THE local unit of Chinese firm Anhui Foreign Economic Construction Company (Afecc) will invest in Namibia to offset a downturn in economic fortunes in Zimbabwe as this country grapples with one of its worst economic crises since the introduction of the multi-currency regime in 2009.
By Hazel Ndebele
Diamond miner Anjin Investments, a subsidiary of Afecc and a key shareholder in the controversial multi-million-dollar Longcheng Plaza mall (pictured) built adjacent the National Sports Stadium in Harare, is understood to be frustrated with its poor return on investment. As a result, the company is now spreading its wings to Namibia where it is currently building a shopping centre.
The introduction of bond notes, a pseudo-currency whose circulation is restricted to Zimbabwe’s borders, has also added to the Chinese firm’s anxiety.
Longcheng Plaza mall was constructed on a wetland against the advice of environmentalists and in violation of environmental laws. It was built despite council objections.
Anjin is a joint venture company between Afecc from China and a Zimbabwean army investment vehicle Matt Bronze representing government interest in a 50-50 joint venture.
Afecc also invested in the Mutare Golden Peacock Hotel.
Sources close to the developments said continued delays in transferring large sums of money outside the country have frustrated the Chinese, who buy most of their stock from China. The delays in money transfers have unsettled the foreign investors who fear that their money may not be safe, given the instability in the country’s financial system.
Under the multi-currency regime adopted in 2009 following unprecedented runaway inflation, commercial banks are responsible for importing cash into the country and can only undertake this function if they have adequate funding available in their nostro accounts to purchase notes for their clients.
A nostro account is a bank account held in a foreign country by a domestic bank, denominated in the currency of that country. Nostro accounts are used to facilitate settlement of foreign exchange and trade transactions.
Experts say banks have witnessed increased pressure on their nostro accounts because of the widespread importation of goods and services into the country, against declining export revenue and other forex inflows, resulting in banks failing to import cash to meet their clients’ needs. Zimbabwe has a trade deficit of nearly US$3 billion, making the country a net importer in a dollarised environment.
Sources close to the Chinese said they are struggling to stock their Horizon Ivato supermarket at Longchen Plaza.
“The Chinese are frustrated because of the economy in general and specifically the cash shortages and the bond notes as they cannot do transactions with the currency outside the country, leading to its Ivato supermarket being understocked,” a source said. “They have since resorted to moving to other countries such as Namibia where they are building a shopping mall.”
Longcheng marketing manager Shingirai Muzavazi said the Chinese would not comment on the matter.
“I have told my bosses about the issues you are raising and we have chosen not to respond,” she said.