Harare - President Robert Mugabe, 90, Africa’s oldest leader, was showered with praise but not with banknotes on his 13th trip to China in search of financial rescue.
He made international headlines this week as Chinese president Xi Jinping called him a renowned African liberation leader and an “old friend” of the Chinese people.
But he didn’t manage to secure anything like the large infusion of capital which his government so desperately needs.
Most of the nine agreements he and Xi signed are evidently about ensuring that Zimbabwe pays its bills to China for any future investment from Beijing but also to repay the $700 million (R7bn) which the treasury in Harare says it has owed China for several years.
According to The Source, a financial news service in Zimbabwe, Finance Minister Patrick Chinamasa signed a “securitisation framework” with the China Export and Credit Insurance Corporation (Sinosure) for the various projects the government wants help in funding.
Chinamasa said what is under consideration is the provision of security against loans, which he proposes to provide using government cash-flows from mine taxes and royalties, as well as dividends from mining.
He dismissed concerns that the Zimbabwe government had “mortgaged” its mineral reserves far into the future.
“Our securitisation, which we have already agreed, is not to mortgage our minerals but to set aside a portion of cash flows that arise when we are exploiting our mineral resources, whether diamond and gold,” Chinamasa said.
He did not say how he would squeeze the extra cash from the mining sector.
According to various media reports in Zimbabwe, China may provide investment at some time in the future for the completion of a dam long under construction, the building of a 600MW thermal power plant, an increase in power from the existing hydroelectric power station on Kariba dam and the construction of a new coal mine.
The reports also suggest that China may lend Zimbabwe money to modernise the state-owned telecommunications industry.
Justice minister Emmerson Mnangagwa, fighting hard to succeed Mugabe one day, said this week that many jobs would be created by the Chinese investment in Zimbabwe.
Speaking about Mugabe’s trip to China, which ended on Friday, Mnangagwa said:
“Obviously, some of the projects will not happen overnight, but people will appreciate what we are doing when they come to fruition.”
A well-connected analyst in Harare, who did not want to be named as he had not yet been able to assess the China deal signed by Mugabe, said: “So far everything about these deals in China is secret.
“But we know that Zimbabwe is going to pay huge rates for what we believe are infrastructure development loans, such as completing a dam which has been under construction for years and an ongoing power project which now seems will cost double the original figure.
“These deals are insured by Sinosure which has assessed Zimbabwe as E minus, in other words a write-off. As soon as possible we need to see if we can get an audit on these deals.”
Meanwhile police arrested about 20 opposition Movement for Democratic Change (MDC) demonstrators this week who protested in central Harare about lack of jobs and the ever-shrinking economy.
The MDC said 18 protesters were injured during the brief demonstration broken up by riot police.
Zanu-PF won an overwhelming majority in last July’s elections on the back of promises to create 2.2 million jobs over the next five years.
Independent Foreign Service