Mugabe to visit China, seek aid package
August 19, 2014, 4:04 am

Mugabe is seeking from China what some analysts have called a “rescue package” for Zimbabwe’s economy [Xinhua]

Mugabe’s four-day visit comes on the invitation of Chinese President Xi Jinping.

Mugabe, 90, who newly assumed the chairmanship of the 15-state Southern African Development Community (SADC), is expected to urge Beijing to increase its development investments in the region.

But the crux of his visit is likely to center around a $4-billion aid package that Harare hopes Beijing can provide to help reinvigorate an economy that has been debilitated by Western sanctions and embargoes.

Experts say that the Zimbabwean economy is teetering on the verge of collapse.

Zimbabwe’s sovereign currency ceased to exist in February 2009 marking a severe economic crisis, replaced by a multi-currency financial system using the US dollar, Botswana pula and the South African rand.

Zimbabwe has been without balance of payment support since 1999 after the International Monetary Fund and donors withdrew financial aid over policy differences.

The EU has been gradually easing its sanctions against Zimbabwe as part of a strategy to encourage political reform after 33 years of Mugabe’s rule.

Chinese investments

Beijing and Harare  have long maintained strong ties; China is a major foreign investor in the Zimbabwean economy.

According to Zimbabwe’s investment promotion agency, China in 2012 emerged as Zimbabwe’s biggest foreign investor with bilateral trade rising to more than $1 billion.

China accounted for 74 per cent of the $134 million of foreign direct investment (FDI) flowing into the country in 2013.

Mugabe has repeatedly said that China will play a bigger role in developing Zimbabwean infrastructure, especially the water and energy sectors.

Sino Hydro and China Machinery and Equipment Company had won tenders to expand Kariba and Hwange Power Stations, each expected to add an additional 900 megawatts to the national grid.

Both projects are supported by a Chinese loan of $144 million.

Chinese businesses are also investing tens of millions of dollars in the manufacturing and mining sectors.

Chinese companies are also involved in eight cooperation programs – among them enhancing education infrastructure by building new schools – that Beijing promised to undertake in Zimbabwe under the framework of the Forum on China-Africa Cooperation (FOCAC).

Some of the projects have already been completed including an agricultural demonstration center and a friendship hospital.

Launched in 2000 by China and African countries, FOCAC has become an integral platform to enhance trade and cooperation between the two sides.

Source: Agencies