Details and value of agreements between Zimbabwe and China- Mthuli Ncube

The circular chamber in Zimbabwe’s new parliament is a design replicated across the continent without input from local architects. Photo: Xinhua

Zimbabwe has borrowed only US$2.7 billion from China since independence in 1980 but the outstanding date as at 22 August 2022 was only US$1.8 billion, Finance Minister Mthuli Ncube told Parliament.

He also gave a detailed breakdown of all the agreements that Zimbabwe had entered into with China.

A recent media report which was widely circulated said Zimbabwe owed China US$13 billion which is actually its total foreign debt.

Some critics including former Finance Minister Tendai Biti have queried the figure saying Zimbabwe’s total debt is closer to US$30 billion.

Biti also queried the outstanding debt saying Ncube had said the government had paid back only US$152 million which would leave the debt at US$2.6 billion.

Below is Ncube’s detailed breakdown of the agreements between Zimbabwe and China.

HON MARKHAM asked the Minister of Finance and Economic Development to provide details and the value of the agreements made with the Government of China including further information on the following:

  1. a) grants received;
  2. b) loans or any other borrowings;
  3. c) joint ventures of Public Private Partnerships (PPPs);
  4. d) the exports and natural based resources in the country, part of the agreements; and
  5. e) the investment incentives granted to each project, assistance received and investment made by the Government of China.

THE MINISTER OF FINANCE AND ECONOMIC DEVELOPMENT (HON. PROF. M. NCUBE):   I want to thank the Hon. Member for that question. In response I want to start with the grants that Government has received from China.

New Parliament Building

The People’s Republic of China availed a grant to the tune of US$145 million for the construction of the new Parliament Building in Mt. Hampden. The project began in December 2018 and was completed in June 2022 and has a capacity of 400 seats for the National Assembly Members, 150 seats for the Senate Chamber and extra facilities for conferencing, 15 committee rooms and space for office staff and parking.

National Pharmaceutical Warehouse

In addition, the People’s Republic of China set aside approximately US$24 million for the construction of the National Pharmaceutical Warehouse in Harare which was also completed in June 2022 with the warehouse set to hold approximately 10 000 pellets of medicine.

500 Boreholes

To help ease the water crises, the People’s Republic of China funded the construction of 500 boreholes in Masvingo and Matabeleland  provinces.

COVID-19 Mitigation Assistance

To mitigate the impact of COVID 19 pandemic, the Chinese Government renovated and upgraded Zimbabwe’s main isolation centre at Wilkins Hospital and donated 2 000 000 surgical masks, 90 000 test kits, 137 ventilators and oxygenators, 152 500 protective suits, 560 000 protective gowns, 500 000 syringes, and 1 900 000 doses of vaccines.

Also a 10 member team of medical experts from China were brought in with a consignment of medical supplies including ventilators, nucleic acid testing kits, face masks and medical protective suits.

Chinese Aid – Cyclone Idai

The People’s Republic of China availed US$800 000 emergency humanitarian assistance to the people affected by Clycone Idai as well as rehabilitation of critical infrastructure damaged by Cyclone Idai. The Embassy of the People’s Republic of China in Zimbabwe signed an agreement with the local UNDP Office to provide roofing materials to community housing and selected health and educational facilities in Chimanimani and Chipinge.

Furthermore, China led the rehabilitation and recovery programme in areas that were ravaged by Cyclone Idai by tasking six Chinese companies operating locally to undertake the repair of roads and power infrastructure, drill boreholes, build houses and communication networks.

Since 1980, Zimbabwe contracted loans from China amounting to approximately US$2.7 billion. I have a schedule of contracted loans but let me read them through. For example:

  • There is IDC Phase 1 loan which is US$14.6 million which was signed on 8 May 1997.
  • There is IDC Phase 2, US$7 million signed on 19th January, 2000.
  • There is DDF equipment project of US$8.6 billion signed on 23rd February, 2001.

All these loans are coming through the China-Exim Bank which is owned by the People’s Republic of China.

  • There is Sinosure, ZISCO Steel facility of US$54.9 million signed on 15th August, 2012.
  • There is agriculture equipment loan of US$29.2 million signed on 30th October, 2006.
  • There is also an additional agricultural project loan signed on 22nd February, 2008 amounting to US$37.6 million.
  • There is NetOne National Mobile Broadband project loan facility of US$68 million signed on 26th June, 2019.

All that we have raised was extended through the China-Exim Bank.

  • I now turn to the National Defence Phase 2 facility, through the China Development Bank signed in 1985 on 20th July. That was US$6.2 million.
  • Then National Defence Project again Phase 3, through the China Development Bank signed in 1986 on 22nd December, that is US$7.7 million.
  • There is a US$200 million farm mechanisation equipment facility signed on 13th October, 2006, through China-Exim Bank.
  • There is NetOne project as well through China-Exim Bank signed on 1st June, 2010, that is US$41.8 million.
  • There is National Defence College facility of US$98.7 million signed on 21 March, 2011, through China-Exim Bank.
  • There is the Victoria Falls International Airport facility of US$149.9 million signed on 5th April, 2012.
  • There is NetOne Phase 2 project, through China-Exim Bank signed on 25th August, 2014 and that is for US$198.8 million.
  • There is ZPC Kariba South Hydro project of US$390.5 million signed on 11th November, 2013.
  • There is TelOne Backbone network again through China-Exim bank signed on 1st December, 2015. This amounted to US$98.6 million.
  • There is Harare International Airport facility of US$152.8 million signed on 4th April, 2018, through China-Exim Bank as well.
  • Then Hwange 7 and 8 expansion facility of about a billion, US$997.7 million signed on 1st December, 2015 again through China-Exim Bank.
  • There is Sinosure Medical equipment project of about US$90 million signed on 21st March, 2011, through China-Exim Bank.
  • Finally, the Sinosure City of Harare facility of US$140.8 million signed on 21st March 2011, again through China-Exim Bank. If we add all those numbers, they amount to US$2.722.4 billion.

