29 August 2014

Zimbabwe: Transform Deals Into Real Projects

editorial

President Robert Mugabe's tail is up after a five-day visit to China during which government officials signed what the state media trumpeted "mega-deals" amounting to at least US$4 billion.

Reports from China said included is a US$2 billion deal for the construction of a thermal power station and agreement to mine coal in Gwayi. The deal is between a Chinese company, Shadong Taishan Sunlight Investments and a local firm, Oldstone Investments.

Other deals were also concluded in infrastructure, transport, agriculture, tourism and communication sectors.

For a country whose economy is virtually on its knees due to lack of investment, these deals are expected to spark economic activities which will in turn spur recovery. However, in this quest for foreign direct investment, Zimbabwe could be making a monumental mistake if the deals struck in China this week are not executed in a transparent manner as has become the norm with the Zanu PF government.

The absence of key private-sector players on the trip to China is a reflection of a murky agenda that could be costly to the economy in the long run. As noted, the major deal agreed on this trip is with a local company Oldstone which is chaired by Defence permanent secretary Martin Rushwaya. His involvement in the company points to military involvement as was the case with diamond miner Anjin. he also chaired.

There are numerous other businesses in the country in which the military has a stake.

The ventures, mainly in the extractive sector, are being executed with the involvement of either the Chinese or Russians. The projects are largely secretive, hence corruption and looting.

We have not seen audited accounts of these entities. There is no clear tendering in the awarding of projects and the involvement of securocrats does not inspire confidence. The military has been involved in mining of diamonds, supposedly on behalf of Zimbabweans who have never benefitted from their sales.

Mugabe has in the past defended the involvement of the army in running commercial business ventures, saying it was "contributing to Zimbabwe Agenda for Sustainable Socio-Economic Transformation through ... several other commercial projects that will, in the medium to long-term, contribute significantly to the country's GDP".

This assertion should be taken with a pinch of salt since there is no such evidence to the generality of Zimbabweans. What is apparent however is that the already enriched individuals continue to amass more wealth. Government assure the nation that these deals will benefit the people.

More importantly, government needs to explain to the nation the state of deals which were announced in previous years with much pomp and ceremony but never got off the ground.

There is huge expectation surrounding the latest deals and the government has to ensure delivery.

However, based on previous experiences, it is difficult to believe Mugabe's trip and deals signed in the process will really change anything. Leadership renewal, reforms and policy consistency to attract investment are far more critical than begging for rescue packages.

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