HomeLocal NewsFailure to repay loans derail mega deals

Failure to repay loans derail mega deals

ZIMBABWEAN government’s red tape and failure to adhere to loans repayments is impacting negatively on some of the “mega deals” signed in key economic areas between Zimbabwe and China.

By Wongai Zhangazha

Zimbabwe Independent has established that although China availed a US$144 million loan facility meant to rehabilitate, replace, install and commission equipment at Harare’s Morton Jaffray and Prince Edward water treatment plants as well as the Crowborough and Firle sewer works, the government is failing to fulfil its end of the deal.

The loan that was backed by a government guarantee was signed for by the then town clerk, Tendai Mahachi, former mayor Muchadeyi Masunda and China National Machinery and Equipment Import and Export Corporation (CMEC) general manager Yang Yinan in 2010.

On behalf of the government on March 21 2011, the then vice-president Joice Mujuru subsequently signed the US$144 million loan agreement for the upgrading of waterworks and sewers so as to improve reticulation and boost water supplies to Harare.

But as the deal with China unravels, Harare City Council is set to repay a US$72 million water and sewer plant upgrade loan from China after being denied the full amount of US$144million.

Government sources close to the negotiations — speaking on condition of anonymity this week — told this newspaper that the Chinese were not responsible for the stalling of the Morton Jaffray project, contrary to media reports. The diplomat said instead government had not been repaying the loan, which explains why the city council has failed to get a loan from China Eximbank.

“The impression that is out there is that the Chinese have failed to deliver on the project. However, that is not the case.

The remaining loan is being held back because government has not committed in paying the loans it was supposed to pay.

Repayment of the principal debt is now due and is payable at US$7 million twice a year,” a senior government official said.

The deal, which council ratified in 2013 and was supposed to be through within 36 months, was expected to increase water pumping capacity at Morton Jaffray to 614 mega litres a day, up from 400 mega litres.

The aim was to see an increase in the supply of potable water and significantly bring down the incidence of water-borne diseases that have plagued the city.

Apart from the Harare water and sewer deal, China has extended a loan and grants to President Emmerson Mnangagwa’s administration in December 2017, totalling US$213 million for the upgrading of Robert Gabriel Mugabe International Airport as well as the construction of a new parliament building and a high-performance computer centre at the University of Zimbabwe.

While progress seemed to have been made on the pharmaceutical warehouse in Harare, the project has been stalled by government’s back-and-forth decision on having the project moved to Bulawayo.

This was despite feasibility studies and designs having been done by the Chinese. It was only after last week’s meeting between Chinese officials and President Emmerson Mnangagwa that it was agreed that the pharmaceutical warehouse be moved to Harare.

“This has been one frustrating project. Feasibility studies and all other works had been done and as per memorandum agreement that the warehouse be built in Harare. However, since 2015 nothing had been done because some officials in the Ministry of Health then wanted the warehouse to be moved to Bulawayo,” the source said.

“That was not possible because all the work had been done. It has been a back-and-forth project worsened by the bureaucratic nature of government offices.”

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