Zimbabwe Accepting Loans From Beijing Has Experts Sounding Alarm

China is pouring money to develop key infrastructure in Zimbabwe, but experts have expressed fear that the Zimbabwe government may not be able to pay back the loans that China has given them—this leads to one very undesired result of China ultimately influencing the infrastructure economy.
Zimbabwe Accepting Loans From Beijing Has Experts Sounding Alarm
Zimbabwe's Robert Mugabe International Airport set to undergo a major facelift, funded by China. Andrew Mambondiyani/Special to The Epoch Times
Andrew Mambondiyani
Updated:

MUTARE, Zimbabwe—China is pouring billions of dollars into developing Zimbabwe’s key infrastructure, but experts have expressed concern that the Zimbabwean government may not be able to repay the loans.

In April, Zimbabwe President Emmerson Mnangagwa invited the Chinese to invest in all sectors of the economy under a new comprehensive strategic partnership of cooperation.

But Beijing’s track record of enticing developing nations to become dependent on loans, in exchange for access to resources and critical infrastructure, has many worried about the influence of Chinese money in Zimbabwe.

A recent example of accepting China’s loans ending badly was in Sri Lanka, where the government had to hand over control of its main southern port, after failing to pay back $6 billion in loans granted as part of China’s One Belt, One Road initiative—Beijing’s massive investment initiative in countries throughout the world.

Zimbabwe's President Emmerson Mnangagwa reviews a military honor guard with Chinese leader Xi Jinping during a welcoming ceremony at the Great Hall of the People in Beijing on April 3, 2018. (Greg Baker/AFP/Getty Images)
Zimbabwe's President Emmerson Mnangagwa reviews a military honor guard with Chinese leader Xi Jinping during a welcoming ceremony at the Great Hall of the People in Beijing on April 3, 2018. Greg Baker/AFP/Getty Images

Farai Maguwu, director of the Center for Natural Resource Governance, a Zimbabwean NGO, says Zimbabwe faces great risks if it becomes beholden to China’s loans.

“If we [Zimbabwe] fail to pay back [the loans], which will likely happen, due to the mismanagement of the economy, China will demand its dues in kind: They will take land and critical institutions to recover their funds,” Maguwu said.

Maguwu added the Chinese loans and deals were negotiated without the involvement of Zimbabwe’s parliament, which is mandated by the country’s constitution to play an oversight role.

“Avoiding parliament is avoiding transparency; hence, such deals are corrupt and will enrich a cabal and deliver very little, as has become the norm in Zimbabwe,” he said. “The problem with Zimbabwe is that government officials negotiate corrupt deals for self-enrichment; hence, the projects never take off or are abandoned halfway through.”

Zimbabwe has limited choices in terms of funding for the country, which desperately needs development, says Victor Bhoroma, an expert on China–Zimbabwe relations. But with the current mechanisms and institutions, it’s not getting the best out of the China deals.

“A lot needs to happen to promote Zimbabwe’s permanent interests and ensure that the loans are used in projects where they are needed the most, and the country is not tied to perpetual debt for projects that do not add value to the public,” Bhoroma said.

Deals

The government of Zimbabwe is courting a Chinese company, PowerChina, to construct the massive Batoka Gorge Hydro Power Station, a $5.2-billion, 2,400 MW plant along the Zambezi River.

At the same time, Zimbabwe’s main airport, Robert Mugabe International Airport, is set for a major expansion under a $153-million loan facility from China.

Beijing, through the Export-Import Bank of China, has released $200 million to Sino Hydro for the expansion of the Hwange Thermal Power Station.

The Chinese also funded an expansion of the $533-million Kariba South Hydro Power Station and the construction of Zimbabwe’s new parliament building, which Mnangagwa said was a donation from the Chinese regime.

Some of the loans from China are repayable in 20 years, with interest rates of 2 percent per annum, according to Zimbabwe’s former finance minister, Patrick Chinamasa.

But Bhoroma expressed concern over the opaqueness of most of the Chinese deals.

“This makes it difficult to do due diligence and monitor progress on these projects. Aspects such as financing interest rates, repayment period, collateral, opportunity costs, and procurement are not as clear as one would wish,” he said.

Reservations

Linda Masarira, the spokesperson for the opposition party Movement for Democratic Change-T (MDC-T), also expressed concern about whether Zimbabwe can repay the debts.

“Definitely, it can’t be a problem to get infrastructural development support, but [the problem is] Zimbabwe’s capacity to repay. That’s the elephant in the room,” Masarira told The Epoch Times.

Currently, Zimbabwe is saddled with about $300 million in arrears from previous Chinese loans.

Masarira raised concern over some of the projects financed by the Chinese, which she said were not priorities for Zimbabwe.

“Above all, are there any technology and skills transfers? Or we shall rely on Chinese forever to continue maintenance and repairs of the same infrastructure?" Masarira said.

Francis Danha, who leads a political outfit named the 1980 Freedom Movement Zimbabwe (#1980FMZ), told The Epoch Times that Zimbabwe isn’t getting much out of the Chinese deals.

“We are not beneficiaries [of Chinese investments] but slaves of future debt [from China]. Everything the Chinese bring is cheap and nondurable, but they [the products] are not cheap in the long term,“ Danha said. ”The scale at which they plunder resources and degrade the environment can’t be worth the so-called help in expensive infrastructure projects.”

Reassurances

Despite the strong reservations on projects funded by China, Mnangagwa assured the country that the government wasn’t surrendering its resources in exchange for loans from Beijing.

“During the period of isolation, very few nations outside the West assisted us. Some of the notable countries which came to our assistance were China, India, Brazil, Russia … And when things are good, you don’t then forget your friends who stood with you during bad times. But you don’t sell your country because someone stood with you during bad times,” Mnangagwa was cited in the media as saying.

China has weighed in, saying its investment policies in Africa were mutually beneficial and aren’t meant to exploit the continent.

But the assurances from Mnangagwa and Beijing isn’t enough to quell Masarira’s fears.

“With low exports compared to import bills, how do we service the debt without resorting to barter trade or mortgaging our natural resources, especially diamonds and other minerals that China desperately needs for its industries?” Masarira asked.

Andrew Mambondiyani
Andrew Mambondiyani
contributor
Andrew Mambondiyani is a freelance journalist based in Zimbabwe with more than 10 years of journalism experience. He served as a Knight Science Journalism Fellow at MIT between 2010 and 2011, and in 2008 served as a Middleburry College Environment Journalism Fellow. His journalism has appeared in various local and international publications, including BBC, Thomson Reuters Foundation, Yale E360, IPs, Think Africa Press, SciDev.net, Centrepoint Now, Opendemocracy.net, and The Zimbabwean. He has a special interest in climate change, agriculture, human rights, sustainable development, and the environment in general.
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