HomeBusiness DigestScepticism pervades China deals with Zimbabwe

Scepticism pervades China deals with Zimbabwe

By Tony Hawkins

In the tiny village of Dotito, near Zimbabwe’s border with Mozambique, Joice Mujuru, the vice-president who many see as President Robert Mugabe&#82

17;s most likely successor, sought recently to convince a sceptical audience that loans and investment from China would soon alleviate their hardship.

But the unsophisticated, poor people of Dotito were having none of it.

“We cannot afford cooking oil,” said an elderly woman, “and have to crush and press dried pumpkin seeds in its place.” Others said they extracted sap from the roots to use instead of the soap they could not afford.

According to one of those at the meeting, Mujuru was sent off with a flea in her ear: “Don’t tell us what the Chinese are going to do,” the vice-president was told, “what is the government doing?”

The simple answer is not very much.

According to Harare’s central statistical office last year China became Zimbabwe’s second largest supplier of imported goods.

Its growing involvement in Zimbabwe has coincided with the country’s international isolation. In 1998 China ranked only 11th in Harare’s roll call of importers. Now it accounts for 6 % of Zimbabwe’s imports worth an estimated US$125 million although observers believe it could well be closer to US$200 million.

But even if the recently promised US$1,3 billion Chinese investment in Zimbabwe does come through — and there is little yet to show for previous such claims of Chinese assistance — the main beneficiaries are unlikely to be the poor and unemployed but rather the associates of President Mugabe’s ruling Zanu-PF party: politicians, senior civil servants, leading business people and a growing number of serving or retired military personnel who are increasingly prominent in government and business, along with a few whites, unkindly described by their peers as collaborators.

The mooted Chinese investment is actually contractor or trade finance, negotiated on a government-to-government basis between state-owned Chinese enterprises on the one side and Zimbabwe government companies on the other. Details are scant.

Scepticism is everywhere. Eric Bloch, a leading economic commentator and adviser to the central bank says: “Trade deals with China should be put into reality — we need investment from China but it should be genuine.”

When asked whether China’s investment in Africa could be less than reported or encountering delays, foreign ministry spokesperson Jiang Yu said on Tuesday: “We have participated in economic co-operation with Africa on the principles of equality and mutual benefit. We are trying to expand imports of goods from Africa.”

Zimbabwe state radio said that during her visit to China this month Mujuru signed a memorandum of understanding with the China National Machinery and Equipment Import and Export Corporation covering the supply of plant and equipment for three new thermal power stations.

Zimbabwe is to finance the loans by supplying chrome.

In a separate $60 million deal, also a barter arrangement for chrome, Star Communications of China is to provide transmission equipment which will enable all parts of the country to receive Zimbabwe state radio and television.

One informed estimate is that there are at least 15 to 20 sizeable Zimbabwe-China business deals, mostly involving state enterprises.

However, the more details that leak out the more problematic such arrangements sound.

The communications deal involves a Zimbabwe parastatal that produces virtually nothing and relies on subsidies from a government currently running a public sector deficit exceeding 50% of gross domestic product.

How Zimbabwe, which has no spare transport capacity because most of the locomotives operated by the state-owned railways are off the rails, will be able to export thousands of tonnes of bulky low-value chrome ore is unclear.

Equally questionable is how a country plagued by daily power outages and producing at best half its electricity needs will find the capacity to process chrome into much more valuable ferrochrome, a highly electricity-intensive process.

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