Mugabe goes begging

HARARE - President Robert Mugabe was due to dash off to China yesterday to beg for a $4 billion financial rescue package for Zimbabwe to avert an imminent economic disaster that has seen his government fail to finance itself.

The complex deal, wrought in months-long negotiations under the Joint Zimbabwe-China Permanent Commission, is aimed at stabilising Mugabe’s beleaguered regime and strengthen its finances, but it leaves strong doubts about the flouting of tender procedures and the sidelining of the State Procurement Board in the talks.

After days of talks, ministers Patrick Chinamasa (Finance), Simbarashe Mumbengegwi (Foreign Affairs) and Mike Bimha (Industry and Commerce), who travelled as part of an advance delegation to Beijing last Tuesday, finalised measures yesterday to secure a rescue deal that will culminate in Mugabe signing an agreement on economic cooperation this week, building on ties at a time the debt-laden  Zimbabwe is seeking new sources of aid.

“The president is leaving today (Saturday), basically to discuss bilateral relations (with China),” Joey Bimha, the permanent secretary in the ministry of Foreign Affairs  told the Daily News on Sunday.

The talks will centre around finance, industry, commerce, mines and agriculture, he said.

Authoritative sources said Zimbabwe and China  will also sign a deal to finance construction of a power plant in Zimbabwe and that  government was exploring lines of credit with
China as it grapples with economic recession, an unemployment rate above 80 percent and more than $10 billion in foreign debt.

Chinamasa has said he was seeking a “comprehensive” rescue package.

Asked categorically to state if Zimbabwe was seeking a financial rescue package, Bimha said:  “We are seeking cooperation.”

In three trips to China, Chinamasa has been told that Beijing wants to leverage any loan to Zimbabwe with minerals, but he has baulked at this proposal  amid warnings from the World
Bank.

Zimbabwe will be placed under increased surveillance by an enhanced  Chinese presence on the ground, after Beijing ruled out budgetary support.

The Chinese will instead channel the cash through their companies, which will in turn implement various projects across key sectors of the economy.  Zimbabwe will have to deposit
funds to service its debt in a special account to guarantee repayments.

The deal, if it materialises, is being hailed as a step forward for Zimbabwe, but experts warn that Harare will need more help to improve liquidity to the level envisaged in its economic blueprint, ZimAsset.

China is calling Mugabe’s four-day official visit “a symbol of the deepening of bilateral traditional friendship”.

Bimha expressed gratitude for the aid China has offered since Zimbabwe’s independence in 1980, and said there was a meeting of the Joint Zimbabwe-China Permanent Commission underway
yesterday.

“There is a meeting as we are talking,” Bimha said yesterday. 

Lin Lin, Chinese ambassador to Zimbabwe, said on Friday, Mugabe’s trip to China, the 13th trip he has made to Beijing, “will start a new chapter for our bilateral relations”.

The trip could also open up the Chinese markets for struggling Zimbabwean firms.

Mugabe’s visit to China comes at a time when he is increasingly also re-engaging with the West after decade-long differences over policy, including his government’s often-violent seizure of white-owned commercial farms for redistribution to landless blacks and his drive to seize majority stakes in foreign firms.

Lin said China has given Zimbabwe aid amounting to over $1 billion in recent years, and has helped the troubled country with preferential, concessionary and commercial loans.

The loans have bankrolled a $100 million National Defence College just outside Harare, $144 million Harare water project, medical equipment for hospitals, Victoria Falls airport expansion and the Kariba South hydropower expansion.

It has also pumped $100 million into Zimbabwe in grants and interest-free loans over the past three years, according to Lin.

Meanwhile, the International Monetary Fund and the World Bank have withheld fresh support for Zimbabwe since 1999, aggravating the country’s economic crisis.

Mugabe, who has held power since his country’s independence from Britain, denies critics’ accusations that his policies have destroyed Zimbabwe’s economy.

Mugabe is expected to arrived in Beijing today and tour the north eastern provinces before visiting the headquarters of top vehicle makers.

He is to meet Chinese Premier Li Keqiang, and top officials in the Communist Party hierarchy, officials said.

Observers said while this may be the most important deal in Zimbabwe’s  post-election history, there was need for full disclosure and transparency about this aid package to make
sure Mugabe does not mortgage the country to China in exchange for aid.

There are growing fears that Mugabe wants to mortgage the Great Dyke, a rich mining belt that cuts across the country, in exchange for the loans.

Dewa Mavhinga, chairperson of pro-democracy group Crisis in Zimbabwe Coalition, a conglomeration of more than 350 civic society groups, and senior Africa researcher with Human
Rights Watch, said China may be known for a number of cheap commodities in Zimbabwe but certainly its aid packages do not come cheap.

“The question that needs to be asked and answered is: How will Zimbabwe pay back China’s $4 billion loan?” Mavhinga asked.

“This loan is unlikely to resolve Zimbabwe’s deep seated economic problems which are as a result of bad economic governance, corruption and kleptomaniac loot and plunder of our
national resources.

“To revive our economy, Zimbabwe must first get its economic policies and economic governance right, in fact, a true sign of bad economics is the belief that all economic problems can be solved by borrowing.”

Other economic experts said the deal was an “important result”  that averts a  “nightmare scenario.”

While the deal provides time for Zimbabwe to put new crisis measures in place over the coming months, it means the southern African country will struggle for years without economic
growth.

Many economists question whether Zimbabwe can pay off even a reduced debt burden, suggesting the deal may only delay a deeper default by a few months.

Stephen Chan, a professor of world politics at the School of Oriental and African Studies at the University of London, told the Daily News on Sunday that Zimbabwe needs large-scale
budgetary support and a standby budgetary programme, and the Chinese government has enough on its plate politically and economically to feel unable by itself to do that.

