Chinese and South African banks have also cut corresponding bank relations as they derisk to comply with ever more stringent US sanctions and international AMLCT anti-money laundering and counter-terrorism standards which, according to Juan Zarate, were set to give US sanctions more bite.
And, even though between 2014 and now Agribank, ZB Bank, IDCZ and IBDC are said to have been delisted from executive order lists, ZDERA still prohibits any multi-lateral institutions from lending the Government of Zimbabwe or its institutions money.
Furthermore, as stated above, the IEEPA is separate from the executive orders so it still restricts any transactions with the Government of Zimbabwe and its companies (in many ways Zimbabwe as a whole) without license from the US President and the above companies are wholly or majority owned by this Government that was identified as a threat to the United States.
As a result, there is still significant sanction risk associated with doing business with these entities, especially after fines were imposed on CBZ and Standard Bank in 2017 and 2016 respectively for doing business with them.
As a result, many financial institutions have derisked by cutting loans or corresponding relationships with these financial institutions and they did not re-establish relationships when those institutions were removed from the sanctions list to avoid penalties.
This suggests that these institutions are still very much under sanctions. The impact of these banking sanctions has been the nation losing in excess of US$34 billion in loans and aid over the last 19 years.
The same sanctions also impact a plethora of parastatals that are instrumental in industrial production, exporting our resources and protecting the sovereignty of the nation.
These include MMCZ, ZMDC, ZISCO, Zimbabwe Mining Development Corporation and Zimbabwe Defence Industries, among others.
ZISCO was a major employer, employing over 5 000 people at its peak and a producer of raw material for industry.
It was also a major a driver of the economy and downstream industries in which it created 50 000 jobs indirectly, according to the Economist, but since the apartheid era, destabilisation and US sanctions, it’s now just a shadow of its former self, handicapping the entire Zimbabwean economy.
All this has had a significant multiplier and ripple effect on our economy which has lost the nation over 50 000 jobs, a potential loss of between US$30 million and US$150 million/year or US$2,8 billion over 19 years from just this one institution.
In 2002, the EU cut €132 million/year in aid to Zimbabwe, affecting social development and humanitarian aid for fighting HIV, climate change, water challenges and droughts. Bear in mind that such aid was a pledge by the EU and the West, in lieu of the West paying reparations in Africa for colonisation.
The British DFID cancelled its Trade Mark Southern Africa funding for a project to eliminate fruit flies in SADC after Zimbabwe benefitted from some of the funds.
Zimbabwean politicians could not attend many EU, COMESA and SADC meetings because of sanctions and so Zimbabwe was left out in many of the regional agreements signed with Western powers, impacting regional integration.
In total, Zimbabwe lost in excess of US$4,5 billion in donor aid since 2001.
In November 2013, Econet Wireless complained about its operations being hampered by a toxic economic environment.
Many private companies could not operate because they did not have access to inputs and loans so they were forced to finance their business with cash or high interest loans from second tier lenders, hindering reinvestment growth and the capacity of these institutions to grow.
Due to prohibitions of investments, loans, machinery and technology sales, payment clearances by financial institutions and a lack of corresponding banking relationships, it was difficult for companies in Zimbabwe to retool and upgrade technology to compete regionally.
All these restrictions affected the critical function of the country, negatively impacting balance of payment, investment, loans, job creation, asset utilisation, production of exports, raising foreign currency and tax generation, which affected the capacity of both Government, private and non-profit sectors to deliver services to people.
Preferential procurement collapse
Since the imposition of sanctions on Zimbabwe, preferential procurement agreements for Zimbabwean products in the commonwealth, EU and the US were cancelled. The Government lost its right to buy fuel directly from the Middle East as using the US dollar as payments would be blocked, while shipping conferences carrying fuel for Zimbabwe under a Government manifest risked being confiscated or sanctioned. This had an impact on the entire Zimbabwean economy and all Zimbabweans.