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ZIMBABWEAN President Robert Mugabe is reportedly looking forward with “great interest” to the planned visit to Zimbabwe by China’s President Xi Jinping early next month.
I am sure most Zimbabweans across the political divide are also looking forward with great interest to the visit, which has already been described by the Zimbabwean media as historical.
I am sure local journalists cannot wait to type their newly-found favourite phrase “mega deals” the moment a deal of any nature or magnitude is announced. The phrase has been used to describe any deal signed by the Zimbabwean government since mid-2014, when President Mugabe reportedly signed “nine mega deals” in China.
One cannot blame Zimbabweans for expressing keen interest in the Chinese president's visit. Having described China as Zimbabwe’s all-weather friend, and even crafting a widely publicised “look East policy,” it was becoming embarrassing that China looked anything but a close friend to the southern African nation.
As much as China has helped Zimbabwe in many spheres in recent times, the country has also done the same in many other African countries, suggesting there is nothing special about its relations with Zimbabwe. The special bond Zimbabwe claims to share with China from the days of the liberation struggle is similar to the bond that country shares with many other African countries.
In his first African tour since becoming China's president on March 14, 2013, Xi Jinping called Tanzania an “old and good friend of China”, adding that the two countries have maintained an “all-weather friendship” and that China cherishes the time-tested bond with Tanzania.
Xi's visit is, however, still worth anticipating as Zimbabwe is desperate for economic lifelines to jumpstart its economy. As Mugabe correctly puts it, Zimbabwe will use the rare opportunity to discuss “some of the projects and programmes we would want China to assist us in undertaking”.
Judging from previous visits to other African countries, Xi’s visit could be the medicine the doctor ordered for the ailing Zimbabwean economy. The Chinese are never shy to pledge huge amounts to hosting nations.
In 2008, China pledged $9bn to the Democratic Republic of Congo (DRC) for access to the latter's huge mineral reserves. In 2010, Ghana's then president John Atta Mills signed credit framework agreements in China, with pledges totalling $13bn.
In the same year, China pledged exactly the same amount to Mozambique for investments in tourism, mining and energy. In 2013, China pledged $5bn to Kenya for energy projects and rail lines. Just recently China's Vice-Minister of Commerce Zhang Xiangchen pledged $50bn towards industrialisation projects in South Africa and the rest of the African continent.
No wonder President Mugabe is elated ahead of Xi Jinping’s visit.
Will the deals be a win-win situation?
Is Xi the economic messiah that Zimbabwe has been waiting for? This should be a burning question for many Zimbabweans who have endured years of economic decline.
One thing Zimbabweans have to understand though is that some of the huge funds that have been announced by Xi and his predecessor Hu Jintao take time to come into fruition. For example, the $10bn pledge for a port project in Bagamoyo, Tanzania made in 2013 only came to fruition this year, two years after the pledge.
Another example is the $8bn pledge to modernise Nigeria's railways, which only materialised in 2014, almost a decade after the initial promise.
The other important aspect that will get China to really open its purse after making promises is the viability and profitability of the projects. Zimbabwe will simply have to prove that China and Chinese businesses will get a good return on their investments.
It would be foolhardy to think China will just pour in its funds when the viability of the projects is questionable. If Zimbabwe does not put forward a convincing investment case, the “deals” - even if they are announced - will remain a pipe dream.
The bungled Ziscosteel deal in which an Indian company Essar wanted to invest $750m and take over the defunct state-owned company is a good example of a deal that did not materialise, despite being announced.
Another important aspect to consider is whether China’s deals will be in line with Mugabe’s vision of value addition and beneficiation. History tells us that most investments China has supported in Africa are in the extractive sector of the economy.
According to author Howard French, an American journalist for the New York Times who has lived and worked in Africa, China is mostly interested in securing raw materials for its industries back home. This is in contrast to what Mugabe has been advocating for in recent past. Since his appointment as chairperson of both the Southern African Development Community and the African Union, the president has been preaching the gospel of value addition and beneficiation.
Beneficiation: beggars can't be choosers
Mugabe promised to use his period as chair to unlock value through the local beneficiation of the bountiful natural resources with which the region is endowed. Will China agree to a deal where minerals such as platinum or gold are mined and processed in Zimbabwe? Beggars can't be choosers and Zimbabwe might have to swallow its pride.
It will also be interesting to see how the potential Chinese deals will be implemented. The big question is whether there will be employment benefits for local Zimbabweans.
The deals would be of limited benefit for the jobless masses if the construction of roads, rails and airports is going to be done by Chinese companies employing Chinese nationals. It has been reported on several occasions that while the African governments choose where the infrastructure is needed, they have to pay back the money in natural resources and are practically forced to give employment to thousands of Chinese instead of Africans.
Zimbabweans can only hope that China will not demand such terms, as the government does not have the liberty to say no.
There are many pitfalls desperate Zimbabwe risks falling into, but I hope Mugabe will find time to tell the Chinese president to ask his countrymen to stop dumping cheap products on Zimbabwean markets. This has forced many companies out of business, as they cannot afford to sell goods at prices listed by Chinese sellers.
I also pray that Zimbabwe will not end up with punitive lending agreements, largest interest rates, and the smallest grace period.
* Malcom Sharara is Fin24’s correspondent in Zimbabwe. Views expressed are his own.
