Gaborone: After a two-year hiatus, Botswana and Zimbabwe will finally sign the P500m Bilateral Investment Promotion and Protection Agreement (BIPPA) in Harare today. Trade and Industry minister Dorcas Makgato-Malesu was expected to leave for Harare yesterday to sign the agreement on behalf of Botswana.
"The Minister of Trade and Industry will on the 21st March 2011 be signing the BIPPA in Harare, Zimbabwe with her counterpart in that country," says a statement from BOCCIM. "The BIPPA is a pre-condition [for] the rollout of the P500 million credit line for Zimbabwe from the Government of Botswana."
BOCCIM says it will mount a trade mission alongside the event and engage in business discussions with Zimbabwe's private sector from 21 to 23 March 2011. Botswana decided to extend the P500 million to Zimbabwe under the Short-Term Emergency Recovery Programme (STERP) that SADC member states agreed on as a means of assisting Zimbabwe to recover more than two years ago.
However, the process got caught in glitches as it required cabinet and parliament approval from both countries. The Botswana private sector pledged to extend the P500 million government-guaranteed credit line to Zimbabwe in 2009 towards rebuilding the Zimbabwean economy, particularly the manufacturing sector. Under the credit line, Botswana banks will provide trade finance for local and Zimbabwean businesses with government underwriting this through Botswana Export Credit Insurance (BECI).
BOCCIM and its Zimbabwean counterpart, the Confederation of Zimbabwe Industries (CZI), were responsible for fine-tuning most aspects of the credit line, including interest rates and lending thresholds. According to the proposals, loans under the credit line will attract an interest rate of 10 percent per annum, while loan thresholds suggested are a minimum of US$500 and a maximum of US$5 million.
It has also been proposed that the facility be a revolving fund targeted at businesspeople on a continuous basis. The funds will be availed mainly to the Zimbabwe's manufacturing, mining and agriculture sectors that are in a desperate need of recapitalisation and are also aimed at enhancing economic co-operation between the two neighbouring states. According the Confederation of Zimbabwe Industries (CZI) as quoted by Newsday, the lines of credit from Botswana could be a forerunner to unlocking other forms of funding from other countries.
CZI is in the process of organising a networking dinner with a BOCCIM delegation that is expected to be in Harare to witness the signing ceremony. "The rules and regulations governing the lines of credit, including the length of borrowing and interest rate, will be made available in due course," CZI said.
The investment accord will cover only investments in the two countries made after the signing of the agreement. Zimbabwe requires at least $8 billion to achieve a quick turnaround following more than a decade of economic disintegration.