Friday, July 03, 2009

(TALKZIMBABWE) Zimbabwe, China sign US$5 billion deal

Zimbabwe, China sign US$5 billion deal
Ralph Nkomo
Fri, 03 Jul 2009 01:16:00 +0000

LOCAL Government, Urban and Rural Development Minister, Ignatius Chombo (left), Finance Minister Tendai Biti, outgoing Chinese Ambassador to Zimbabwe Yuan Nansheng, Higher and Tertiary Education Minister, Stan Mudenge and Industry and Commerce Minister Welshman Ncube (far right) pose in front of one of the 173, 20 tonne containers used to ferry 4 000 tonnes of soya bean seed donated to Government by the Chinese government. The seed was officially handed over by Mr Nansheng to Minister Biti at a function held at Olivine Industries on Tuesday

ZIMBABWE and China have signed a US$5 billion loan deal securing half of the amount the inclusive Government needs in delivering its Short Term Emergency Recovery Programme (Sterp).

The deal becomes the largest deal that has ever been signed between the two countries and is secured on various mining and infrsatructural development rights.

Sources in Harare say Finance minister Tendai Biti and Reserve Bank officials on June 8 signed a Memorandum of Understanding (MoU) with China Exim Bank (CEB) guaranteeing the loan.

"They signed a large package of documents, including those in the mining industry and infrastructure development, in Harare on June 8," says our source in government.

“It became possible owing to the use of the mechanism that we created with the leader of the People’s Republic of China some years ago.”

CEB is the export and credit guarantee agency of the Chinese government in Africa. The bank has played an important role in fostering the rapid expansion of Chinese trade and investment in Africa.

Under the deal Zimbabwe will get US$5 billion from CEB and in return the Chinese get some equity in a US$40 billion platinum concession. The actual size of the stake still remains undisclosed.

The loan will, in line with the Sterp program, be used to boost capacity in agriculture and other key sectors such as mining, tourism, construction and public works.

Prime Minister Morgan Tsvangirai this week announced that Zimbabwe had secured a US$950 million credit lines from the Chinese government. The credit line is separate from the platinum-backed loan.

China also donated 4,000 tonnes of soyabean this week (see picture above). The consignment was handed over to Olivine Industries whcih has entered a vegetable oil processing deal with Government.

The inclusive Government has separately secured about US$3 billion since it came into office in February, mostly from African governments and institutions.

The West has has not been forthcoming with aid preferring to adopt a wait-and-see approach until "certain benchmarks" are achieved by the inclusive Government.

Tsvangirai recently toured Western capitals seeking the easing of sanctions against Zimbabwe and in search of money, but his spokesman James Maridadi said the trip had brought home pledges of a modest US$200 million.

On Tuesday this week he inflated that figure and said US$500 million was raised, saying the breakdown would soon be made public by his office.

The US$5 billion deal has been kept under wraps as underwriters complete the necessary legal paperwork.

China’s trade, investment and aid activities in Africa have been growing rapidly over the past decade.

Chinese aid to Africa totaled $5.75 billion in 2006, and China the world's third largest food aid contributor. Trade between China and Africa has grown tenfold since 1999, reaching $56 billion in 2006.

By September 2006, there were 259 China Exim projects in 36 African countries, 79 percent of which committed to infrastructure development, such as railways (Benguela and Port Sudan), dams (Merowe in Sudan; Bui in Ghana; and Mphanda Nkuwa in Zambia), thermal power plants (Nigeria and Sudan), oil facilities (Nigeria), and copper mines (Congo and Zambia).

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