US sanctions strangling Zim economy

FANUEL JONGWECallisto Jokonya stands in the cavernous factory of Imperial Refrigeration and recalls the halcyon days. In the 1990s, his factory, located in the Zimbabwean capital Harare, was buzzing.It had a workforce of 350 people, who cranked out 20 000 refrigerators per year. Today, the company employs just 50 people, and annual output is just 1 000 units. "Just that tells you what sanctions are," Jokonya told AFP.He refers to one of biggest wounds suffered by the Zimbabwean economy US-led sanctions imposed two decades ago when then president Robert Mugabe launched a violent election crackdown. Intended to apply to the elite, the sanctions-imposed travel bans and a freeze on assets held top Zimbabwean officials.But the measures have had a far-reaching and probably unintended impact on the Zimbabwean economy by strangling the country's access to the international banking system.To take the case of Imperial Refrigeration, Jokonya wanted to get a loan to expand production at Imperial. All his equipment needs to be imported, for which he has to pay in US dollars.Institutions like the International Monetary Fund (IMF) are usually the first line of support for countries in financial trouble.Zimbabwe has not met all of the requirements for IMF support and Zidera means there is little incentive for Harare to try, or for the IMF to look at compromises.Private banks also struggle to access international funds. Zidera imposes stiff penalties for companies who deal with companies targeted by the law.The result is that Zimbabwe has meagre supplies of US dollars at home, and it is risky for entrepreneurs to seek access to greenbacks abroad via private banks.A UN expert said after a visit in November that 87 financial institutions had stopped doing business with Zimbabwe for fear of running afoul of the sanctions. Foreign leaders often have much leeway to adjust sanctions over time. But in the case of Zidera, the punishment is enshrined in US law, which would require any changes to be endorsed by Congress.Indeed, the latest version of Zidera, passed in 2018, further raises the threshold for lifting the sanctions. It broadly requires Zimbabwe to hold better elections and respect human rights.But it also demands that Zimbabwe adhere to a southern African court ruling to pay some nine billion US dollars to white farmers whose properties were seized during Mugabe's land reforms two decades ago.Zimbabwe's entire gross domestic product (GDP) is only 16.7 billion US dollars. Harare has made initial pay-outs of 53 million dollars, a tiny fraction of the amount demanded. -AFP

US sanctions strangling Zim economy

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