Capital Injection

　　Chinese president’s visit results in $1-billion soft loan to kickstart Zimbabwe’s economic recovery

　　It was a long time coming， but Chinese President Xi Jinping’s visit to Zimbabwe was well worth the wait， with over $1 billion earmarked for the southern African nation’s energy and telecommunication sectors to kickstart its economic recovery.

　　Both Xi and his Zimbabwean host， President Robert Mugabe， had set the stage， ahead of the two-day state visit on December 1-2，2015， with statements which underlined the significance of the event - the first by a Chinese head of state since then Chinese President Jiang Zemin’s trip in 1996.

　　“We will work with Zimbabwe and all other friendly African nations to pave a broader and more solid road of mutual benefit and common development for China and Africa，” Xi said in his statement， which was widely quoted in the Zimbabwean media ahead of his visit. “Zimbabwe is making vigorous efforts to promote the Zimbabwe Agenda for Sustainable Socio-economic Transformation and achieve economic independence and self-reliant sustainable development.”

　　For his part， Mugabe said， “Our friendship is now much more than that [mere friendship] - there being economic agreements where China will assist Zimbabwe to develop economically.”

　　Zimbabwe’s economy has been hit hard by a crippling liquidity crunch， energy and power shortages， and closure of industries， which has spawned high unemployment. The Zimbabwe Congress of Trade Unions estimates the unemployment rate to be more than 85 percent. Zimbabwe had been seeking more than just friendship from its long-standing， “all-weather friend” China， that had provided support for the anti-colonial struggle that culminated in independence from British rule 35 years ago in 1980.

　　And Xi’s visit delivered just that.

　　The biggest chunk of the loan from China will go into refurbishment and expansion of the Hwange Thermal Power Station in Zimbabwe’s Matabeleland North Province to boost power generation， which is vital to the resuscitation of industries.

　　In a press statement， Zimbabwe’s Finance Minister Patrick Chinamasa confirmed the signing of this and other agreements on December 2， 2015. Chinamasa said the Export-Import Bank of China (China Exim Bank) will provide concessionary funding for the engineering， procurement and construction of the Hwange power station expansion project and for upgrading TelOne， the state-owned provider of fixed telephone line service.

　　Chinamasa said with respect to Hwange， China Exim Bank will provide a soft loan of $999.7 million at a concessionary rate of 2 percent interest per annum to be repaid over 20 years. On completion of the project， 600 MW generating capacity will be added to Zimbabwe’s national electricity grid， which will help significantly reduce the power deficit in the country. Zimbabwe is currently said to have about 1，000 MW in its generating capacity against a demand of 2，200 MW. This has resulted in extensive power blackouts countrywide.

　　The minister also said a loan of $98.6 million， at the same concessionary rate， will be extended to finance TelOne’s backbone network and broadband project. The loans will take effect in the first half of 2016.

　　And it was not all about loans， as China also awarded the Zimbabwean Government a $62.4-million grant for the construction of a new parliament building and a pharmaceutical warehouse. The current parliament house has become too small to accommodate the over 300 legislators， up from less than 40 during the pre-independence days.

　　Other deals include agreements on aviation and infrastructure development. The leaders also consented to facilitate cooperation on tax administration between their two countries.

　　Xi’s visit and the signing of the agreements bring to a successful conclusion efforts to secure funding to support Zimbabwe’s recovery projects in various sectors. The efforts had begun with Mugabe and Chinamasa’s visit to China in 2014.

　　By Herbert Moyo