The Herald (Harare)

3 September 2014

Zimbabwe: Zim/China Deals - Less Talk, More Action Needed

During his State visit to China last week, President Mugabe signed a number of multi-million-dollar deals that will see Beijing assist in improving roads, energy, the national railway network, telecommunications, tourism and agricultural sectors.What is left is implementation.

Investment and funding are what have been lacking in Zimbabwe. Zimbabwe desperately needs funding for capital projects.

The country needs investment in infrastructure to enable the economy to start generating its own money.

It is critical to know that time for handouts is over. China is teaching us a new way of doing business and we need to build on these agreements.

Unlike the Western concept of development aid, China is telling Africa and indeed Zimbabwe that it should borrow for infrastructural projects that have a capacity to generate more.

Zimbabwe will have to generate its own money from these capital projects - that is real development.

It is therefore critical for Zimbabwe to ensure that it fully benefits from the various projects that will be funded by China. We cannot let this opportunity slip away while we wait to be spoonfed.

It is a wake-up call for all to fasten our belts and play a role in our developmental trajectory.

Indeed, the projects to be funded must directly benefit local companies first and those in the region later. An improved railway system should make it cheaper for companies to ferry locally produced goods to pay back the loan.

This means our farms and industry have to increase productivity to ensure that the wagons and the rail are kept busy.

In the past a number of capital projects that had been put in place failed to take off due to poor planning and lack of funding.

The Mt Hampden Biodiesel Plant and the Chitungwiza Aquatic Complex show how lack of planning can result in the creation of white elephants.

Never should the Chinese-funded projects turn into white elephants because local people cannot utilise the infrastructure.

Zimbabwean companies must also be prepared to partner the Chinese in the execution of these projects so that they can also benefit from the huge Chinese investments.

The fact is that the Chinese are in Zimbabwe for business and will only partner serious local companies during the implementation of the projects.

Zimbabweans are known to be excellent planners but poor implementers. The Chinese lifeline should ensure that Zimbabweans are on hand as partners and to use the infrastructure for their benefit.

We cannot repeat what happened in the DRC and Mozambique. After toiling to ward off the wars of destabilisation, Zimbabwean companies decided to remain in Zimbabwe while vast opportunities that came with peace in those countries were grabbed by other countries.

The only way Zimbabwean firms can show their gratitude to President Mugabe is to start putting their houses in order and grab the opportunities presented by Chinese infrastructural development finances.

There have been challenges around implementation in the past but this time we should come right and ensure that the country fully benefits from the various agreements.

It is unfortunate that some people in industry are casting aspersions on the Chinese deals.

They wanted easy money without saying who is prepared to give us money. Above all, Zimbabwe is already suffocating from international debt.

It is therefore critical that everyone who matters in these deals be geared to ensure that the projects are a success and ordinary Zimbabweans benefit.

It is important that everyone understands that given our creditworthiness there will not be free money from China or elsewhere but rather mutually beneficial business agreements.

As Finance Minister Patrick Chinamasa said, the mission was not to ask for money but project investments that have the potential to pay for themselves.

That indeed makes more economic sense given Zimbabwe's parlous economic situation triggered by the illegal sanctions imposed by the West.

The investment deals dovetail with the country's economic blueprint Zim-Asset which seeks to improve the country's infrastructure to jumpstart economic development.

As one economic commentator pointed out, these projects should be export-oriented as much as possible so that servicing of the loans does not negatively affect the national current account.

Projects like the integrated Gwayi coal mining and thermal power generation, for example, should sign power purchase agreements with Eskom and Nampower to export excess power to service the loans.

"Should that power export agreement be secured then the power station capacity can be doubled or trebled. A power export agreement thus increases the attractiveness of the project and reduces the risk of it not performing to expected levels," one analyst said.

What we should be asking ourselves now are not questions about the suitability or not of the deals but how Zimbabweans are going to claim their share of the Chinese money during implementation.

The deals not only offer Zimbabwe sound infrastructure but also employment opportunities and capitalisation money for companies subcontracted in the implementation of these capital projects.

The worry now as a country should not be what the West thinks and says but what we stand to benefit from President Mugabe's successful trip to China.

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