Comments (11)

Folks, are you comfortable with the phrase 'White owned farms'? I am not-disturbs my sleep.

shame - 25 August 2014

Under Smith this country was second most prosperous economy in the whole of Africa despite stringent United Nations Trade sanctions from 1965 to 1980. Smith never asked for any foreign investment from anyone. Smith never got any foreign aid from the World Bank or Africa Development bank or from the International Monetary Fund or UK or USA or Canada or Australia or New Zealand or European Union or collect money from Toll Gates. Under Smith there were no DIAMONDS discovered at the time. Blacks in formal employment were exempt from paying income tax and black businesses were exempt from paying corporation taxes as well which Zanu compelled all blacks to pay from 1980. Smith would not trade with any other country other than S Africa and Portugal but managed to make the country the second most prosperous economy in Africa. Burst sewer pipes were attended to promptly. No potholes on the roads. The system by the whites was run on merit alone whereas ours is run on patronage or sycophancy. There were black multi-millionaires in Rhodesia which goes to show that if you were enterprising enough, the sky was the limit. There was never a time when there was no electricity or water. Jobs were in abundance. Everything was cheap. Everyone was paid on time either weekly or monthly without fail. Ian Smith was a class act whether people like it or not. Whether I praise him or not will not change that under him this country was the second most prosperous economy in the whole of Africa. That is a fact which most people find it unpalatable. Now our black government has to go to China to beg for more when they are unable to repay existing debts. Rhodesia had no debts despite the sanctions. Companies are closing down daily. Now Mugabe says we need to build processing industry! Absolutely barmy. I have no idea why these politicians were clamouring to govern when they are clueless. I write as an ordinary citizen nit like a politician seeking support.

Musona - 25 August 2014

They were never, 'white owned farms'. The correct term is 'white occupied land'.

machakachaka - 25 August 2014

@ machakachaka "White occupied land". Did you know 80% of white farmers bought their farms fair and square after 1980, don't come with nonsense.

Ethan - 25 August 2014

Its crystal clear these loans will not better Zimbabwe. The Chinese have been present in the economy of Zimbabwe for years but the situation has been getting worse. without Chinese loans under the GNU the economy improved tremendously. so its questionable the motive behind this begging by Mugabe government. they are not for the people but for themselves. the level of incompetence is appalling even ZUPCo failed to repay Chinese bus loans and the Chinese have taken over the operating of ZUPCO. what about $4billion. someone maybe the opposition needs to inform the nation what Robert is doing to this country.

gwabu - 25 August 2014

@gwabu. I read elsewhere the Chinese are getting 99 year leases on farms, diamond, gold and platinum fields and well as other things, it's very worrying. We are seeing our country being sold before our very eyes.

Ethan - 25 August 2014

Rhodes landed in Southern Africa with only $10 000.00 and went on to develop the The countries of Zimbabwe, South Africa, Zambia, Malawi from that budget. Mugabe has been getting milliins after millions and nothing has developed since 1980. The roads we are using today were built by smith. Most facilities which are in a sorry state today were left by Smith. I wondor were could we have been today if Mugabe was the one in power since the 18th century. Cry the beloved country

Ziziharinanyanga - 25 August 2014

it is sad that even donated money, loans and remitted money will somehow find its way back to europe. What is affecting our country is corruption by our leaders. I wish they got the message that they have an obligation to plan for the next generation. However, that does not justify a wish for colonial days. I think in time we will have people of a different mind set leading the country responsibly. Zambia was once a country of very high corruption practices. Today there seems to be significant changes. Hatifanire kupisa musha nekuda kwekuti maita tsikidzi bodo. Zimbabwe ndeye maZimbabweans.

taurai - 25 August 2014

Taurai,no one ever wishes back the colonial days.But we can't evade the truth that whites did better & what's wrong with us learning from them?Smith was far better&we can learn from him.He did well for his fellow whites,hence their support for his gvt.What's there for a black man to support Mugabe?He even thanked his Chinese friends for the stolen election victory of 2013.The chaotic land reform actually displaced thousands of blacks for his own& ZANU PF heavy weights benefits.He ruined commercial farming, the backbone of our economy. Invasions of commerciaI farms continue&yet Mugabe just watches as he is not personally affected.The Chinese loans will be for his personal gain.What kind of president is he?

KUREMARA KWEPFUNGWA - 26 August 2014

kuremara kwepfungwa, i feel the same pain with you and other zimbabweans affected by the current state that we are in. I accept that things have gotten worse by day. I am praying for change. However, i do not wish for change that brings back the colonial era for two reasons. First, I believe we are equal with whites and that we can rule ourselves reasonably. It has not been the case for the past 15yrs yes but who knows what tomorrow will bring. Second, the white regime was very cruel to blacks such that we do not want them back. They have their own country. They can only come over here on our terms as it is the rule in their own home. Lets continue looking for positive ways of encouraging better prospects in our country. It is my hope that this phase will soon pass.

taurai - 26 August 2014

It is very painful for us and embarrassing to us as a nation that blessed as we are with just about every mineral known to men, we are one of the poorest of citizens the world over. Had we good governance from the time we got independance from the Smith regime, we would by now be vying for the top position economically in Africa. Never mind Nigeria and South Africa because naturally we are a hard working people, complimated with our level of education, they would have been way behind us by now. Internationally we should have been classified with middle income countries like Malaysia, Indonesia, Singapore and Thailand. Yet we find ourselves being grouped up with poor countries like Togo and Malawi with no resources to talk about except maybe fish. Those that believe this 4 billion from the Chinese will translate into any improvements are as stupid as those that believed that 2 million jobs would pop up from nowhere just by voting for ZANU PF.

Dr Know - 26 August 2014

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