HomeEditor`s PickNo bailout: China tells Zim govt

No bailout: China tells Zim govt

Tinashe Kairiza

PRESIDENT Emmerson Mnangagwa’s desperate attempts to secure a financial rescue package from China were once again flatly rebuffed after Chinese Foreign minister Wang Yi emphasised during his visit this week that Beijing was not going to give budgetary support to Harare.

Wang said Zimbabwe can only benefit from the world’s second largest economy through projects under China’s Belt and Road Initiative (BRI) and the Forum on China Cooperation (Focac).

China’s top diplomat was in Zimbabwe on a three-day visit which ended on Monday. Zimbabwe was the only southern African country he visited on his five-nation tour of Africa which also took him to Egypt, Djibouti, Eritrea and Burundi.

He held high-level talks with Mnangagwa, Vice-President Constantino Chiwenga and Foreign Affairs and International Trade minister Sibusiso Moyo.

Mnangagwa had to temporarily abort his annual leave to meet the influential Chinese politician at State House in the capital on Monday, where he asked for a bailout from Beijing, yet again.

This is despite the fact that Wang’s visit to Zimbabwe came barely two years after Mnangagwa returned home empty handed from China in April 2018 where he had gone to beg for a US$1,5 billion liquidity rescue package, which is urgently needed to revive the country’s floundering economy.

With Zimbabwe trapped in the throes of a vicious currency volatility crisis, characterised by acute forex and cash shortages, Mnangagwa had sought to leverage on the country’s cordial relations with

China to unlock a bailout package from the global economic powerhouse. But Beijing flatly turned down Harare’s request, emphasising that China was not the proverbial Father Christmas who doles out free gifts, but was prepared to extend loans for infrastructural projects under the BRI and Focac arrangements.

Officials who attended Monday’s closed-door meeting between Mnangagwa and Wang, as well as previous meetings with Chiwenga and Moyo told the Zimbabwe Independent in off-the-record briefings this week that the Chinese official, dismayed by Zimbabwe’s hostile investment climate, emphasised to his hosts that Harare needs to roll out a comprehensive economic reform agenda, and tackle rampant corruption.

Zimbabwe is also engaging the European Union (EU) to thaw relations after the bloc accused the country of grossly violating human rights. Japan, the world’s third-largest economy, has also expressed concern over Harare’s lethargic approach to tackling corruption.

“China attaches immense importance to its bilateral relationship with Zimbabwe. This was underscored by the Chinese Foreign minister’s visit to Zimbabwe. Minister Wang emphasised to President Mnangagwa that Zimbabwe must implement a comprehensive economic reform agenda pivoted on tackling corruption,” a well-placed source told the Independent.

“Zimbabwe’s government is creating a number of barriers that have frustrated investment. For example, when investors come, before they get work permits, they must produce multiple documents. For each applicant they charge US$500.You can tell there is corruption there. This is a bad policy, how can you charge one applicant US$500? So set in that way, who wants to come to Zimbabwe? It is in that context that Minister Wang encouraged government to have better policies to attract foreign direct investment.”

The source said Wang was emphatic in advising Zimbabwe to explore opportunities available under the BRI and Focac facilities, instead of asking for a financial bailout package.

Under the BRI window — which is Chinese President Xi Jinping’s infrastructural signature programme to connect Asia with Africa and Europe through a vast land and maritime network to improve trade, integration, as well as stimulate economic growth — has seen a number of countries on the continent immensely benefit.
Under the Focac initiative, China’s focus is to deepen its economic cooperation and trade relationship with African countries.

“BRI and Focac are the major platforms China can engage with Zimbabwe now and so the minister emphasised to the Zimbabwean government that its repeated requests for a bailout would not be heeded. The next stage is to explore how the two countries can deepen relations,” a source revealed.

Wang also reportedly told Mnangagwa that although Beijing was committed to deepening its bilateral relations with Harare, Zimbabwe’s investment climate was hostile.

“Wang also pointed out that there are many examples which point to Zimbabwe as a bad investment climate. He underscored that government must ensure that in its bureaucratic system, there must be no room to solicit for bribes,” the source said.

During the meeting, described by sources as cordial but tense in its frankness, Wang also reportedly brought to Mnangagwa’s attention China’s frustrations regarding how Harare could restore the US$10 million belonging to Beijing that was raided by the Reserve Bank of Zimbabwe from an escrow account held by a local bank.

The money was part of a loan for the expansion of the Robert Gabriel Mugabe International Airport.As reported by this newspaper on November 1, 2019, China indefinitely suspended financing infrastructural projects totalling US$1,3 billion after the central bank had raided the US$10 million from an escrow account which held funds for the project.

The project is being bankrolled at a cost of US$153 million. Another official who attended the meeting said when the issue was brought up, Mnangagwa appeared remorseful and fell short of apologising for the abuse of the money, but assured the visiting Chinese minister that the raided funds would be returned.

“When that matter came up for discussion (the raided US$10 million), the parties agreed that the banks of the two involved sides will come up with a solution to resolve the matter. If they cannot give solid assurances that the funds will be restored, then government will intervene. I believe that the issue of the raided Chinese funds will simply be resolved. Zimbabwe gave assurances to that effect,” the official said.

The source said China’s confidence that the funds would be restored stemmed from Harare’s glaring concern over the possibility of losing out on a major infrastructural development package amounting to US$1,3 billion.

During Wang’s visit, the Zimbabwe and China governments, which have upgraded their relationship to a strategic comprehensive partnership, saw Harare submitting five projects that can potentially earn China’s approval for funding under the BRI.

When Mnangagwa visited China in his first-ever state visit outside Africa since seizing power through a military coup in November 2017, he returned home without the bailout package his administration desperately needed to set the fragile economy on a firm recovery and growth path. However, he was handed a token US$20 million, an amount which China hands out to all visiting African leaders for use at their discretion.

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.

In 2008, China and Russia vetoed a resolution by the US and Britain to push for the imposition of UN sanctions on Zimbabwe.

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