Zimbabwe’s long-term economic survival prospects look dimmer by the day with analysts warning that the government’s mortgaging of the country’s minerals to Asians is sure to lead to more troubles in the future for the world’s fastest-shrinking economy.
President Robert Mugabe’s government, at a loss as to how permanently to tackle an economic crisis that started at the end of 1999, has been parcelling out pockets of Zimbabwe’s mineral wealth to China and other Asian countries in return for mostly short-term assistance.
As part of its much-vaunted “Look East” policy, the Zimbabwe government has entered into at least 15 deals with the Chinese, Iranians and other Asians, mostly on fuel, mining, electricity and communication.
Last week, a Zimbabwean delegation led by Vice-President Joice Mujuru was in China where they signed at least five agreements that would effectively give the Chinese access to the country’s resources.
However, analysts told independent news service ZimOnline that the Asian expedition will only worsen Zimbabwe’s crisis in that the deals only serve to expand the catchment area for Chinese and other Asian manufacturers to dump their products.
University of Zimbabwe (UZ) political-science lecturer John Makumbe says Zimbabwe’s economy is structurally too weak to sustain trade with China.
“The Chinese are an attractive country to trade with only if our manufacturing sector is not on death row, as is the case at the moment,” says Makumbe.
The lecturer says the Look East policy — which Mugabe adopted after falling out with the West — is, in fact, contributing to Zimbabwe’s biting economic crisis by destroying its manufacturing base, as many industries were forced to close after losing market share to mostly cheap Chinese-made products.
Harare economist James Jowa cautions against continued Asian deal-making, warning that these deals are leaving the country vulnerable to the vagaries of world commodity prices.
“These countries are getting a cheap source of commodities at a time when international prices of these products are firming. If anything, all Zimbabwe is getting is a few days’ supply of oil, electricity and other things that we could as well produce locally if we get our act together,” says Jowa.
The recent World Economic Forum on Africa summit held in South Africa singled out China’s insatiable demand for commodities as one of the factors pulling the rising Asian giant to Africa.
Chinese demand is, in fact, believed to be the reason behind the recent firming of copper, gold and other commodity prices.
The analysts also believe that the current deal-making and attendant mortgaging of Zimbabwe’s resources could have serious repercussions in the event that the country’s economic fortunes normalise.
There is a likelihood that a future post-Mugabe government in Harare might want to review some of the deals or, in the worst case, expel the Chinese and other Asian investors should Zimbabwe’s economic situation normalise.
Zimbabwe is also bound to suffer heavy economic losses as prices of commodities continue to firm.
“I foresee future problems with regards to our own indigenisation policy for sectors like mining and manufacturing and also problems to do with relations between future Zimbabwe governments and the Chinese and Iranians,” says Jowa.
Mugabe, who has ruled Zimbabwe since independence from Britain 26 years ago, has shifted his foreign policy to favour the East over the past six years in response to what he views as sabotage by Western countries angered by his government’s land reforms. — ZimOnline