Commercial Farmers' Union of Zimbabwe

Commercial Farmers' Union of Zimbabwe

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Government to issue Diaspora Bond

Government to issue Diaspora Bond

Thursday, 13 October 2011 15:30

Nqobile Bhebhe

FINANCE minister Tendai Biti says government will issue another Diaspora 
Bond after overwhelming success of US$50 million bond floated in July.
He said a follow-up instrument is being worked on and would be announced in 
the 2012 national Budget. The idea of the Diaspora Bond was mooted in 2009 
in a bid to enlist the services of Zimbabweans to help rebuild the economy.
In his 2010 Budget, Biti announced the bond, which is a co-operation between 
government, CBZ Bank, and underwritten by the by the Cairo-based African 
Export-Import Bank (Afreximbank).

However, due to high interest shown in the Diaspora Bond, a second facility 
is on the cards.

“We have begun putting together a framework for a follow up bond but with a 
different creative name. We hope to announce it in the 2012 Budget,” said 

“To date, resources mobilised under the bond amount to US$42,5million and 
the Diaspora Bond has benefited several companies which include Zimbabwe 
Electricity Supply Authority (US$3m), NetOne ($8m), Hwange Colliery (US$5m), 
Investments (US$13m), transport and mining sector got US$5m.”

A bond is a contract to repay borrowed money with interest at fixed 
Diaspora bonds have historically been crucial for raising development 
finance during times of crisis in many developing countries particularly 
India and Israel.

Records show that Israel has had yearly bond issues since 1951 and had 
raised US$25 billion by the end of 2007, while India has had three separate 
bond issues since 1991 and had raised US$11, 7 billion by the third issue in 

More than three million Zimbabweans are in South Africa, UK and the US owing 
to the political and economic crisis of the last decade.
Biti said the bond and several other home-grown financial instruments are a 
measure of raising money from the domestic market.

“Zimbabwe is in a unique and horrible situation in that we only depend on 
one fiscal instrument to finance operations, that is budget and taxation, 
yet other countries rely on overseas assistance,” he said. “There is huge 
money on overseas borrowing which Zimbabwe cannot access, World Bank (US$75 
billion for sub-Saharan Africa), Africa Development Bank (US$30 billion), 
but because of our crippling domestic debt we are ruled out.”

Zimbabwe’s national debt is said to be more than US$7 billion, outstripping 
the country’s GDP, which is estimated at just over US$6 billion in 2010.
The bulk of the country’s external debt is owed to multilateral creditors 
and the debt has continued to grow mainly as a consequence of interest and 
penalty charges on existing payment arrears.


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