Business / Economy
MDC-T agrees to mortgage diamonds
11 Jun 2011 at 17:44hrs | Views
THE Movement for Democratic Change (MDC-T) formation led by Prime Minister Morgan Tsvangirai explicitly backed a US$98 million loan from China to construct the National Defence College (NDC) in Harare under a deal in which government mortgaged diamonds from Chiadzwa. Documents seen by this newspaper indicate that the Ministry of Finance, presided over by the MDC-T secretary-general, Tendai Biti, was the lead broker for financial terms for the deal, and is principally cited as the borrower under a facility that has angered Zimbabweans currently battling high taxation and poor service delivery by central government.
Zimbabwe's health delivery system is still up the creek and the education system is also in desperate need of funding.
Civil servants have also been calling for salary reviews, which government has been wont to decline due to poor revenue inflows.
The deal, which represents skewed priorities on the part of government, therefore contradicts public pronouncements by the former opposition party that it has been frantically promoting policies meant to bring food on the table for the country's suffering masses.
Critics indicated that the deal also brought to the fore the need for Zimbabweans to demand servant leadership from its politicians and stop the top-down approach that has ruined the country's economy due to its disregard for citizens' concerns.
The Financial Gazette can reveal that the Ministry of Finance consummated the concessional loan agreement with the Export Import Bank of China (Eximbank) on March 21, 2011.
There is no evidence that the party, which joined the inclusive government on the basis of popular support from the country's restive populace, had resisted the deal.
In fact, evidence documented indicates that the Ministry of Fina-nce, as the borrower, had requested Eximbank for the loan facility "for the financing needs under the commercial contract".
Zimbabwe's Ministry of Defence had, however, initiated the deal after entering into an agreement with Anhui Foreign Economic Constru-ction Group Corp. Limited on Nove-mber 16, 2009.
The loan agreement has also lifted the veil on the Zimbabwe Mining Development Corporation (ZMDC)'s partner in a diamond mining vehicle, Anjin Investments (Private) Limited, as Anhui Foreign Economic and Construction Group, the same firm contracted to construct the Defence College.
Last week, Parliament ratified the loan agreement with China's Exim-bank.
The deal, according to a copy of the agreement, has a grace period of seven years and is payable at two percent interest per annum.
Government was forced to seek the deal's ratification by Parliament due to a clause in the country's Constitution compelling it to seek approval of any loan agreement concluded with a foreign Sate from Parliament.
The Chinese loan shall be paid over 13 years, with payments being made twice each year. The agreement says if there is any change of laws or government policies in Zimbabwe making it difficult for either party to perform its obligations, China could declare all the sums payable immediately due without further demand, notice or legal formality of any kind.
It adds that any dispute arising from the agreement would be settled through friendly consultation. If the parties fail to reach a settlement, the dispute would be referred to the International Court of Arbitration of the International Chamber of Com-merce for arbitration.
Diamonds from Chiadzwa would be used for loan repayments.
"The related Zimbabwe side should establish an escrow account to secure the payment and repayment of the facility with revenue of Zimbabwe's side's benefits from Anjin Investments (Private) Limited. Anjin Investments is the joint venture set up by Zimbabwe side and Anhui Foreign economic Constru-ction (Group) Corp Limited. An agreement on the escrow account should be signed by Zimbabwe sides and the lender for the purpose herein," reads part of the agreement.
It is not clear why the government would enter into a partnership with a construction company for the explo-itation of diamonds.
Anhui Foreign Economic and Construction Group is a public construction company under China's Ministry of Construction, which was established in 1992. In Zimbabwe, it has been involved in the construction of the Chinese embassy in Harare.
It was also involved in the construction of Malawi's ultra modern US$50 million Parliament and in Mozambique it constructed the Maputo International Airport. With branches in 14 African countries and others in Asia, Europe, Caribbean and South Pacific, the company has also been involved in the building of Ghana's Camp Houses for Military Police and a stadium in Togo.
In Parliament last week, Defence Minister Emmerson Mnangagwa said the imperative to establish the defence college "was a consequence of the obtaining global security environment."
He added that President Robert Mugabe authorised the establishment of the institution on Septe-mber 5, 2008, resulting in the army acquiring 60 hectares of land along the Mazoe Road for the project.
A report in the State media, when the project was conceived, said military top brass had wanted to name it after President Mugabe, but the ZANU-PF leader turned it down.
The college will be affiliated to the University of Zimbabwe through the Political and Administrative Studies Department, but by 2016 it would become a fully fledged National Defence and Security University.
"As Honorable members have already realised, is it indisputable that the National Defence College is an ideal platform to address complex issues and challenges presented by the global security environment dominated by real politics.
