A multi-million dollar loan, earmarked primarily for power and water support in Zimbabwe, has been handed to the ZANU PF government by the African Development Bank.
The $53 million loan agreement was signed on Wednesday by the Bank's representative Mateus Magala and Finance Minister Patrick Chinamasa. Of that amount, almost $40 million is being funded by the Zimbabwe Multi-Donor Trust Fund, set up in 2010 to support the Zim government's 'priority recovery' activities.
The major donors of that Fund include Australia, Denmark, Germany, Norway Switzerland and the United Kingdom, who have for years poured money into Zimbabwe by way of humanitarian relief. This latest loan is meant for water supply, sanitation and power infrastructure rehabilitation projects.
The rest of the Development Bank grant is being paid out by the African Development Fund and is set to finance governance and institutional strengthening programs, youth and tourism enhancement projects and more.
There was no detail provided about what accountability measures would be enforced to ensure that ZANU PF spends the money where it is needed, with the party responsible for years of financial mismanagement and widespread economic destruction.
Economic analyst Bekithemba Mhlanga said it was likely that some enforcement measures would be in place.
"If you take a place like Zimbabwe where there are concerns about how these kinds of funds are used, and about transparency and accountability, you'll find mechanisms are in place to ensure a confidence level of transparency and proper use of the funds," Mhlanga said.
Zimbabwe's external debt is pegged at about $11 billion, and global lenders like the World Bank and the International Monetary Fund have not given the country any new loans on this basis.
Mhlanga said that the ZANU PF government could start paying off its debt, if it kick-started the country's economic recovery.
He added: "Water and power remain critical for Zimbabwe's economic recovery and it is important the money is used for those purposes. What these loans say to Zimbabwe is that this is a second chance. This is an opportunity for Zimbabwe to take that second chance and demonstrate that they are able to live by whatever commercial obligations it has."