‘China snubbing Zim’


HARARE – Insurance giant, Old Mutual, has become the latest local prominent voice to observe that Zimbabwe’s supposed all-weather friend, China, is treading carefully about investing more in Zimbabwe, due to the country’s poor property rights record.

Old Mutual’s observations came in the wake of China injecting nearly $20 billion into Sub-Saharan Africa’s economy in 2015 alone, with Zimbabwe receiving only $500 million of that investment — translating to 2,6 percent of the Asian giant’s total investment in the region, according to World Bank data.

“In order for Zimbabwe to improve its economic fortunes, a number of excessive legislation governing business operations and red tape need to be simplified.

“The country has had a bad reputation … and will need to seriously overturn this deficiency if it hopes to attract the sort of investment that its neighbours have been able to attract,” Old Mutual said in its latest quarterly review.

The prognosis will come as a major blow to President Robert Mugabe and his Zanu PF government, who have been pinning their hopes on China helping Zimbabwe to revive its dying economy.

The International Monetary Fund expects the local economy to grow by a paltry 1,5 percent this year due to a deadly combination of mismanagement, policy inadequacies and drought.

Although China was initially very enthusiastic about funding Zimbabwe’s economic blueprint, ZimAsset, the high-profile “mega deals” that it signed two years ago have failed to materialise thus far, with Beijing now seemingly more focused on stemming its own economic challenges.

A senior government official who spoke to the Daily News recently said while the Chinese were still very keen on doing business with Zimbabwe it was also wary of the deadly factional and succession wars devouring Zanu PF.

“If you look closely you will see that several feasibility studies have been started between China and Zimbabwe, including studies into coal exploration and a 600MW thermal station in Sibugwe, as well as the dualisation of the Beitbridge-Harare, Harare-Nyamapanda, Harare-Chirundu and Mutare-Harare highways.

“But the Chinese borne of contention at the moment is whether their investments would be secure after the old man is gone, considering that there is no clear succession plan in place. Until we sort that issue, it would be difficult for these good projects to take off,” the official said.


Other experts say a slowdown in China’s growth rates, as well as scepticism over whether Zimbabwe can repay previous loans, has crept into the finalisation of the mega deals.

On its part, Old mutual noted that the Zanu PF government must do more to attract foreign direct investment in the manufacturing sector, to allow the country to add value to its predominately raw product exports.

“Foreign investors require comfort in the security of their investment and policy consistency in the environment in which they operate. Zimbabwe would benefit by eradicating corruption, improving its ease of doing business requirements, policy consistency and respecting property rights.

“Of growing concern has been the growth in public sector debt through the continued issuance of treasury bills by government. In the absence of a public auction system, the exact amount of the debt attributed to treasury instruments alone is difficult to ascertain,” it said. Information at hand shows that government’s net debt ballooned from $0,5 billion in January 2015 to $1,2 billion by August 2015 against shrinking tax revenue collections.

Economic experts said this has increased concerns over the default risk of these treasury instruments and they are currently being assumed by banks at significant discounts from parties holding these instruments that are desperate for liquidity.

“In the absence of foreign direct investment or debt re-negotiations from external financiers these instruments are most likely to be rolled over by government to avoid default on the more significant maturities,” Old Mutual added.

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