By Cris Chinaka
HARARE – China’s state development bank has promised Zimbabwe financial aid — including a possible currency swap — to help revive an economy with severe foreign currency shortages, an official newspaper reported on Monday.
The Herald n
ewspaper said the governor of the China Development Bank (CDB), Chen Yuan, told Vice-President Joice Mujuru during a visit to Beijing last week that the CDB was ready to assist the southern African country.
“We believe your country is a good candidate for our bank. We look at our friends first. We want to finance your social and economic reconstruction programme,” he was quoted as saying.
There were no details on the amount of financial aid or exactly how the deal would work. Last year Zimbabwe said it was discussing a possible loan with South Africa, the continent’s powerhouse, but South African officials have said those talks are no longer taking place.
Critics say President Robert Mugabe has plunged Zimbabwe into disaster with controversial policies that have led to an 8 year economic recession and isolated his government from former Western donors, prompting it to scramble for aid from the East.
The crisis has left Zimbabwe with severe foreign currency shortages and the world’s highest inflation rate at more than 1,000 percent, keeping the local dollar a pariah on international markets.
The Herald said the Chinese bank was considering a currency swap between the Zimbabwe dollar and the Chinese yuan to alleviate that situation, although it was unclear how the move would be implemented.
Officially, the U.S. dollar is worth 101,195.54 Zimbabwe dollars but fetches three times that rate on the black market.
China, which is looking increasingly to Africa for raw materials to fuel its economic boom, has been paying particular attention to Zimbabwe, selling Mugabe’s government fighter aircraft and agreeing to a number of business deals.
This month a Chinese company and two Zimbabwean firms signed deals worth US$1.3 billion to establish coal mines and three thermal power stations in the country, and Chinese companies are also bidding for rights to explore Zimbabwe’s uranium deposits.
Mujuru told the Chinese that Zimbabwe would do its part to benefit from the promised help, and said the country was trying to build its own “socialist market economy”, borrowing some concepts from China.
“We leave for home knowing the ball is in our court because our friends are willing to assist us,” she said, inviting China to exploit Zimbabwe’s vast mineral wealth.
“We have some people perceiving Zimbabwe as a very poor country. Yes we do not have the greenback (the U.S. dollar) or the euro but we have minerals in abundance,” Mujuru said.
Analysts say Zimbabwe’s platinum, nickel and copper deposits could all be of likely interest to Chinese companies.
Mugabe, 82 and in power since independence from Britain in 1980, has links to Beijing dating back to the 1970s when he co-led a guerrilla war against white minority rule.
Chinese Premier Wen Jiabao is currently on an African tour, but he will not visit Zimbabwe. — Reuter