Zimbabwe Signs Trade Agreements with Botswana

The two neighbouring countries signed eight agreements at a Zimbabwe-Botswana Bi-National Commission in Harare. Among the agreements was a P1 Billion credit line to Zimbabwe to the private sector, which made the headlines in Zimbabwe. The credit line is an expansion of a P600 million facility which was initiated in 2009 but wasn't concluded as the former presidents of both nations had a political fall out. Although Zimbabwe's beleaguered economy needs more capital, the movie was appreciated by Zimbabwean President Emmerson Mnangagwa.

The money will come from private financial institutions in Botswana, and both governments will guarantee the loans. The facility is meant for Botswana companies that want to access the Zimbabwean market. Zimbabwean companies may access the facility if they partner with a Botswana company. Zimbabwean companies have been struggling to access working capital. The economy is in shambles, and international lenders are shunning the nation. So, the credit facility will come as a relief to some companies.

African nations have always struggled with getting good value for their raw materials. They have also realized that there is more money in processing raw materials rather than just extracting them. With this in mind, Zimbabwe agreed to take its diamonds to Botswana for processing, polishing, cleaning, and marketing. Currently, Zimbabwe exports its diamonds raw to markets like Antwerp in Belgium. This has both historical and economic importance as the African nations will own and participate in a more significant section of the supply chain. It also creates cross border trade among the two countries, something which will enrich both nations.

An agreement was also signed to move forward with a 2000 km railway line that would link Zimbabwe and Botswana with Mozambique. The Port Techobanine Inter-Regional Heavy Haul railway project will give the two landlocked nations access to Mozambique's seaports. The railway line is expected to link Botswana's Francistown, Zimbabwe's Bulawayo and Mozambique's Techobanine. Each of the three nations is expected to put $200million towards the project, and the rest of the work will be carried out through public-private partnerships. The railway is expected to transport passengers and up to 12 million tonnes of goods per annum.

The agreements signed were economically and socially important for both nations. As with most government projects, the real test will be in its execution.

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