China splashes cash on Zimbabwe

China has put an "unlimited financing cap" on mega economic deals with Zimbabwe, and this co-operation will be sealed during high-level talks in December.

About two weeks ago, members of China's National Development and Reform Commission were in Harare to discuss infrastructural projects geared towards Zimbabwe's socio-economic transformation.

They met President Mugabe and top Government officials, committing to implement several of these projects before 2015 is out.

And it has now emerged that the Asian giant will not limit its funding, running into billions of dollars.

China will recoup the money within frameworks set to be finalised under auspices of the Forum on China Africa Co-operation in December.

The NDRC is the engine of the Oriental nation's economy and operates under President Xi Jinping's authority.

Officials close to the meetings in Harare said, "What is very encouraging from the Chinese is that they have put no limit on how much they will want to pour into the projects.

"What came out of the high-level talks is that the level of seriousness in implementing the deals has now gone a gear up. This is why the subject of financing as well as immediate implementation was topical during those talks."

Deputy Chief Secretary in the Office of the President and Cabinet Colonel (Retired) Christian Katsande told The Sunday Mail that various funding options were under consideration.

Among these are grants, concessionary loans and project financing, which essentially involves cashflows instead of investors pumping in all required capital.

"Innovative mechanisms will be used in implementing the deals. For example, you can say to the contractor, 'Take a certain percentage of equity for the loan's duration and then you can return this equity when the tenure of the loan is done'.

"It is a practical way of doing things and guarantees results. Most projects are, really, based on project financing. This is where you look at the bankability of the project. For instance, with the Kariba South (hydro-power generation) project, the idea is to generate power and sell it. So, this is what has been agreed regarding energy projects."

Rtd Col Katsande also said, "Some concessionary loans will be availed at very low interest rates. Construction of the New Parliament Building will be under a grant at very low interest rates. This is why headway has been made in that regard; work has already started.

"So, the practical results are there to see. Projects are at different stages as we speak; some are at feasibility stage while others - like the Kariba South extension - have already kicked off."

Zimbabwe is positioning itself for major economic take-off in keeping with Zim-Asset which requires massive capital injection and rapid implementation.

In 2014, Harare and Beijing signed deals covering energy, roads, railways, telecommunications, agriculture and tourism.

Presidents Mugabe and Jinping oversaw the deals' signing in Beijing.

In July 2015, the two leaders followed these up with an upgraded memorandum of understanding, and the NDRC visited Zimbabwe to review work done and prepare for the December Focac meetings.

Several Chinese companies have set up base locally to implement the projects.