"By definition therefore, the NDC is intended to be the highest, specialised professional military and civilian learning institution to provide high quality education and training on national and international policy, defence and security issues in Zimbabwe" said Mnangagwa.
"Already, the construction is almost 50 percent at the hospitality of the contractor who started using his own finances," he said.
Zimbabwe's health delivery system is still up the creek and the education system is also in desperate need of funding.
Civil servants have also been calling for salary reviews, which government has been wont to decline due to poor revenue inflows.
The deal, which represents skewed priorities on the part of government, therefore contradicts public pronouncements by the former opposition party that it has been frantically promoting policies meant to bring food on the table for the country's suffering masses.
Critics indicated that the deal also brought to the fore the need for Zimbabweans to demand servant leadership from its politicians and stop the top-down approach that has ruined the country's economy due to its disregard for citizens' concerns.
The Financial Gazette can reveal that the Ministry of Finance consummated the concessional loan agreement with the Export Import Bank of China (Eximbank) on March 21, 2011.
There is no evidence that the party, which joined the inclusive government on the basis of popular support from the country's restive populace, had resisted the deal.
In fact, evidence documented indicates that the Ministry of Fina-nce, as the borrower, had requested Eximbank for the loan facility "for the financing needs under the commercial contract".
Zimbabwe's Ministry of Defence had, however, initiated the deal after entering into an agreement with Anhui Foreign Economic Constru-ction Group Corp. Limited on Nove-mber 16, 2009.
The loan agreement has also lifted the veil on the Zimbabwe Mining Development Corporation (ZMDC)'s partner in a diamond mining vehicle, Anjin Investments (Private) Limited, as Anhui Foreign Economic and Construction Group, the same firm contracted to construct the Defence College.
Last week, Parliament ratified the loan agreement with China's Exim-bank.
The deal, according to a copy of the agreement, has a grace period of seven years and is payable at two percent interest per annum.
Government was forced to seek the deal's ratification by Parliament due to a clause in the country's Constitution compelling it to seek approval of any loan agreement concluded with a foreign Sate from Parliament.
The Chinese loan shall be paid over 13 years, with payments being made twice each year. The agreement says if there is any change of laws or government policies in Zimbabwe making it difficult for either party to perform its obligations, China could declare all the sums payable immediately due without further demand, notice or legal formality of any kind.
It adds that any dispute arising from the agreement would be settled through friendly consultation. If the parties fail to reach a settlement, the dispute would be referred to the International Court of Arbitration of the International Chamber of Com-merce for arbitration.
Diamonds from Chiadzwa would be used for loan repayments.
"The related Zimbabwe side should establish an escrow account to secure the payment and repayment of the facility with revenue of Zimbabwe's side's benefits from Anjin Investments (Private) Limited. Anjin Investments is the joint venture set up by Zimbabwe side and Anhui Foreign economic Constru-ction (Group) Corp Limited. An agreement on the escrow account should be signed by Zimbabwe sides and the lender for the purpose herein," reads part of the agreement.
It is not clear why the government would enter into a partnership with a construction company for the explo-itation of diamonds.
Anhui Foreign Economic and Construction Group is a public construction company under China's Ministry of Construction, which was established in 1992. In Zimbabwe, it has been involved in the construction of the Chinese embassy in Harare.
It was also involved in the construction of Malawi's ultra modern US$50 million Parliament and in Mozambique it constructed the Maputo International Airport. With branches in 14 African countries and others in Asia, Europe, Caribbean and South Pacific, the company has also been involved in the building of Ghana's Camp Houses for Military Police and a stadium in Togo.
In Parliament last week, Defence Minister Emmerson Mnangagwa said the imperative to establish the defence college "was a consequence of the obtaining global security environment."
He added that President Robert Mugabe authorised the establishment of the institution on Septe-mber 5, 2008, resulting in the army acquiring 60 hectares of land along the Mazoe Road for the project.
A report in the State media, when the project was conceived, said military top brass had wanted to name it after President Mugabe, but the ZANU-PF leader turned it down.
The college will be affiliated to the University of Zimbabwe through the Political and Administrative Studies Department, but by 2016 it would become a fully fledged National Defence and Security University.
"As Honorable members have already realised, is it indisputable that the National Defence College is an ideal platform to address complex issues and challenges presented by the global security environment dominated by real politics.
"By definition therefore, the NDC is intended to be the highest, specialised professional military and civilian learning institution to provide high quality education and training on national and international policy, defence and security issues in Zimbabwe" said Mnangagwa.
"Already, the construction is almost 50 percent at the hospitality of the contractor who started using his own finances," he said.
Source - FinGaz
