Zim may lose out on Chinese funds

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China, a comprehensive strategic partner of Zimbabwe, feels its debt stricken ally has moved slowly towards seizing funding opportunities Beijing pledged at this year’s Forum for China-Africa Co-operation (FOCAC) amounting to $60 billion to support new co-operation with Africa.Chinese Acting Ambassador to Zimbabwe Zhao Baogang told Business Weekly in an interview that Harare had not done enough to bring forward a list of feasible and bankable projects to be considered for support under the $60 billion facility pledged by China at the FOCAC 2018 in Beijing.

Zimbabwe, whose economy remains fragile after years of downslide and battering from debilitating western sanctions, needs over $16 billion to revamp key infrastructure such as roads, rail system, airports and energy infrastructure, according to the African Development Bank.

The Chinese government — which announced a new funding package made up of $20 billion in new loans, $15 billion in foreign aid, plus an additional $15 billion in two “special funds”, could just be the answer. A further $10 billion will be invested in Africa by Chinese private investors.

Notably, Beijing contends that prospects are bright for Harare to secure significant financial support from China despite the fact that the former owed the Asian economic giant arrears from earlier loans it failed to service; although reservations do exist that the arrears may affect future co-operation.

Zimbabwe owes Beijing upwards of $300 million in arrears from previous loans, but also it needs affordable long term external funding support to rebuild its tattered infrastructure with only $2 billion out of the $8 billion 2018 National Budget earmarked for capital programmes.

All-weather friends for decades now, China supported Zimbabwe in its struggle for independence from colonial occupation by Britain, until the African country attained its independence in April 1980.

And trade between the two countries breached the $1 billion mark last year, as trade and economic co-operation grows from strength to strength.

China wants action on F O C A C

The top Chinese diplomat has since implored the Government to put together a team of experts and to do lots of research to closely scrutinise and understand the range of specific projects Beijing has expressed willingness to support financially under the ambit of the FOCAC summit and also what exactly it is that Zimbabwe must do to secure approval for financial support.

Interestingly, this comes at a time Zimbabwe has not witnessed significant inflows of foreign direct investment (FDI) despite the excellent investment opportunities it provides and has for nearly two decades not had access to long-term funding from multi-lateral lenders after defaulting.

Already, an economic meltdown under the previous administration, which China says failed to take full advantage of the close relations with Beijing, decimated nearly half of Harare’s gross domestic product in the decade to 2008 and left Zimbabwe billions in debt, $16,7 billion.

“My wish is that Government and different sectors could attach more importance to the cooperation with China. Why?”, Baogang asked rhetorically, adding, “Because the just concluded FOCAC summit provided $60 billion financing for cooperation between China and Africa, including Zimbabwe.

“China has already started to make plans to implement the projects with African countries including Zimbabwe; we urge the African countries including Zimbabwe to come up with feasible and bankable projects.

“Now, we have already started working with the Zimbabwean Government; we have to see that the co-operation covers eight major initiatives. Under these 8 major initiatives we have provided $60 billion. Now, the list of projects from the Zimbabwe side is not enough, I think we have to, both sides China and Zimbabwe, work harder to try to do a lot of research on the documents adopted at the FOCAC summit.

“One is Beijing Declaration and the other is Beijing Action Plant 2019-2021. The Government and all relevant departments have to do a lot of research then they will know how to fit in; how to benefit from the outcome of the FOCAC summit and come up with more projects.”

China wants experts to study FOCAC

Acting Ambassador Baogang said the Government of Zimbabwe needed to expeditiously designate a team of expert officials to specifically study the documents passed at the FOCAC summit on how Harare could benefit.

“I think this is a low hanging fruit; easily we can get it. The financing is there; it all depends on whether we work harder or not,” he said.

On arrears from previous loans, Acting Ambassador Baogang said discussions were ongoing with Finance Minister and Economic Development Professor Mthuli Ncube to find a lasting solution on the longstanding debts.

“Zimbabwe owes arrears to Chinese financial institutions, as I understand it will have some impact on the future cooperation especially possibility for Zimbabwe to get loans from Chinese financial institutions.

“But we are working with the Ministry of Finance to try and to find the solutions on this issue, just as we did in April when President Emmerson Mnangagwa visited China; though you owed China, we still decided to provide more loans to the Zimbabwe Government.

“So, on future co-operation, we need more work. We need to work harder on future cooperation and come up with more projects; not just 1,2 or 3. But we should have dozens of projects.

“We have to focus on the outcome documents of the (2018) FOCAC summit. They cover industrial promotion, trade facilitation, financial co-operation, people to people exchange, peace and security cooperation and green developments,” Ambassador Baogang noted.

Other potential areas for funding support include infrastructure (road, rail, and airports), cooperation between think tanks and promotion of products (such as citrus and avocado) to China; for which China has set aside $5 billion.

The Chinese diplomat also said that if Zimbabwe adopts more friendly policies, billions in Chinese investments would certainly flow into the country. He noted that while Zimbabwe had opened up to foreign investment, more still needs to be done to make the country attractive.

This includes resolving challenges around foreign payments and repatriation of funds, salaries, profits and dividends faced by both local and foreign companies.

In Zimbabwe, China invested in cement production ventures (Sino-Zimbabwe), Zimbabwe National Defence University, through (AFECC) after a loan from the China Export and Import Bank (China Eximbank).

China, Africa largest trading partner at $170 billion annually with over US$3 trillion in reserves, has also invested in building Long Chen Plaza, the Kariba South and Hwange power expansions and Anjin Diamond Mine among others.

‘These investments are done by the Chinese themselves using Chinese resources, expertise and local labour,” according to University of Zimbabwe department of economics lecturer Ithiel Munyaradzi Mavesere.

Zimbabwe does not feature in the top 10 destinations of direct Chinese investment from 2003 to 2017. Egypt is number one, followed by Nigeria, Algeria, South Africa, Mozambique, Ethiopia, Angola, Niger, Zambia and Morocco.

“In addition, Zimbabwe does not feature among the top six recipients of loans from the China Eximbank from 2000 to 2015. Ethiopia is number one, followed by Angola, Kenya, Sudan, Cameroon and then DRC.

Former CZI president Dr Joseph Kanyekanye told a recent workshop on how Zimbabwe can exploit its close relations with China that Zimbabwe should improve capacity on deal making and seek to strike commercial deals, based on its comparative advantages such as its abundant minerals, than seeks handouts.–ebusinessweekly.co.zw

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