China puts screws on Zim
The Chinese government is seeking the secondment of its officials to key Zimbabwe parastatals to ensure that Chinese loans for government projects are not lost to “leakages”, it emerged this week.
A Chinese delegation was in Zimbabwe to lay the groundwork for the implementation of economic agreements signed in August by the two countries. There are now concerns from some government officials that the Chinese government is angling for a greater stake in, and control of, Zimbabwe’s natural resources and government entities before the agreements are implemented.
Zimbabwe has so far failed to get the $27-billion it is seeking to implement its ambitious economic blueprint, the Zimbabwe Agenda for Sustainable Socio-Economic Transformation (ZimAsset), which the government sees as a panacea to the country’s economic problems.
Zimbabwe signed a number of memorandums of understanding with China during President Robert Mugabe’s visit there last year, which the government said would kick-start the implementation of ZimAsset and aid efforts to revive the economy.
China pledged to assist Zimbabwe in implementing infrastructure projects in various sectors of the economy, including power generation, water, telecommunications, agriculture and mining.
Mugabe went to China seeking a $4-billion rescue package, but other than the memorandums of understanding, he came back empty- handed. Most of the projects agreed to with the Chinese government have yet to take off and are subject to feasibility studies.
The Chinese have also expressed concern over the loss of revenue in the parastatals and ministries that will oversee the implementation of the deals, should the feasibility studies be successful.
“It is against that background that the Chinese want to ensure that systems are put in place to ensure that, should the deals go ahead, funds are not lost due to leakages,” said a government official, who did not want to be named for fear of victimisation.
“They want their people to be attached to some of the key parastatals that will implement the deals to ensure there is no revenue loss.
“They believe their people will also help to capacitate the parastatals and ensure an enhancement of skills. Although indications are that the Chinese will have their way, there are some among us who believe the Chinese have in a way colonised us as they are taking over the economy and are now moving into parastatals.”
But Economic Planning Minister Simon Khaya Moyo told the Mail & Guardian in a phone interview on Wednesday, the visit by the Chinese delegation would be beneficial to Zimbabwe as the government tries to implement the ZimAsset turnaround plan.
‘Our all-weather friend’
He dismissed suggestions that the government was desperate and was handing control over to the Chinese. Zimbabwe had a lot to learn from the Chinese, he said, including how parastatals should be run, and the Chinese were merely assisting Zimbabweans as they had done in the past.
“China is our all-weather friend. They gave us all the support during the liberation struggle and they have continued to do so after independence,” Moyo said.
“They obviously understand our difficult situation due to the illegal economic sanctions imposed on us by the Western countries for over a decade. They also understand our economic programme, which is driven by ZimAsset. This is an exchange which will obviously be beneficial to our economy because they have done well in their planning processes through their parastatals.”
But government officials said friendship has now been laid aside as the Chinese lay down stringent conditions, the chief one being the reform of parastatals, which are considered to be havens of corruption and inefficiency.
Government sources said this week the deals would take time to reach fruition because of the Chinese demands, including transparency, accountability and the stamping out of corruption in parastatals.
“The Chinese want to exercise greater control of the parastatals through training and capacitation of staff as well as dictating that they follow Chinese models of operation,” said an official.
“They are insisting on Zimbabwe adopting Chinese models of parastatal reforms, a development which should allow them greater control as the state enterprises will be working with their officials in the capacitation and implementation of projects.”
The Chinese have also demanded that the Zimbabweans meet their obligations by settling arrears on loans advanced in the past. Zimbabwe has been battling a liquidity crunch for years in the aftermath of its falling-out with Western countries, the World Bank and the International Monetary Fund. It has also fallen behind in paying loans advanced to it to recapitalise underperforming companies as well as for infrastructural developments.
Zimbabwe’s unpaid loans
The Chinese are also said to have been unhappy with Zimbabwe’s failure to repay previous loans. Sinosure, a leading Chinese insurance company, is reportedly refusing to guarantee loans from Chinese banks to Zimbabwean companies.
By the end of last year, Zimbabwe’s interest on loans stood at $60-million, according to government officials.
On Tuesday, the Chinese embassy professed ignorance about the finer details of the delegation’s visit, telling this reporter to seek comment from the office of the president and Cabinet. The president’s office subsequently issued a statement saying the purpose of the visit by the Chinese delegation was to discuss several areas of economic co-operation.
“Its main objective ... is to discuss a range of economic development issues affecting Zimbabwe, with a view to proffering solutions on the back of the experience of the Chinese,” said Christian Katsande, the deputy chief secretary to the president and Cabinet.
“The broad areas of co-operation between the government of Zimbabwe and [the] NDRC [National Development and Reform Commission] include exchange of experiences and knowledge covering the formulation of five-year development plans, reform of state-owned enterprises, establishment of special economic zones and promotion for the growth of small to medium enterprises, promotion of strategic economic policy research, planning, co-ordination, monitoring and evaluation of government policies and programmes,” he added.
The Chinese ambassador to Zimbabwe, Lin Lin, last year suggested the possibility of more stringent rules before loans were advanced to Zimbabwe.
“Between the two governments there is no problem [since] concessionary loans being provided by Exim Bank for current projects like the Victoria Falls Airport upgrade and the Kariba South Power expansion have a low interest rate of only 2% and the repayment period is for 20 years,” he said in an interview with the Zimbabwe Independent.
“But for any new projects, which need more loans from the Chinese side, we should also consider the capability of the Zimbabwean side. The banks and even insurance companies have their own terms for providing or giving guarantees for any lines of credit so it needs goodwill and good understanding on both sides. I hope there will be more co-operation and more projects with the help of Chinese institutions.”