Energy Sector
The energy sector has not been spared from the impact of unilateral coercive measures through low levels of investment, high cost of energy, decline in lines of credit, obsolete technology, failure to access spares, among other challenges. Electricity generation capacity now stands at less than 1 200 MW against an installed capacity of 2 000 MW, which has forced Zimbabwe to import electricity from the region with scarce foreign currency, leading to debt accumulation to the tune of around USD133 million. Considering that energy is a key economic enabler, restricted power generation capacity constrains economic activity, rendering domestically produced goods and services uncompetitive, locally and internationally.
Similarly, the absence of international lines of credit has constrained the capacity to import adequate fuel products to meet demand. This has led to the accumulation of external debt, worsening the public debt situation.
Financial Sector
The imposition of unilateral coercive measures on Zimbabwe compelled traditional financial creditors to classify the country as high risk, limiting access to international capital, thereby making the country a target for de-risking. Currently, only 6 out of 27 commercial banks are able to transact internationally. There is an observed trend towards de-risking of money service businesses, foreign embassies, non-profit organisations, and correspondent banks, which has resulted in bank account closures, mainly in the US, the UK and Australia.
A telling example is when the Infrastructure Development Bank of Zimbabwe (IDBZ) failed to access correspondent bank relationships with Commerzbank AG, Societe Generale, China Construction Bank, Industrial and Commercial Bank of China, Standard Chartered Bank New York, Nedbank South Africa, Bank of New York Mellon and Barclays Bank Plc. CBZ bank, ZB Bank and AGRIBANK all under unilateral coercive measures have also failed to conduct international transactions. For example, the imposition by the US Office of Foreign Assets Control (OFAC) of a USD3,5 million fine on CBZ Bank, the largest commercial bank, crippled its operations affecting thousands of ordinary Zimbabweans. In the same vein, ZIMRE Holdings had funds confiscated by the OFAC to the tune of USD1.7million, resulting in operational difficulties in trade and massive retrenchments without severance packages.
A German company, Giesecke and Devrient, Zimbabwe’s banknote paper supplier for over 50 years, unilaterally terminated the supplies of paper to Zimbabwe in July 2008. This resulted in loss of a fully paid up consignment of paper due for delivery to the Reserve Bank being denied exit from Germany.
Development Partners Support
The withdrawal of Official Development Assistance (ODA), in the wake of the imposition of unilateral coercive measures, precipitated the marked curtailment of development programs. This is best illustrated by the withdrawal of funds by both Denmark and Sweden, amounting to USD115 million a year. The funds were used to complement Government efforts in infrastructure development, health, food security and agricultural sectors.
Transport
The imposition of unilateral coercive measures on Zimbabwe adversely affected the transport sector resulting in marked declines in the operability of the road, rail and air transport systems. The measures curtailed the ability of these subsectors to access offshore lines of credit, receive multilateral donor support, acquisition of spares and equipment, among other challenges. Consequently, the safety, reliability and serviceability of road, rail and air transport systems were compromised.
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