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China still committed to financing Zimbabwe projects

01 Nov 2019 at 06:45hrs | Views
THE African Forum and Network on Debt and Development (Afrodad), together with the Zimbabwe Coalition on Debt and Development (Zimcodd), this week held a multi-stakeholder public debt conference to discuss the impact of debt on citizens, build collaborative plans to tackle Zimbabwe's rising debt while ensuring continuity of consultations with stakeholders.

The conference, which also sought to devise policy recommendations that will address Zimbabwe's debt situation, was, among other delegates, graced by Chinese deputy ambassador Zhao Baogang (ZB, pictured) who came to discuss Chinese investment opportunities and challenges for responsible borrowing. Zhao said there were many misconceptions about China's loans and lending modalities.

Although relations between Zimbabwe and China have gone through various phases and even generated all manner of controversy, Zhao said Beijing is still willing to invest more in this country. Business reporter Melody Chikono (MC) spoke to him on the sidelines of the conference to understand these and other issues.

Find excerpts of the interview below:

MC: During the conference, you dismissed the notion that Chinese loans are shrouded in secrecy as well as the fact that your interests are mainly concentrated in energy. There are also allegations levelled against the Chinese which include smuggling of minerals such as gold and chrome. What is your comment on that?
ZB: I don't think that such things exist and, if they do exist, I believe that the law enforcement agencies will deal with that. So we call upon the Chinese companies to work in the framework of law and to abide by the law and make contributions to the development of the economy of Zimbabwe. We have to go through thick and thin together in unity. We will never do anything to harm the country.

MC: You also spoke of your investment in Zimbabwe. What is the size of Chinese investments?

ZB: It is really difficult to calculate. You know, so many Chinese companies are investing here in Zimbabwe. I could just share some information with you that every year some Chinese companies come and invest here.

For example, in agriculture we have the Anhui State Farming Enterprises who came here and invested in farming. Now they have been planting some 1 000 hectares of land. That is quite a big piece of land. Tian Ze Company every year will invest roughly US$50 million to encourage and help Zimbabwean farmers to grow tobacco and after the harvest they buy all the tobacco at a very high price.

Last year, Tian Ze bought more than US$536 million worth of tobacco and half of all the tobacco produced in Zimbabwe. I can say that Chinese companies make a very big contribution to the development of agriculture. And certainly in the energy sector, we see that we have the Kariba South Power Station Extension Project and Hwange Thermal Power Station. We are also in tourism and the number of tourists that come into Zimbabwe has been increasing.

MC: What are the challenges you are facing in investing in Zimbabwe?

ZB: We face those challenges that other companies also face and we hope there will be stabilisation of the exchange rates and maybe with that in the future, it will be easier for Chinese companies to get work permits.

Like I indicated, many of them have been affected and their capacity utilisation has dropped by almost half due to electricity issues. Many of them do not have electricity and they talk to us so they hope that in the future we will have enough electricity. We are also willing to push forward the construction or rehabilitation of Hwange Thermal Power Station to make sure that in the future we will have enough electricity.

MC: Let us talk about debt. You, together with multilateral lenders, are owed money by the Zimbabwean government. What is you comment on the debt situation in Zimbabwe?

ZB: All the issues are being discussed by the relevant departments of the two governments and also the financial institutions. I believe that this is not an issue that will hinder developments or hinder co-operation between the two sides.

Last year, although Zimbabwe owed arrears to the Chinese side, the Chinese government still made special arrangements for the Zimbabwean side and we decided that we provide finance to the three projects: Hwange power station, Harare's Robert Mugabe International Airport and also NetOne phase three projects. Although Zimbabwe is in difficulty, we are brothers and sisters; we will not stand there idle, we will try our best to help.

MC: What is the total amount you are owed?

ZB: On the exact debt Zimbabwe owes us, I cannot give the exact number because it is increasing every three months on interest. It is not a big number compared to debts you owe to the Paris Club or multilateral financial institutions or to the African Developmental Bank and World Bank. You owe much more to those countries than you owe to China.

Last year, about US$2,1 billion in loans was provided for projects which are being financed by a Chinese institution.

Four projects are being financed by the Chinese financial institutions so in the past several years, we provided loans and it is more than US$2,1 billion and it is quite a lot for one African country. Zimbabwe enjoys a big share of the Chinese loans to African countries.

MC: Are there new projects in the pipeline?

ZB: Here in Zimbabwe we believe that Zimbabwe will prosper under the leadership of President Emmerson Mnangagwa. Business environment will be improving and the Chinese companies will come to invest and also we will discuss more projects. We will certainly continue to finance the construction of some projects. I can assure you that there are some projects that are under discussion.

MC: China has also been accused of bringing everything, including building material and insurance services, for instance, from China, which means Zimbabwe gets to benefit nothing except employment for casual labourers. What is your comment?

ZB: Certainly not everything. Let us just take one example. We have a new parliament building project. They bought the cement, stones, nails from local markets and they hire local workers.

Only those construction materials we cannot get from the local market are procured in China. If we buy it here, it is cheaper and if we buy it from China it is more expensive. If you are a businessman what would you do?

MC: There is an issue about US$10 million Chinese money which was raided from an escrow account. What does this mean to China in terms of the security of investment in Zimbabwe?

ZB: Well, I think the security of investments can only be guaranteed by the government.

Source - the independent
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