ZIMBABWE is fast running out of funding options after Finance minister Patrick Chinamasa returned home empty-handed from his recent trip to China where the Chinese requested “bankable projects instead of policy pronouncements”, the Zimbabwe Independent can reveal.
Herbert Moyo/Elias Mambo
Highly-placed government sources said Chinamasa, accompanied by Deputy Foreign Affairs minister Christopher Mutsvangwa, failed to convince the Chinese business community in Beijing and Shanghai two weeks ago to loan Zimbabwe funds using the country’s minerals as security.
Chinamasa was hoping to secure US$10 billion in funding to finance the ambitious Zimbabwe Agenda for Sustainable Socio-Economic Transformation (ZimAsset), a policy document pitched as the panacea for economic revival by the Zanu PF government.
“The Chinese wanted something more tangible than a mere policy pronouncement such as ZimAsset,” said a top government official, adding that “they were very clear that they wanted bankable projects as well as a breakdown of when the projects that the government plans to undertake will break even.”
The official said Chinamasa’s meetings were only confined to the banking sector and representatives of companies with business interests in Zimbabwe.
“It is not that the Chinese government snubbed them,” said the source, “but they felt that since the Zimbabwean delegation had come to discuss business matters, it was therefore necessary for them to meet with people in that sector.”
The most senior official, Chinamasa met was with Li Ruogu, the executive president of the China Export Import (Exim) Bank, but there was no joy for the Finance minister who is desperate to secure funding for ZimAsset.
“They (Chinese) also wanted to know the repayment plans, but Chinamasa could not provide details,” the source said. “Ever sticklers for detail, they demanded to know how the projects will be set up, how they will be run and when they will start generating revenue as well as a repayment plan.”
According to the bank’s website, China Exim Bank was founded in 1994 and is a state bank solely owned by the Chinese government under the direct leadership of the State Council. It is headquartered in Beijing.
Chinamasa’s delegation also met with the China Development Bank, China State Engineering Corporation, China Highway Group and China Africa Sunlight Energy Company to start negotiations on rebuilding the country’s infrastructure.
Discussions with the China Highway Group centred around the Harare-Beitbridge dualisation project while those with China Africa Sunlight Energy centred on the company constructing a 600 megawatt thermal power station in Gwayi at an estimated cost of US$2 billion.
Efforts to get comment from Chinamasa were futile as his mobile phones went unanswered and text messages were not responded to. Mutsvangwa said it was not prudent for him to answer questions on the trip as Chinamasa was head of delegation.
Government is desperate for funding to turn around the economy, but more doors seem to be closing in its face.
In October last year, Chinamasa returned from the International Monetary Fund (IMF) and World Bank meetings in Washington with nothing to show. Upon his return, he said the IMF would not be loosening its purse-strings for Zimbabwe any time soon.
“We still owe them money, and because of that they have put us under the staff monitored programme and they will not be giving us fresh money or new concessionary loans until we complete that programme,” Chinamasa said.
Last November, he came just short of begging the IMF to advance lines of credit to the country when he asked them to be “open-minded with the unique situation that Zimbabwe finds itself in”.
In December 2013, government pleaded with the United Nations to bail out the country by scaling down its humanitarian programmes and instead channel the funds to development work that would support ZimAsset.
ZimAsset aims to grow the economy by 6,1% this year, with the ultimate target of achieving a 9,9% growth rate by 2018 — but government is struggling to secure funding for these plans.
Among other targets, ZimAsset seeks to rebuild infrastructure, create two million jobs, re-open closed factories, pay off the country’s external debt and provide cheap housing and better access to identity documents. It also seeks to run all government buildings on solar energy by 2015.
The country’s external debt is estimated at about US$6 billion. This has dampened prospects of any immediate balance of payments support from the World Bank.
In its latest report released last month, the World Bank insisted that it would not extend any financial assistance to Zimbabwe under the Highly Indebted Poor Countries facility unless the country clears its arrears.
“The country will be eligible for assistance if it meets end-2004 and end-2010 indebtedness criteria and clears its arrears to the Poverty Reduction and Growth Trust,” reads part of the report.
The African Development Bank estimates that Zimbabwe needs US$14 billion to fix multilateral lenders, which stopped lending to Harare in 1999 because of arrears. Zimbabwe has an estimated debt of US$10,7 billion, which represents 110% of GDP.
Government breathed a sigh of relief this week when it received a US$53,4 million grant to implement six infrastructural development projects from the Zimbabwe Multi-Donor Trust Fund and the African Development Fund.
The deal was negotiated by former finance minister Tendai Biti.