Impact of Sanctions on Zim, region: Part 2

12 Oct, 2019 - 00:10 0 Views
Impact of Sanctions on Zim, region: Part 2

The Herald

Continued . . .

Impact on the Energy sector

2.52 The energy infrastructure dilapidated significantly since the imposition of sanctions due to decreased Foreign Direct Investments. There has been limited access to credit lines and financial support from international financial institutions like the World Bank, which stopped their support for energy infrastructure development programmes. International investors demand government guarantees as prerequisite for investing in the sector, while charging high interest rates on loans for infrastructure development.

2.53 This has impacted negatively on the rate of implementation of capital projects, resulting in curtailed and unreliable power infrastructure, insecure power supply and uncompetitive industries, with power outages directly affecting other sectors such as agriculture and manufacturing.

2.54 Oil traders used to extend credit facility to oil importers, a facility which has since stopped with insistence on upfront payment. This has negatively impacted on the country’s ability to secure adequate fuel supplies. The fuel shortages has downstream effects on the cost of production, and public transportation.

2.55 The unavailability of both electricity and fuel impacts negatively on industry and commerce.

Impact on health, water, and sanitation infrastructure

2.56 Water and sanitation infrastructure virtually collapsed resulting in the outbreak of cholera and typhoid. The collapsed infrastructure is largely a result of constrained capacity to provide adequate clean and safe water to communities. Water treatment plants have not been upgraded to match increased demand.

2.57 Some health facilities that were under construction like provincial and district hospitals and were being financed through the World Bank loan facility could not be completed soon after the imposition of sanctions as donors withdrew their funds. Government failed to raise enough funds to complete the projects leaving some facilities incomplete.

Impact on the Transport sector

2.58 The transport sector was adversely affected by the illegal punitive measures, resulting in dilapidated aviation, road and rail sub-sectors.

2.59 Air transport lost almost 50 percent of traffic movements at its airports and airspace since the imposition of sanctions. In 1997, a total of 2,280,153 passengers were registered in Zimbabwe, but the number of passengers dropped by almost 63 percent to as low as 834,269 in 2003. A number of foreign (European) Airlines like Lufthansa, British Airways, Air France, KLM and Qantas exited the Zimbabwe market. In the same year, recorded aircraft movements stood at 36 215, representing a 58 percent fall from the 1997 figure of 87 618. These figures mean retarded growth and loss of revenue, which had direct impact on tourism industry, employment rates, exports and foreign currency generated.

2.60 By its nature, the aviation industry is capital intensive, with most airlines thriving through leasing of equipment and purchasing the same through loans and other credit facilities. Due to sanctions, local airlines were unable to access loans, purchase equipment and get any financial support from the traditional funders. This crippled domestic air operators, who failed to get spares and other equipment to sustain their operations. In some cases, private air operators had to contend with high credit costs, while still being considered as not very suitable for trade and business partnerships with Western firms.

2.61 Furthermore, the movement of funds via the International Air Transport Association (IATA) has been difficult resulting in airlines failing to access their funds from ticket sales, thereby making it difficult for airlines to do business in Zimbabwe. For example, the national airline was suspended from the IATA billing and ticketing system. By implication, the airline cannot sell interline tickets or international tickets via travel agents or other airlines.

2.62 The road and rail sectors were not spared by the sanctions. A transport sector support programme funded by DANIDA to the tune of US$48 million was discontinued because of sanctions. In addition, a labour-based roads and rehabilitation works programme with the aim of rehabilitating 116 kilometres of roads, which was funded by the Swedish government to the tune of US$15,1 million, was discontinued due to sanctions.

2.63 The national railway’s capitalisation and operations were hampered by sanctions because all of its rolling stock was supplied by an American company, General Electric. Currently the national railways purchases parts through third parties outside Zimbabwe, which makes their cost of doing business very high. It also faces challenges of securing lines of credit and loans from the American market for recapitalisation as the US companies are forbidden to engage with the national railways.

Impact on the Tourism sector

2.64 Bad publicity has dealt Zimbabwe’s tourism sector a very negative blow. Zimbabwe has been falsely perceived as an unsafe and risky country to visit with the like of the UK, US, Germany and Australia issuing negative Travel Advisories to their citizens. This drastically reduced the number of tourist arrivals from the West with resort towns such as Kariba being rendered ghost towns.

