SINOSURE, a leading Chinese insurance company, is refusing to guarantee loans from Chinese banks to Zimbabwean companies because the government’s failure to repay arrears already owed to China and these amounting to over US$60 million, the Zimbabwe Independent has learnt.
Sinosure is also reportedly worried about the country’s poor credit rating and high political risk.
The government has been defaulting on repayments of loans advanced to re-capitalise some of the under-performing companies as well as for infrastructural developments.
“Sinosure is unhappy with Zimbabwean government’s failure to pay up on loans and are refusing to guarantee Zimbabwean government backed loans,” said a government official last week.
“Zimbabwe has fallen behind on payments of arrears to China and these are in the region of US$60 million. These loans were acquired for projects like Ziscosteel, which is currently not functioning and this is likely to affect further disbursement of funds, particularly to the large-scale projects like the proposed construction of solar power plants which was hoping to access funding from China Exim Bank.”
China has provided Zimbabwe with over US$1 billion in concessionary and preferential loans. It has also given Zimbabwe US$100m in grants and interest-free loans.
Chinese ambassador Lin Lin suggested two weeks ago the possibility of more stringent rules before loans can be advanced to Zimbabwe.
“Between the two (Chinese and Zimbabwean) governments there is no problem (since) concessionary loans being provided by Exim Bank for current projects like the Victoria Falls Airport upgrade and the Kariba South Power expansion have a low interest rate of only 2% and the repayment period is for 20 years,” he said.
“But for any new projects, which need more loans from the Chinese side, we should also consider the capability of the Zimbabwean side. The banks and even insurance companies have their own terms for providing or giving guarantees for any lines of credit so it needs goodwill and good understanding on both sides. I hope there will be more co-operation and more projects with the help of Chinese institutions.”
Attempts to get comment from Sinosure were unsuccessful as they were unreachable by telephone. However, its website indicates that although it is state-funded, “it is an insurance company with independent status of legal person”.
Established in 2001, Sinosure is mandated among other things, “to promote Chinese exports of goods, technologies and services and national enterprises’ overseas investment, by means of export credit insurance against non-payment risks.”
Sinosure had by 2013 supported export, domestic trade and investment with a total value of US$ 1484,65 billion.
It has also facilitated the lending of Chinese yuan 1,8 trillion (approximately US$ 292, 5 billion) by 190 Chinese banks to promote export, domestic trade and investment.
Finance Minister Patrick Chinamasa was not reachable for comment.
He visited China twice this year seeking US$4 billion for government’s economic blue-print ZimAsset. President Robert Mugabe is expected to make a follow-up visit on August 21 to finalise the US$4 billion package.