CHINA has lined-up several multi-sectoral billion dollar investment projects for Zimbabwe for this year, covering mining, manufacturing, steel and hospitality sectors, senior diplomats from both countries said this week.
In a joint interview with Zimbabwe Independent, the acting Chinese ambassador to Zimbabwe, Zhao Baogang and Zimbabwe’s ambassador to China Paul Chikawa said there was a boom in expressions of interest by top Chinese companies keen on investing in Zimbabwe.
However, the diplomats warned that the civil unrest, which rocked the country last week, in which the army and the police violently quelled protests over economic hardships across major cities leading to 12 deaths, could scare away some investors.
China, the single largest foreign direct investment source for Zimbabwe in nearly two decades, invested US$3 billion in the country last year. The figure is smaller than what other African countries are attracting from Beijing. Zhao said the Chinese embassy would ensure that Zimbabwe this time enjoys a significant portion of the US$60 billion which Chinese president Xi Jinping pledged to finance projects in Africa in the form of assistance, investment and loans at the Forum on China-Africa Cooperation (Focac) meeting in Beijing in September last year. Zimbabwe has been outdone by other African countries in terms of accessing the money.
“This is the year of action by the Chinese government and business here,” Zhao said.
The diplomats revealed that several prospective Chinese investors have already been to Zimbabwe this year, while others visited the country and met with senior government officials and potential business partners in the country, while others are making offshore investment inquiries.
Chikawa said two Chinese companies from Sichuan Province in China have expressed interest in investing in lithium mining. “I am due to meet potential investors from Sichuan province. They are interested in lithium. But in our conversations, I have made it clear that we would rather have the whole value chains. So, I can confirm that my office has been approached in respect of this,” he said.
Last year, Australia Stock Exchange-listed company Prospect Resources Plc, invested US$165 million into mining lithium through its Arcadia Lithium project located 38 kilometres east of Harare.
The company’s definitive feasibility study says the project has capacity to generate nearly US$3 billion in export revenue.
Zhao said two more Chinese companies are planning to invest in mining the same mineral at Kamativi in Matabeleland North province. “Two companies are also coming and their teams are already in Zimbabwe to discuss some potential projects with Zimbabwe. They say some progress has been achieved. It is at Kamativi,” Zhao said.
Lithium has gained global significance due to its expanding use in electric vehicle batteries. Lithium demand has also grown as industrialised nations lead the charge towards reduced carbon emissions while use of lithium-ion batteries for home electronics and medicinal drugs has also expanded.
Chikawa also said another Chinese company had expressed interest in investing in Zimbabwe’s defunct steel industry, but declined to divulge its identity since negotiations are still in progress.
Last year, Chinese billionaire investor Zhang Li, worth US$3,9 billion according to Forbes, came to Zimbabwe to pursue a deal to revive Ziscosteel. Zhang co-chairs real estate developer Guangzhou R&F which has property in 28 cities, mostly in China.
Shoemaker Huajian Group is also set to set up a US$2 billion shoe factory in Zimbabwe which will be the second largest such plant after the one it established in Addis Ababa, Ethiopia, where it has been one of the most outstanding success stories for recent Chinese investment in Africa.
Both diplomats said the leather company recently despatched a “mid-level delegation” to Zimbabwe, where it is engaging government on the possibility of setting up factory.
“This company is from Guangdong Province in south China and it is in the light industrial manufacturing sector and is already established in Ethiopia. It set up shop for leather wear exports there in just three months. This is an investor who is excited. He wants to go the whole value chain from cattle to leather. In addition, he wants to do other projects like mining, manufacturing and tourism. As I speak to you, a mid-level delegation was in the country and they only left on January 13,” Chikawa said.
“If this deal is going to go through, it is projected that it is going to create 15 000 jobs. This is part of a grand plan of this investor to expand his Ethiopian investment into about five other countries and Zimbabwe has been designated as the second destination outside Ethiopia,” Chikawa added.
Zhao said Jinan Sinotruck Co. Ltd, a Chinese light truck maker, is keen to partner with struggling Mutare-based Quest Motors to produce light trucks in huge volumes. Quest Motors’ capacity utilisation is currently below 5%. Zhao said more Chinese companies are exploring business interests in agriculture, especially the production of citrus fruits, and also in rail. He said another company recently set up a factory to manufacture furniture in Zimbabwe using local timber. Some of the furniture, he said, would be for export.
Another company recently bought land near the site of the new Zimbabwe parliament in Mt Hampden, just outside Harare, where it will construct a five-star hotel.
The new parliament being constructed under a US$677 million grant from China Aid, a Chinese government-owned global development aid agency, is billed to herald a massive construction project for a completely new densified capital, which will serve at least 1,2 million people.
However, he said some investors were concerned by the violence which swept across the country last week.
“We sincerely hope that the government and the different political parties in the country can work together to resolve the issue and stabilise the country. If you go onto the streets and burn tyres and barricade the road, then you scare away the investors. You scare away the tourists. That has a huge damage to the economy.
Acrimony is never a compass towards where the country wants to go,” Zhao said, also urging government to be consistent in policy-making.
“We hope that you continue to craft good policies to provide preferential treatment to investors. I can see that, sometimes, when investors make money here, then you close down those shops — there is a problem. When you see that they might achieve profits, and then you change policies and conditions of cooperation, change the terms. That is very bad,” he said.