UAE to invest in Zim agriculture

Published: 17 April 2014

The United Arab Emirates is willing to invest in agriculture projects in the country to contribute to the revival of the economy and ensure food security.

Dubai based Mondore General Trading LLC executive director Dr Andre Homberg said this on the sidelines of the Zimbabwe Special Economic Zones workshop yesterday.

"UAE relies on food imports and we are very concerned with food security so l can tell you that we are very willing to invest heavily in Zimbabwe's agriculture," he said. He said he was working with other countries in the east to offer structured financing to Zimbabwe.

He however could not disclose which countries he was working with as negotiations were still in initial stages.

"I can confirm that there is potential to explore other markets in the east to raise funds for the development of Zimbabwe. I will be meeting with the ministry of finance and other government officials to discuss financial solutions that can be offered to the country," he said.

He said a vibrant banking system and financing is critical for the success of the Special Economic Zones, which have been proposed by the government in a bid to attract foreign direct investment.

However, the country's banking system has not been performing well in the past decade resulting in banks not being able to offer long term financing and the central bank letting go of its lender of last resort role.

But Government has made efforts to recapitalise the Reserve Bank of Zimbabwe and restore its core functions. Dr Homberg said Government should consider establishing an investment guarantee fund which will be used to offer sovereign guarantee to attract private public partnerships.

Sovereign guarantee is a government instrument issued by the central bank, guaranteed by assets like mineral rights and land infrastructure which can be used as collateral. "Zimbabwe is a rich country, not in cash but in assets. Some of them are in the ground or the land and this is what government should use to finance projects.

"With that framework you can attract international partners and use Zimbabwe's own assets as collateral for the finance," he said.

He said sovereign guarantees could be used to liquefy the central banking system which will then be able to issue bonds to attract Public Private Partnerships. Homberg noted that most major capital intensive projects in the world use this type of financing which is raised from the country's own assets to avoid being indebted to other governments.

"The problem, however, is that issuing a direct Zimbabwean bond will not work because the banking system is not reliable, but getting someone in another country to issue the bonds on the Government's behalf and securing it with assets will definitely work," he said.
- BH24

Tags: Agriculture,