PRESIDENT Emmerson Mnangagwa returns home from China tomorrow without the US$1,5 billion liquidity rescue package, which government desperately needs, although he managed to secure funding for infrastructural projects and elevated relations between the two countries to a higher strategic level, the Zimbabwe Independent has learnt.
By Owen Gagare /Hazel Ndebele
Sources close to the Chinese embassy said during his visit, Mnangagwa clearly learnt that China is not the proverbial Santa Claus and that everything which Zimbabwe gets must be on the basis of commercial arrangement and sustained strategic engagement for mutual benefit.
However, Mnangagwa’s bag was not completely empty when he left as he received the usual gifts given to visiting African heads of state by China. Although it is not clear how much he got, China usually gives out a token of between US$20-30 million to visiting African leaders, which they are free to use at their discretion.
On top of Mnangagwa’s agenda on his visit was the financial bailout. This comes at a time government is desperate for funds to ease the liquidity crunch and cash shortages gripping the economy.
Mnangagwa also wanted acceptance and to legitimise his leadership, as well as to cement international relations. This was Mnangagwa’s first state visit outside Africa since seizing power in November last year through a military coup.
Government has always considered China as its “all-weather friend”. The relationship dates back to the liberation struggle, where the Asian nation assisted Zimbabwe with weapons and provided training to many cadres, including Mnangagwa.
Moreover, in 2008 China defended Zimbabwe at the United Nations (UN) Security Council when some members of the UN wanted sanctions to be imposed on the country.
Mnangagwa arrived in China on Monday. A grand welcome ceremony, where he received a 21-gun salute and inspected a guard of honour, was held for him on Tuesday.
He held talks with Chinese president Xi Jinping for one-and-a-half hours, where the two presidents discussed economic, political, cultural issues and people-to-people exchanges, among other topics.
Mnangagwa and Xi agreed to elevate relations from being “all-weather friends” to comprehensive strategic level, meaning the relations will have a strategic dimension going forward. Mnangagwa also met Chinese Premier Li Keqiang and chairman of the National People’s Congress Li Zhanslu.
On the rescue package and Zimbabwe’s economic problems, Chinese leaders pledged their support, although they could not avail a rescue package.
“Frankly speaking, no one will do it (provide a rescue package) now. What China can do is try its best to assist. That is the promise,” a Beijing source said.
“Zimbabwe’s difficulties cannot be resolved within a day and only the Zimbabwean government can solve the problems. If you have good policies, good environment, fix issues to do with the ease of doing business, develop and tap your national resources, you will have foreign currency flowing in.
“I must say, we are very happy with the direction the government is taking. We are pleased with amendments to the Indigenisation Act and efforts to have a one-stop investment office.”
Sources said that Zimbabwe is seeking liquidity support from China and talks were underway over the matter.
Mnangagwa sent Finance minister Patrick Chinamasa and Reserve Bank of Zimbabwe governor John Mangudya to Beijing to engage the Chinese authorities over the matter.
“Negotiations are still going on. They engaged the China Industrial and Commercial Bank and China Exim Bank. They will hold more discussions to see whether China can assist in terms of what Zimbabwe asked for, which is the liquidity bailout. If it materialises, then Zimbabwe may get some liquidity support,” the source said.
On a positive note for Mnangagwa, he managed to secure project funding for the refurbishment of Hwange Power Station’s units 7 and 8, as well as the Robert Mugabe International Airport.
The initial agreement for the Hwange Power Station deal was signed in August 2014 when former president Robert Mugabe visited the world’s second largest economy.
China agreed to extend loans to Zimbabwe, amounting to over US$1,1 billion for the expansion of the power station.
However, insurance firm Sinosure refused to guarantee loans from Chinese banks to Zimbabwean companies including a loan meant for the expansion of the power station because of the government’s failure to repay arrears already owed to China.
Former Chinese ambassador Lin Lin, who left Zimbabwe in 2016, in an interview with the Independent, warned of the possibility of Sinosure refusing to guarantee new loans.
“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,” said Lin at the time.
The impasse has persisted because Zimbabwe still owes US$160 million to China Exim Bank and Sinosure.
Sources close to the Chinese government explained why funds will be released for the Hwange Power Station and the Robert Mugabe International Airport, despite Zimbabwe’s poor loan repayment record.
“In the past we discussed arrears and why the Chinese banks have been reluctant to release funds. However, this time around, the Chinese took into consideration the concerns of Zimbabweans,” said an official.
“It is said that China and Zimbabwe have made special agreements on the Hwange thermal project and the Robert Mugabe International airport. It’s a very special arrangement and a good gesture. However, payment for the loans extended to Zimbabwe are still expected to be paid and the China wants Zimbabwe to respect its end of the bargain.”
To boost trade, investment and tourism arrivals into Zimbabwe, the two governments agreed that, going forward, Chinese nationals will not require to apply for visas before coming to Zimbabwe.
“As you know there have been a few tourists in Zimbabwe who are Chinese nationals unlike in countries such as Kenya and Mauritius. This is because of the stringent conditions on the issues of getting the visa. However, from now on, the Chinese nationals will now get their visas at the airport,” a diplomatic source said.
Mnangagwa, who held an investment conference in Beijing, will today host a similar event in Hangzhou before flying out of the Asian country at night. He is expected in Zimbabwe tomorrow.