South Africa writes off R1bn Cuban debt

8 December 2010

Trade and Industry Minister Rob Davies has announced the cancellation of a R1-billion debt owed by Cuba to South Africa as part of a new trade agreement between the two countries.

Davies, who was accompanying President Jacob Zuma on a two-days state visit to Cuba, said on Tuesday that the debt had become a “hindrance” to trade and economic development between Cuba and South Africa.

The debt was incurred during the 1990s, when Cuba purchased diesel engines from South Africa.

He said South African businesses demanded cash in advance because the Export Credit Insurance Corporation of the department could no longer insure Cuba’s orders as it had exhausted its credit limit.

“We are re-opening the credit lines so that we can start trading actively again,” Zuma said.

Apart from cancelling the debt, South Africa has also offered Cuba credit line package guarantees to the value of R70-million rand and a further R40-million rand to support Cuba with seeds and fertilizers following the hurricane that devastated Cuban agriculture in 2008,

About R100-million from the African Renaissance Fund will be made available for purchases from South Africa. It is envisaged that this package will help to reinvigorate trade and investment between the two countries.

South African exports to Cuba had fallen from R82-million in 2008 to a mere R1-million this year.

South Africa and Cuba have strong relations dating back to the struggle against apartheid.

In another landmark agreement, Home Affairs Minister Nkosazana Dlamini-Zuma signed an agreement on the waiver of visa requirements for holders of diplomatic, official and service passports.

The agreement entitles Cuban and South African citizens holding such travel documents to enter and remain in the respective countries for up to 90 days without visas.

Source: BuaNews