2.65 Similarly, ordinary Zimbabwean travellers are finding it difficult to obtain visas to travel abroad due to negative perceptions and xenophobia arising indirectly from the sanctions. The air services industry is also hamstrung by incessant logistic and financial impediments.

2.66 The downturn in the tourism industry experienced during 2000 to 2008 resulted in the closing down of a number of tour operating companies in the country. Whilst there were 118 companies operating in the country in 2000, by the year 2005 the number had gone down to 56. While room occupancy averaged above 60 percent during the period 1989 to 1998, the figures fell to 40 percent in 2000 and 34 percent in 2006.

2.67 The effects of sanctions on tourism were, thus, experienced through the decline in international partners, decline in room occupancy, volume of tourist arrivals and bookings and revenues.

Impact on the Health Sector

2.68 Sanctions had a catalytic effect on the deterioration of health services in Zimbabwe. The Government was forced to fund salaries and running costs with little funding supporting real health programmes.

2.69 As an example, after the imposition of sanctions in 2001 the DANIDA withdrew aid funding towards various vertical health programmes to the tune of US$29,7 million. This was followed by the Swedish Government’s withdrawal of US$6,4 million worth of grant towards supporting HIV and AIDS, water and sanitation, alleviating disability and health education. Access to the Global Fund grant was also turned down. Sanctions created a humanitarian crisis of gigantic proportions, with a rise in infant mortality rate rising from 70/1 000 to 132/1 000 by 2005.

2.70 Health Services Support Programmes which were suspended due to sanctions include:

• Support to the provincial health service capacity building and policy issues to the Health Ministry;

• Development of a gender strategy Support to HIV and AIDS activities;

• Integration of Zimbabwe Essential Drugs Action Program to national laboratories;

• Establishment of the health information system; and

• Support to the Health Services Fund Transport Management.

2.71 The deteriorating economic environment resulted in the failure by Government to recapitalize hospital equipment, with available equipment breaking down more frequently due to lack of technical support from manufacturers. Since Government could not raise adequate foreign currency, the costs of procuring equipment and drugs/medicines also became expensive as it had to be done through middlemen.

2.72 A number of deaths arising from HIV and AIDS, malaria and cholera could have been avoided had sanctions not been imposed on the country.

Other Socio-economic effects of sanctions

2.73 Zimbabwe has seen widespread reversal and cessation of donor funding in the areas of social development such as environment, health, water, sanitation, education, and infrastructure development. Ordinary citizens have, thus, been worst affected by the sanctions. The sanctions have also had adverse downstream effects on the Zimbabwean economy’s key sectors.

2.74 A significant number of non-governmental organisations (NGOs) and international cooperating partners have moved their operations out of Zimbabwe after the imposition of sanctions. DANIDA and the Canadian International Development Agency pulled out of Zimbabwe in 2001 and 2003, respectively, terminating all projects in progress and retrenching their employees.

The Swedish government funded Education Sector Support Programme to the tune of US$95 million by supplying textbooks and other educational material, as well as constructing schools and promoting gender equality in schools. However, the funding was withdrawn after the imposition of sanctions.

2.75 The decrease in donor funding and support resulted in the marginalised vulnerable groups sinking deeper into poverty.

As the government struggled to meet its financial obligations women, children and people living with disability and the unemployed faced increased challenges. Thus, sanctions have hard hit the marginalised and vulnerable people more than the so-called targets.

2.76 The average number of people employed in the formal sector was bigger before the imposition of sanctions. On average 1,17 million people were employed in the formal sector per given year during the pre-sanctions period. This declined to 1,03 million per year during the period of sanctions. The decline in employment levels was attributed to massive retrenchments mainly due to the downsizing of operations and closure of companies particularly in the manufacturing sector. Labour force surveys indicated that over 400 000 were at one point retrenched in the period 2005 to 2013.

2.77 Consequently, the average number of people employed in the informal sector increased significantly. The informal sector employed an average of 0,49 million people per year before sanctions and this average rose to 1,65 million during the period after imposition of sanctions. This suggests the increased dependence on the informal sector by households, but which affected government’s revenue base through loss of taxes.

