Mnangagwa renews US$2bn Chinese bid

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Controversial winner ... President Emmerson Mnangagwa

PRESIDENT Emmerson Mnangagwa will tomorrow leave for Beijing, China, to attend the Forum on China-Africa Cooperation (Focac) summit after which he will hold a bilateral meeting with Chinese President Xi Jinping, where Harare is expected to push for a critical US$2 billion bailout package in a desperate bid to ease the country’s crippling liquidity crisis.

By Owen Gagare

Ministry of Finance and Reserve Bank of Zimbabwe officials have for some time been negotiating for a loan from the Industrial and Commercial Bank of China (ICBC) and the Export-Import Bank of China, but a breakthrough has been slow in coming because the Chinese remain worried about Harare’s ability to repay loans.

The Chinese are also keeping an eye on the prevailing investment climate and macro-economic environment, before availing a rescue package.

The summit will be attended by several African leaders, some of whom will also hold bilateral meetings with Xi as they seek to attract Chinese loans and investment, especially in infrastructure development. The summit will be held under the theme “China and Africa: Toward an Even Stronger Community with a Shared Future through Win-Win Cooperation”.

At the last Focac meeting held in South Africa in 2015, China tabled a US$60 billion finance cooperation facility for Africa up to 2018. Xi is expected to launch a similar facility for the 2018-21 period.

Government officials revealed the Zimbabwean government was eager for fresh lines of credit and will once again be making a request for assistance. Harare will also be seeking new investment and greater cooperation.

Presidential spokesperson George Charamba confirmed Mnangagwa will be hoping to secure new lines of credit.
“That’s the hope, of course,” he said.

Charamba also said the trip would result in cooperation in several areas and strengthening of agreements reached when Mnangagwa visited Beijing in April.

“We do have some position that we will try and secure as Zimbabwe in line with our interests. There are areas like agriculture, infrastructure, energy and, of course, some other bilateral agreements which are non-economic. On the sidelines of the summit we will still have some bilateral agreements. But it’s a very good follow-up on the President’s state visit which then allows us to consolidate on the positions we broached during the state visit,” Charamba said.

An official from the Chinese embassy in Harare said the Focac summit was important as it will unveil a plan of action for Sino-Africa relations for the next three years.
“The summit will review the progress made by China and Africa and will look into the future to strengthen, friendship, solidarity, connectivity, economic cooperation, infrastructure building and people to people cooperation among other things,” said the official.

“The summit will reveal the plan of action between 2018 and 2021 and may be there will be more loans. But when loans are provided they have to be paid back, so it is important to have an environment which attracts investment and economic growth. In the case of Zimbabwe, even if a loan is provided it won’t resolve the challenges, so it is important that good policies are put in place to make sure the environment is friendly to investment.”

During Mnangagwa’s visit to Beijing in April, he was pushing for a US$1,5 billion bailout. Negotiations for the loan are still going on although he managed to secure funding for key infrastructural projects.

Mnangagwa, who promised to turn around the economy during his inauguration on Sunday, will be hoping to secure funding in more projects at a time his critics are questioning his capacity to deliver.

“We expect the President to leave on Saturday and arrive on Sunday to attend the Focac summit on the third and fourth (of September). On the 5th he will hold a bilateral meeting with President Xi Jinping and in the evening he will hold a meeting with the chairman of China Communist Party who is the equivalent of the Speaker of Parliament. There will also be a dinner with the delegation,” he said.

“We expect the two leaders to discuss bilateral political relations and party-to-party cooperation as well as economic cooperation. On the economy we expect the Zimbabwean delegation to raise all issues of concern including liquidity and financial support.

“Financial institutions of the two countries will discuss this matter and the talks will also involve the African Export-Import Bank (Afreximbank). On the Chinese side there is the ICBZ and China Exim Bank and on the Zimbabwean side the talks will involve Reserve Bank of Zimbabwe and Ministry of Finance officials.”

On his last visit, Mnangagwa 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.

The impasse has persisted because Zimbabwe still owes US$160 million to China Exim Bank and Sinosure.

Special agreements were however made on the Hwange thermal project and the Robert Mugabe International airport, in line with the elevation of relations.

China also extended a US$500 million for the Kariba South Extension programme while work on the construction of a new parliament in Mt Hampden will commence soon.

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