The Herald (Harare)

26 August 2014

Zimbabwe: Zim, China Sign Nine Mega Deals

Photo: Nehanda Radio
Robert and Grace Mugabe.

Beijing — Zimbabwe and China yesterday signed nine landmark agreements that will see the emerging global giant from Asia providing financial support for the much-needed economic enablers in critical sectors that include energy, roads, national railway network, telecommunications, agriculture and tourism as part of the Zimbabwe Agenda for Sustainable Socio-Economic Transformation.

One of the four pillars of Zim-Asset is the Infrastructure and Utilities cluster which spells out a number of major projects to revive the economy by rehabilitating, upgrading and building key physical as well as social infrastructure and utilities to enable the turnaround of the economy and create business and employment opportunities.

Funding was, however, a major challenge to achieving the goals of the Infrastructure and Utilities cluster, but thanks to close to a year of thorough negotiations that included several visits to Beijing by Zimbabwean officials and Cabinet ministers, nine solid funding commitments were made yesterday by the Chinese government in a development that is set to open a new page in the transformation of the economy by funding key infrastructure projects that create jobs and spur economic growth and development.

Government ministers from the two countries under the watchful eyes of Presidents Mugabe and Xi Jinping become the second major, cluster-specific statement since the launch of Zim-Asset last October; the first being the US$180million agriculture support facility that has since scored dividends for the Food Security and Nutrition Cluster which has ushered the country towards a path of national food self-sufficiency within the first year of the new Government that was sworn in on September 11 last year. The development impact of this agriculture input support facility on economic factors such as employment creation is yet to be assessed.

Finance and Economic Development Minister Patrick Chinamasa signed two master loan agreements with the China Export and Import Bank and the China Export and Credit Insurance Corporation. Minister Chinamasa told The Herald after the signing ceremonies that the agreements provided securitisation framework for infrastructural and productive sectors.

"We have signed agreements which provide securitisation framework under which projects in infrastructural and productive sectors can be funded," said Minister Chinamasa.

"The agreements with the China Exim Bank puts into place a framework under which we can secure funding for projects in the productive and infrastructural sectors on a case by case basis that also puts into place securitisation framework on the basis of which we can then submit projects for funding. But that funding will only come from China Exim Bank.

"The agreement with the China Export and Credit Insurance Corporation is also providing securitisation framework for infrastructure and productive projects that can be funded by both the State and non-State financial institutions. It's opening up other sources of funding. These projects will be anchored on securitisation."

Contrary to media reports that Zimbabwe was to securitise the funding of the agreed projects with minerals, the fact is that no sub-soil assets were used to securitise the commitments whose security is enterprise-based and commercially pegged to the performance and cashflows of the state enterprises concerned be it Zesa, NRZ, NetOne, Zinara etc.

Minister Chinamasa said only viable projects would attract such funding, adding that the Zimbabwean delegation was not in China to look for budgetary support contrary to reports in some sections of the media.

"No country sets aside a lump-sum payment for no specific projects," he said. "Projects must demonstrate their ability to pay for themselves. You will not come to China to ask for money to invest in a project that won't pay for itself. That would not make economic sense".

Minister Chinamasa said he also signed another agreement on economic and technical cooperation on provision of emergency food donation by the Chinese Government to the Government of Zimbabwe and a concessionary loan agreement for the NetOne Network Expansion Phase Two project.

Foreign Affairs Minister Simbarashe Mumbengegwi signed another agreement on behalf of the Zimbabwean Government on mutual exemption of visa requirements for holders of diplomatic and service passports. He also signed another agreement on the confirmed minutes of the Ninth Session of the Joint Commission of Economic, Technical and Trade Cooperation that met from August 21 to 22 in Beijing ahead of President Mugabe's state visit to China.

Tourism and Hospitality Industry Minister Walter Mzembi signed an agreement between his ministry and the National Tourism Administration of China on cooperation in the field of tourism whose implementation will lead to an increase of revenues from Chinese visitors to Zimbabwe.

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