2.78 Before the imposition of sanctions, the yearly average number of people living below the country’s poverty datum line was 54.2 percent. This average rose to 60.7 percent during the period after the imposition of sanctions. For example, in 2011, 72.3 percent of all Zimbabweans were considered poor, whilst 62.6 percent of the households in Zimbabwe are deemed poor. Individual poverty prevalence is as high as 84.3 percent, while extreme poverty is 30.3 percent in rural areas. Prior to the imposition of sanctions, 10 percent of the population was deemed to be extremely poor and living below the food poverty line. Worryingly, the proportion of the population in extreme poverty rose in the aftermath of sanctions.

Impact on Women, children and other vulnerable groups

2.79 Women and youth organisations and other vulnerable groups like children, the elderly and the disabled were severely affected by sanctions.

2.80 Besides, the livelihoods of women and youths have become precarious as they cannot access financial assistance and lines of credit from local banks. The group can no longer access development and entrepreneurship funding from regional and international financial institutions due to sanctions.

2.81 The sanctions caused a fall in the country’s revenues and devaluation of national currency, resulting in high inflation and unemployment. This resulted in the deterioration of people’s overall welfare and lowering of their ability to access the necessities of a standard life such as nutritious food, healthcare and medicine.

2.82 In essence, the illegal sanctions have caused significant worsening of public health conditions and economic well-being of the majority of Zimbabweans.

While the number of people who could have died due to poverty is difficult to ascertain, the above figures reveal that the effects of sanctions directly contributed to poverty in the country which now perpetuates the cycle of poverty, resulting in poverty-related deaths.

To be continued on website: www.herald.co.zw

2.83 The innumerable socio-economic challenges like high incidences of poverty and related deaths faced by the general populace in Zimbabwe were a direct result of the sanctions. The poor water, health and sanitation services experienced by Zimbabweans not only indicate poor living conditions but also helped perpetuate the vicious cycle of poverty which the Government is grappling with.

2.84 The impacts of sanctions are more immense on the lives of the most vulnerable groups. In the past two decades, humanitarian interventions by some NGOs have failed to protect ordinary Zimbabweans from the adverse effects of the sanctions. Funds that were previously channelled through the Government Treasury are now channelled through NGOs, most of whom have diverted from their core humanitarian business to issues to do with the governance and human rights.

2.85 It is important to note that the UN Human Rights Council draws attention to the high unemployment rate, failure to expand the infrastructure, high incidences of poverty, HIV and AIDS, low life expectancy and challenges faced by the vulnerable as examples of the negative impact of sanctions in Zimbabwe.

2.86 This proves that the illegal sanctions that were imposed on Zimbabwe for political purposes have violated all the basic human rights of the ordinary Zimbabweans and the norms of international behaviour by denying them their basic human rights. Such action has precipitated man-made humanitarian catastrophes of unprecedented proportions with the intention of effecting regime change in the country.

Impact on the Region

2.87 Zimbabwe was the bread basket of the SADC region. The Land Reform Programme that the country undertook could not bear optimal benefits because the sanctions made it difficult to import capital equipment, spares and ancillaries to mechanise agricultural production, resulting in low productivity, thereby subjecting the country and the region to food and nutrition insecurity.

2.88 The imposition of sanctions saw an increase in outward migration of skilled and non-skilled labour force to neighbouring countries. This human capital flight heavily affected the economy of Zimbabwe which was already under stress. In turn, this impacted on resources in terms of social services delivery in the recipient neighbouring countries. The sporadic attacks on foreigners in some of the neighbouring countries could be directly attributed to sanctions as the recipients of our citizens have to put more resources towards social services.

2.89 Before 2000, Zimbabwe used to enrol and train a high number of students from the SADC region in its colleges and universities. However, the situation has changed due to sanctions. Internationally, Zimbabwe has been struck off from a number of scholarships programmes that complemented Government’s human capital development efforts.

2.90 On infrastructure that support regional trade, Zimbabwe provides road and rail links for many SADC countries due to its strategic central location. The deterioration of road infrastructure due to financing challenges has resulted in high cost of operations for road users from the region. Zimbabwe could not revamp the railway system that could have benefited the region due to sanctions.

