Zimbabwe’s finance minister said on Monday that China’s economic slowdown would not affect investment by Chinese firms or the funding of infrastructure projects such as roads and power stations in the southern African nation.
China has emerged in the last 10 years as the biggest investor in Zimbabwe after President Robert Mugabe’s government clashed with Western countries and international lenders including the International Monetary Fund and World Bank.
But the world’s second-largest economy is headed for its slowest growth in 25 years this year and its markets have tumbled in the last few months, giving global markets a scare.
Patrick Chinamasa said despite the slowdown in China, Beijing was on course to fund a $1.2 billion coal-fired power plant as well as rebuild Zimbabwe’s crumbling road network.
“Most of our FDI has come from China, I don’t think this will be affected in my view. The Chinese companies which are coming to set up shop here, I think the appetite remains,” Chinamasa told journalists.
“We are also expecting investments into road construction, the dualisation of our road network and many other areas,” he said, referring to creating two lanes each way on main roads.
Chinese companies are currently upgrading a hydro-power plant and expanding the airport in the resort town of Victoria Falls for more than $700 million.
Chinamasa said Zimbabwe’s commodity exports, however, like in most African countries, were being affected by low global prices.
“But as a countermeasure in relation to minerals, we are trying to ramp up volumes to make up for the loss of prices and we hope that strategy will work,” Chinamasa said. He declined to give details on production of which minerals would be increased.
Zimbabwe’s two biggest mineral exports are platinum and gold, while the government expects chrome production to surge following the lifting of a ban on chrome ore exports.
The government has halved its economic growth target to 1.5 percent this year due to a drought and low commodity prices.
Chinamasa said Zimbabwe, which owes international lenders $9 billion, planned to meet the World Bank, African Development Bank (AfDB), IMF and Paris Club creditors next month to discuss how to clear its arrears.
Clearing $1.8 billion in arrears to the IMF, World Bank and AfDB is essential to unlock new funding, he said.
“If goodwill (among creditors) is forthcoming, it will make the process smoother and shorter. If goodwill is not there, then of course the process will be more protracted,” Chinamasa said.