Mugabe clinches Chinese financing for infrastructure

HARARE, Tuesday
Zimbabwe President Robert Mugabe’s delegation in China has inked nine agreements that will see the Asian economic giant bankrolling infrastructure projects in an effort to turn the fortunes of the struggling African country.

President Mugabe began his five-day official visit to China on Monday where he was hailed as a renowned African leader and "old friend" by China’s President Xi Jinping.

(Read: China’s Xi hails Mugabe as renowned leader, friend)
Finance minister Patrick Chinamasa did not reveal the monetary value of the agreements but said funding frameworks had been agreed to specific projects.

He said the projects were aligned to a new economic blue print — the Zimbabwe Agenda for Sustainable Socio-Economic Transformation — which authorities say require $10 billion to implement.

Mr Chinamasa said the security for the loans would be based on income from the projects and not on Zimbabwe’s mineral resources.

“No country sets aside a lump-sum payment for no specific projects,” he said. “Projects must demonstrate their ability to pay for themselves.

“You will not come to China to ask for money to invest in a project that won’t pay for itself. That would make no economic sense.

“We have signed agreements which provide securitisation framework under which projects in infrastructural and productive sectors can be funded.”

Zimbabwe has been unable to secure loans from multilateral lenders such as the International Monetary Fund and the World Bank because of its failure to repay.

$10 BILLION INTERNATIONAL DEBT

The country is saddled with an international debt of $10 billion, which is seen as a major stumbling block to economic recovery.

Mr Chinamasa said one of the agreements they signed was with the China Exim Bank, which would open up new sources of funding.

“The agreements with the China Exim Bank puts into place a framework under which we can secure fund for projects in the productive and infrastructural sectors on a case by case basis that also puts into place securitisation framework on the basis of which we can then submit projects for funding,” he said. “But that funding will only come from China Exim Bank.

“The agreement with the China Export and Credit Insurance Corporation is also providing securitisation framework for infrastructure and productive projects that can be funded by both the State and non-State financial institutions,” he added.

Zimbabwe has been seeking closer ties with Asian countries under its so-called Look East Policy after the West slapped sanctions on President Mugabe and his inner circle in 2002 following a disputed presidential election.