2.91 The long and winding queues of Zimbabweans travellers witnessed at land entry and exit points into the country reflect the negative effects of sanctions on the Zimbabwean economy. It has forced Zimbabweans to import basic necessities and other personal effects from neighbouring countries resulting in high human traffic at border posts that has caused insurmountable logistical challenges for our border authorities and those of our neighbours. Before sanctions, the reverse situation played out. Neighbouring countries relied on Zimbabwe for manufactured goods. This helped to ease the challenges now experienced at borders.

Impact on Regional Co-operation

2.92 Sanctions are affecting the smooth running of regional groupings such as SADC and COMESA. The SADC macroeconomic convergence targets of low inflation, sustainable budget deficits, minimal public debt, equitable current account balances, as well as the formation of a regional monetary union and the movement towards attaining the region’s industrialisation agenda are being compromised by the sanctions. Zimbabwe has failed to meet most of the targets owing to the adverse effects of sanctions. For instance, while the average rate of inflation for the region declined from 29 percent in 2002 to 7.7 percent in 2012, Zimbabwe’s inflation around 2000 was in the three digit range while in 2012, it was in the negative territory and the economy was stagnant yet it desperately needed some growth to stimulate employment.

2.93 The European Union, through the European Development Fund, compensates COMESA Member States for revenue losses suffered under the tariff phase down exercise under specific conditions, which take into account macroeconomic policies and governance issues. The Zimbabwe Government had not directly benefited from the fund until only 2014. This discrimination had the effect of undermining regional integration initiatives and slowing down development.

2.94 Sanctions have also resulted in Zimbabwe failing to be effectively represented at some international meetings, where crucial decisions and commitments are made, as some targeted individuals especially high-ranking government officials are denied visas.

African Growth and Opportunity Act

2.95 The USA enacted the African Growth and Opportunity Act (AGOA) in 2000, an Act which incentivised trade with African countries and encouraged them to open up their economies. Countries perceived to uphold democratic values and rule of law, as well as adopt free market economic principles were allowed to export a wide range of products to the USA duty free. This led to the dramatic increase of African exports to the USA, in some cases of up to 1,000 percent.

2.96 Thirty-seven African nations have benefitted from AGOA, while Zimbabwe is still considered ineligible thereby missing in investment and job creation.

3. OVERALL IMPACT OF SANCTIONS

Zimbabwe has lost over US$42 billion in revenue over the past 18 years because of the sanctions. It is believed that Zimbabwe lost bilateral donor support estimated at US$4.5 billion annually since 2001, US$12 billion in loans from the International Monetary Fund, the World Bank and African Development Bank, commercial loans of US$18 billion and a GDP reduction of US$21 billion.

4. CONCLUSION

4.1 The US and EU sanctions on Zimbabwe are illegal and unjustified because they violate Article 41 of the United Nations Charter, which states that sanctions can only be decided by the UN Security Council. Any unilateral measures taken by an individual state without the authorisation of UNSC resolution are illegal in nature because they infringe upon States’ right to economic and social development. Cognisant of this, the UN General Assembly has passed a resolution which calls upon all States not to recognise unilateral extra-territorial coercive economic measures or legislative acts imposed by any state on another.

4.2 Sanctions by their nature are foreign policy tools of economic coercion and are incompatible with international law. They discriminate a country from trading freely on the international markets and to access funding. They are a blunt coercive instrument adversely affecting the entire economy with far reaching implications for the ordinary people, especially the most vulnerable groups. Significant progress that the country had made in the development of infrastructure, health, education and other social service delivery systems was severely reversed by the sanctions.

4.3 The country’s neighbours and the entire African continent continue to feel the strain of the implosion of the Zimbabwean economy, which continues to reel under these Western sanctions.

4.4 In view of the new dispensation thrust on engagement and re-engagement, the sanctions are out of date and irrelevant to the situation that prevails in Zimbabwe. In this regard, they must be removed immediately to allow the country to move forward. The need for unity of purpose from all Zimbabweans, SADC and the AU in lobbying for their unconditional removal cannot be over-emphasized. — MINISTRY OF FOREIGN AFFAIRS AND INTERNATIONAL TRADE

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