UNWTO: Zim mortgages more natural resources

Paidamoyo Muzulu

PARLIAMENT on Tuesday rubber-stamped further mortgaging of the country’s natural resources and existing infrastructure to China by pledging Harare and Victoria Falls international airports as security for a US$381,2 million loan to upgrade infrastructure ahead of the 2013 United Nations World Tourism Organisation General Assembly.
Of the loan, US$150 million would be used for upgrading and expanding Victoria Falls airport in preparation for the premier tourism meeting, US$141,3 million is for upgrading and repairing Harare City Council’s decaying water and sewer reticulation system, while US$89,9 million is earmarked for medical equipment and supplies for public hospitals.
The government earlier this year contracted the Chinese for the US$50 million expansion of state-owned mobile network NetOne, and US$98 million construction of the National Defence College (NDC) along Mazowe road in Harare.
Zimbabwe has also mortgaged part of the Marange diamond fields to the Chinese for the loan to construct the NDC. The Chinese have since established a shady mining company — Anjin — in partnership with the Zimbabwe Defence Forces. Anjin is currently constructing a hotel along Samora Machel Avenue next to the National Sports Stadium, a project that was controversially given the go-ahead on a wetland.
In Article 6 of the Victoria Falls contract, Zimbabwe pledged that all revenue from Harare and Victoria Falls airports would be handed to the Chinese if Zimbabwe fails to settle its financial obligations to the Export-Import Bank of China (Eximbank).
Article 6.11 reads: “In the event the borrower fails to perform the obligation of payment and or repayment under this agreement, the revenue generated from Zimbabwe Victoria Falls Airport and passenger service charges generated from Harare Airport collected into the Escrow account and other account proceeds shall be utilised to repay to the lender all the principal amount drawn and outstanding under the facility.”
The clause further states: “The borrower’s obligations under this agreement shall not be derogated by the establishment of the Escrow account.”
The debts appear to be sugar-coated by significantly longer grace periods and what seem to be low interest rates at face value, and the extended repayment period.
The debts have tenure of 20 years or above, with a minimum of a five-year grace period. They have annual interest rates of between 2% and 3,5%; 0,5% annual management fees and a 0,5% commitment fee.
Tourism and Hospitality minister Walter Mzembi was relieved after the ratification of the Victoria Falls debt arrangement.
“The UNWTO is now on track and guaranteed since we now have all the resources at hand through this loan,” he said.
Zimbabwe is co-hosting the tourism assembly with neighbouring Zambia.
The ratification of the loans brings the coalition government’s cumulative debt to China to a staggering US$530,2 million.
Parliament ratified the combined US$381,2 million debts after feeble debate, with some MPs complaining the executive had whipped them into line for the umpteenth time since the formation of the coalition government in 2009.
Most MPs’ sentiments were captured by Marondera Central MP Ian Kay who lamented the reduction of the House to a mere rubberstamp of the executive.
“I am dismayed that we (MPs) are being used to ratify these loans without debate. If the executive is doing our work then what should we be doing?” asked Kay.
Zimbabwe’s total external debt is now US$10,7 billion, approximately 111% of the country’s GDP. The country seems to be moving deeper into a debt trap, which would further manifest itself in various ways in the next five to six years when loan repayments become due.