Madam Speaker Ma’am, out of the loans that I have mentioned, US$152 million worth of loans have since matured and are fully paid up.  I have got a second schedule which shows loans that are fully paid up.

The outstanding debt to China as at August, 2022 amount to US$1.768 billion.  What we will do here, again it means what is in Table 2, if we remove that, the remainder is US$1.768 billion.

In Table 2:

  • We have IDC Phase 1 amounting to US$14.6 million signed on 8th August, 1997, through China-Exim Bank.
  • There is IDC Phase 2 signed on 19th January, 2000 amounting to US$7 million, through China-Exim Bank.
  • We have DDF Equipment project of US$8.6 million signed on 23rd February, 2001 again from China-Exim Bank.
  • There is Sinosure-M of-ZISCO Steel amounting to US$54.8 million signed on 15th August, 2012, from China-Exim Bank.
  • There is Agriculture-Mechanisation Equipment and Implements Project 1 worth US$29.2 million signed on 13th October, 2006 from China-Exim Bank.
  • There is the Equipment and Implements Project 2 worth US$37. 6 million signed on 22nd February, 2008 again through China-Exim Bank.

The outstanding debt to China stood at US$1.768 billion as at 22 August, 2022.

I now turn to category C of the question from Hon. Markham, regarding the private-public-partnerships (PPPs).  The joint venture agreements processed through ZIDA are as follows: Here again I am focusing on China PPPs, I am assuming the question was only focusing on China.

  1. The first one is the Mhangura Dumps PPP, focusing on copper production. It is worth US$10 million.  It was signed between ZMDC and Zhi Jui Mining Resource Private Limited.  This is a five year contract mining arrangement where ZMDC is engaging Zhi Jui Mining Resource for treatment of copper dumps at Mhangura.   It is a five-year contract.  It was signed in June, 2021.
  2. The second one is a partnership between ZMDC Sim See and Honghua International for the resuscitation of Angwa Shaft mine and processing of copper dump at Chidzikwe. This arrangement is worth US$20.2 million.  It is a 10-year arrangement and the contract was signed in September, 2021.
  3. The last one is a US$66.6 million project which is a partnership between Dinson Iron and Steel Company (DISCO) for the construction of 100 km electricity power line from Sherwood to Manhize. It is a US$66.6 partnership between DISCO and ZETDC, a subsidiary of ZESA holdings.  That will be for the construction of a 100 km power line from Sherwood to Manhize and that will include a substation.  It is a five-year arrangement and the project has just been approved by Cabinet.  The contract has been signed.  It is paving way for the project to commence.   This ends my report on the PPPs.

I now turn to the last section of the question from Hon. Markham pertaining to the export and national base resources, including those that are enshrined in agreements.  Government contracted a US$200 loan in October, 2006 for the farm mechanisation equipment.  The loan was collateralised with mining rights to the 26 million ounces of platinum resources in Selous which were owned by Government through the Zimbabwe Mining Development (ZMDC).

The loan is currently in arrears amounting to US$172 million.  This was to be implemented following the fulfilling of certain conditions, which included validation of the resources that were used as security and determination of the amount of the resources according to internationally accepted funders and valuation funders.  I thank you.

HON. MARKHAM: Thank you Madam Speaker.  I would like to thank the Minister for his answer.  I just need clarity on one point.  The issue of the power line, the joint venture.  The power line from Sherwood to Mvuma, confirm that joint venture is only for the power line and not for the mine?  I thank you.

HON. PROF. M. NCUBE: I thank Hon. Markham for really giving us the opportunity to explain a lot of things.  I thank him for his detailed question.  Certainly, the joint venture is just about the power line. What is really going on is that ZESA was unable to make the necessary investment on the 100km evacuation power line.  So the partner who is vested in the mine made an offer to finance the power line through a joint venture arrangement so as to get power to operate the mine and produce the carbon steel.  That is the arrangement but that JV is only on the development or investment on the power line.  I thank you.

HON. BITI:  I have got two questions to the esteemed Minister.  You said that the amounts we owe to China are about US$1.7b but your mathematics is not adding up because you said total indebtedness to China was US$2.7b and you have only paid US$152m.  So if you subtract US$152m from US$2.7b, it does not give you US$1.7b but it is about 2.6b.

My substantive question however pertains to the loan you referred to of 2006 which was for US$200m.  So, Government of Zimbabwe borrowed US$200m from China to purchase farm mechanisation equipment but you said this loan was collateralised by 26m ounces of platinum.  If you do rough mathematics, assuming the price of platinum for an ounce is US$2000, you are talking of US$52b for the 26m ounces.  How is it possible that the Government can borrow US$200m from China and give an asset which in gross terms is US$52b?

HON. PROF. M. NCUBE:  This arrangement was struck way back in October 2006, I think before the buoyant prices that you see in the PGM sector were available for us to enjoy.  So, I think in a sense, he is requesting that some of these arrangements should be looked into given the high prices that are currently out there.   Certainly, for me as the Finance Minister is something I would want to look at closely and see how best this can be structured so that a good will loan from China is dealt with and serviced properly on the back of a properly valued asset.  That is what I said at the end that this arrangement is subject to proper resource evaluation and the current prices that he mentioned matter.  We will look into it to ensure that the lender is dealt with fairly for their good gesture while the debtor, who is ourselves, is adequately treated the right way in this regard.  I thank you.

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