Mugabe to favour Chinese projects

CHINESE business interests in Zimbabwe received a major boost recently after President Robert Mugabe re-emphasised his government's position to allocate the lion's share of crucial capital projects to Sino multinationals.

With billions of United States dollars worth of capital projects, Chinese construction firms and banks have evolved into the biggest funders of power rehabilitation and construction projects, water sanitation, roads and airports development projects have revolved.

While opening the 8th session of Parliament, President Mugabe said many of outstanding projects, which his cash-strapped administration has struggled to fund, would be bankrolled by Chinese money.

"Global trends point to the growing involvement of the private sector in the provision of public infrastructure and services," he said.

"Construction of the Mtshabezi Dam to augment water supply to the City of Bulawayo should move at a faster pace, following the conclusion of a financing facility with the Chinese government. Implementation of the other infrastructure projects, covered in the Memorandum of Understanding recently concluded with the People's Republic of China, will take off soon," he said.

His statement could confirm that the current government strategy to predominantly focus on building stronger diplomatic and economic ties with one corner of the globe could be prolonged. The Chinese government estimates that bilateral relations between Beijing and Harare have generated deals worth US$1,1 billion. Last year alone, Chinese investment into Zimbabwe reached US$602 million, the largest in Africa, according to statistics from the world's third largest economy.
Chinese exports to Zimbabwe reached US$440 million in 2014, while exports to Beijing from Harare were estimated at US$668 million.

President Mugabe's remarks also pointed to more rolling business for Chinese construction and technology firms going into the future. But economists fear that this could spell doom for hundreds of cash-strapped Zimbabwean construction firms, which have struggled to emerge from a recession that has had damaging effects on their balance sheets. They have failed to clinch crucial State projects, which require strong balance sheets to execute.

Concrete measures were required, said analysts, to ensure that as Chinese enterprises scooped the profits, Zimbabwean firms benefited as subcontractors or through joint ventures. Otherwise they could continue to sink into the abyss, dragging with them thousands of jobs. These plans were underway, said President Mugabe. However, whether implementation of agreed policies would take place, given the privileged treatment of Chinese corporations in Zimbabwe, remains an issue that the markets await to see.

"To facilitate the implementation of the joint venture infrastructural projects envisaged under Zim-Asset (Zimbabwe Agenda for Sustainable Socio Economic Transformation blueprint), a Joint Venture Bill shall be tabled before Parliament," the President said.

"In addition, the Procurement Act shall be amended to render the public procurement process more efficient, transparent and in consonance with other policy initiatives and development in the technology front."

Chinese firms, President Mugabe indicated, would be at the heart of crucial multi-million dollar water and sanitation projects aimed at arresting the danger of deadly epidemics triggered by an aged infrastructure. "The provision of adequate water and sanitation services remains a problem for some of our major urban centres. The ongoing Harare Water rehabilitation programme, under the US$144 million China Exim Bank loan facility, is progressing well. The programme, scheduled for completion in 2016, is expected to increase the city's water pumping capacity to 630 mega litres per day."

Other major projects being undertaken by Chinese firms include the Kariba South Expansion Project, Hwange Thermal Power Station Units 7 and 8 project and a cluster of smaller power projects with the capacity to generate 5 000 megawatts by 2020.

"Poor transport infrastructure has been a drawback in the country's socio-economic development process. I am, therefore, pleased to note that the upgrading of the Plumtree-Harare-Mutare Highway, the Harare International Airport Road Dualisation Project and the construction of a new four-kilometre runway and terminal building at Victoria Falls International Airport, are progressing well," said the President. Poor infrastructure has been sited among the biggest problems affecting trading and economic development in Zimbabwe.