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Ever since Mugabe launched his ZimAsset economic recovery plan as part of his 2013 Zanu PF elections manifesto he has struggled to get donors to finance the plan. Ever since the party successfully rigged the July 2013 national elections Zanu PF has been on a charm offensive to re-engage the West to get them to fund his plan but to no avail.
Mugabe has begged and grovelled to the Chinese but they too have refused to fund his plan. But all of a sudden there are reports that the Chinese have now changed their minds and they will bankroll ZimAsset!
“What is very encouraging from the Chinese is that they have put no limit on how much they will want to pour into the projects,” reported The Sunday Mail quoting a Zimbabwe Government official.”What came out of the high-level talks is that the level of seriousness in implementing the deals has now gone a gear up. This is why the subject of financing as well as immediate implementation was topical during those talks.”
There is no such thing as a free lunch, especially from the tight fisted and shrewd Chinese! So what has made the Chinese change their minds on financing ZimAsset?
Zimbabwe’s economy has been in serious economic trouble for years and the solution was glaringly obvious; the nation needed to finally bite the bullet and end endemic gross mismanagement and rampant corruption and scrap the obnoxious indigenisation laws that had forced Foreign Direct Investment to dry up. Instead of biting the bullet and deal with the cancers killing the national economy Mugabe decided to throw lots and lots of money, $27 billion, with his 2013 ZimAsset recovery plan.
$27 billion; that is nearly three times the nation’s national $10 billion debt, which would have been even larger if all credit-lines had not been cut because Zimbabwe was failing to service existing loans. Mugabe was hoping the credit-lines will be renewed allowing him to borrow and spend his way into economic recovery and prosperity.
After the rigged 2013 elections Mugabe’s regime went on a charm offensive to win the West back into bankrolling his ZimAsset plan. He failed to fool anyone; not even the Chinese were willing to fund the plan.
After a year and a half of begging and grovelling the Chinese and Russians finally signed what Mugabe announce as “mega deals” at the time. To start with the deals were for projects and not for the budgetary support Mugabe was seeking. Second, the funding was only to be released after Zimbabwe had fulfilled certain so none of the projects ever took off. The Chinese demanded that Zimbabwe was to pay all outstanding payments on its existing $1.5 billion debt first before China release funding on the new deals. The Chinese knew Zimbabwe is stone broke and one could say the cheques signed for the mega deals were undated, unsigned and not worth the paper they were written on.
So this announcement that work on the mega deals projects with the Chinese will start before the end of the year and they have not only signed and dated the cheque but have left Mugabe to fill in the amount too is a bolt out of the blue! What has changed to justify this volte-face by the Chinese?
Mugabe has certainly not done anything to end the corruption and all the other cancers killing the national economy. The only way for him to end the corrupt is by ending the political patronage system he has instituted all these years to reward party loyalties; with the country’s economy in total meltdown and everyone feeling the ill effects of the worsening economic situation Mugabe knows firing the corrupt and incompetent party loyalists now would be him committing political suicide.
Zimbabwe was failing to service its debt at $10 billion how on earth is it going to do so with the debt increased four-fold but with no significant economic recovery. Surely the Chinese are not extending new loans to Harare and expecting nothing!
“Innovative mechanisms will be used in implementing the deals. For example, you can say to the contractor, ‘Take a certain percentage of equity for the loan’s duration and then you can return this equity when the tenure of the loan is done’.” Deputy Chief Secretary in the Office of the President and Cabinet Colonel (Retired) Christian Katsande told The Sunday Mail. Well that would go a long way to explain the Chinese’s change of heart!
The “contractor” in all these mega projects with China is a Chinese company employing Chinese workers down to the man pushing the wheelbarrow. So if the usual waste due to corruption, etc. pushed the project costs to ten times or more China is not bothered. They know the Chinese worker pushing the wheelbarrow will be paid rock-star wages, one. Two, the greater the project cost the great the equity the Chinese will own in Zimbabwe!
Since the Chinese are only funding bankable projects guaranteed to generate lots of profit they will cream-off the profits as the new owners for many, many years to come.
There is one other reason why the Chinese have decided to Fund Mugabe’s ZimAsset plan. The Chinese have been racking in billions of dollars every month from grand looting and plunder of Zimbabwe’s resources especially in Marange and Chiadzwa. No doubt the Chinese are aware that Zanu PF hold on power has been slipping fast these last few weeks with the worsening economic situation.
By agreeing to fund Mugabe’s ZimAsset the Chinese are bolstering Zanu PF’s political standing by creating the impression that the regime will after all deliver on its promise of economic recovery and thus extend the regime’s stay in power. As long as Zanu PF remains in power the Chinese know grand looting and plunder will continue.
So the decision by the Chinese to fund Mugabe’s ZimAsset plan although they know it is doomed to fail makes a lot of sense. They are using some the billions of dollars earned from the looting and plunder of Zimbabwe’s resources going on to fund Mugabe’s hare-brain plan to buy more time to loot. They are allowing Mugabe to be as wasteful as he please knowing this will increase China’s equity value of Zimbabwe’s bankable assets.
Zimbabwe will not be a colon of China but its economic slave. After decades of robbing Zimbabwe blind through looting and plunder of our resources; China is set to continue with the looting or be it by controlling and owning the nation’s bankable assets, bought using our own looted wealth! by Wilbert Mukori