China cagey on $5bn deals
THERE are renewed doubts over China’s commitment to fund US$5 billion agriculture and housing projects that were proposed recently as well as deals that President Robert Mugabe purportedly clinched when he visited the Asian economic powerhouse two years ago due to failure by government to pitch bankable deals.
It has since emerged that the only money that seems to be coming from China is just over US$1 billion to finance infrastructure, telecommunications and wildlife protection.
Diplomats say Zimbabwe is unlikely to receive financial support to fund its agriculture and housing projects from China amid indications that the ambitious proposals are not bankable and have no guarantees.
Government took its begging bowl to the world’s second largest economy to boost agricultural output, which went into freefall after the chaotic land reform programme at the turn of the millennium.
The cash-strapped government hoped that funds would enable the Zanu PF government to roll out a populist housing programme targeting youths and low-income earners, among other beneficiaries, as a campaign tool ahead of the 2018 general elections.
The government is in the process of acquiring farms in peri-urban areas to kick-start projects while also parcelling out stands on partisan lines.
A ministerial delegation comprising Local Government minister Saviour Kasukuwere, Macro-Economic Planning minister Obert Mpofu and Agriculture minister Joseph Made went to China in August to negotiate the deal with the Chinese, as the cash-strapped government continues its desperate search for funding for various projects aimed at stimulating economic recovery.
However, Asian diplomats in Harare say the Chinese are reluctant to fund agricultural projects which they fear are not bankable.
“The Chinese will not fund such projects given the current state of the agricultural sector which is fraught with chaos and structural deficiencies. They have indicated that they are only ready to fund projects that are bankable,” one diplomat familiar with the issue said.
The Chinese embassy declined to comment on whether or not Beijing would assist Zimbabwe. “The questions are beyond the scope of our responsibilities,” the embassy said this week in written responses to the Zimbabwe Independent’s queries.
In December 2015, Chinese President Xi Jinping paid a state visit to Zimbabwe to discuss bilateral issues.
Deals worth just over US$1 billion, according to the embassy, were subsequently signed last year. The energy sector benefitted the most from this. The bulk of the funds will be directed towards the US$998 million loan for the expansion of Hwange Thermal Power Station. Under the funding programme, the Export- Import Bank of China will provide a loan for the expansion of Hwange power station, which will add 600 megawatts to the plant, whose current installed capacity is 920MW, although reliable output is much lower at 600MW.
“The two nations signed 10 cooperative documents worth more than US$1 billion covering such key sectors as infrastructure, telecommunications, financing, and wildlife protection,” the embassy said. “The deals include a donation of a new parliament building and a pharmaceutical warehouse, TelOne Backbone Network and Broadband Access Project, financing for the expansion of Hwange Power Station, and handover of wildlife protection equipment.” The Chinese also pledged to provide grain to alleviate food insecurity caused by the ongoing drought. According to reports, as many as four million Zimbabweans are in need of food aid.
“It is against this background that China this year will provide 19 700 metric tonnes of rice worth US$24,6 million to help Zimbabwe cope with the food shortage caused by drought, in addition to the five consignments of emergency food assistance for Zimbabwe in recent years … China will also donate 10 000 tonnes of urea to Zimbabwe, and try its best to make sure it reaches the farmers before the 2016/2017 farming season begins.”
However, sources close to the Chinese say they are reluctant to shell out US$5 billion on agriculture and housing and fund projects agreed in 2014. — Staff Writer.