South Africa's Standard Bank, its Zimbabwean unit, and Absa Group authorized a $193.3 million loan for Zimbabwe, which is designed to finance public health facilities, Zimbabwean Finance Minister Mthuli Ncube has said.
The project envisaging building five new 60-bed district hospitals and 30 new 20-bed health centers in ten provinces of the country is due to commence in June and is expected to finish over the next three years, reads a statement by the Ministry of Finance on its official social media page.
"External banks are now extending lines of credit to Zimbabwe’s government, which reflects an improvement in the country’s sovereign credit risk profile," the minister emphasized.
As of September 2022, the country's external debt amounted to more than $14 billion, according to the Statement of the Public Debt made on November 2022 by Zimbabwe Public Debt Management Office.
Since the 2000s, when it defaulted on payments to the World Bank and other financial institutions, Harare has not been able to secure new financing from international lenders such as the International Monetary Fund or Paris Club due to its arrears.
Zimbabwe began making efforts to regain access to credit lines in 2021. The country is now seeking to implement a debt clearance plan overseen by African Development Bank President Akinwumi Adesina.
Devastating Effect of Western Sanctions & External Debt
Along with the external debt, the country has been bearing the burden of Western sanctions for more than 20 years. Zimbabwean officials have repeatedly criticized the West for the imposed sanctions, saying they aggravate the persisting economic challenges for the country, including the high inflation rate, high unemployment, agricultural decline, and shortage of basic goods.
Recently, European Union High Representative Josep Borrell announced the EU would maintain its sanctions against Harare, claiming the sanctions do not constrain the country economically.
However, in 2022, the UN Human Rights Council issued a report on the state of the Zimbabwean economy, highlighting the damaging impact of the sanctions.
"Unilateral sanctions decimated the economic performance of the country, thereby aggravating the humanitarian situation and consequently adversely impacting access to basic rights, including to life, food, water and sanitation, health and education, and the rights of Zimbabwean residents, migrants and refugees…" the report reads.
Zimbabwe is not the only African nation that is experiencing trouble paying off its external debt; the list of such countries also includes neighboring Zambia, Nigeria, and Ghana.
Speaking on loans received from international financial institutions, Ghana's President Nana Akufo-Addo in 2022 urged Africans to stop "begging" the West, pointing to the possibility of receiving financial assistance from the African Development Bank and the Africa Export-Import Bank.
"If we stop being beggars and spend African money inside the continent, Africa will not need to ask for respect from anyone, we will get the respect we deserve. If we make it prosperous as it should be, respect will follow," he noted.
More to that, Zambian President Hakainde Hichilema, whose country's external debt amounts to $13.04 billion criticized the "suicidal" interest rates offered by international financial organizations.
"... the reckless interest rates that our colleagues agreed — 10, 11, 12%. Suicidal. That’s a black mamba kiss of death," Hichilema said.