Shunned by most international investors for uncertainty and lack of protection of property rights, Zimbabwe has looked to China for investment in key infrastructure projects such as power, telecommunications and construction.
However, experts say China is a shrewd investor and that its investment focus in Africa is guided by resource exploitation opportunities.
“China is a cunning investor and they are all interested in resource extraction in Africa. They are risk takers and are very focused on getting more out of their investment deals,” said a business leader in Zimbabwe.
Yet President Robert Mugabe, who presided over the signing of the 10 investment deals together with Xi at the official State House in Harare last night, showed no concern about China’s investment philosophy. He paid glowing tribute to China for its role in assisting Zimbabwe through investment.
“The task we have at hand is to convert our natural resources into wealth for our people. The other key areas include roads, rail and infrastructure development,” Mugabe said in his address at a colourful banquet in Xi’s honour in Harare.
Zimbabwe’s economy has struggled to grow, with industries and other businesses shutting down and the unemployment rate, estimated at over 80%, continuing to worsen. Analysts are sceptical about Finance Minister Patrick Chinamasa’s projected 2.7% economic growth for 2016.
Although there were no figures announced for Tuesday’s deals, China and Zimbabwe have signed investment agreements for fibre internet roll-out, power generation and construction of a pharmaceuticals warehouse as well as the building of a new parliament building.
Other deals signed include the donation of wildlife conservation equipment, cooperation between state parastatals and taxation modalities. Information gathered by Fin24 shows that the deal to expand the Hwange power plant through units 7 and 8 – which will add an additional 600 MW to the power grid – has a value of about $1.2bn, while the fibre internet deal is worth nearly $100m.
“My visit is about friendship and cooperation. We agree that both countries should make full use of this, to translate our friendship into concrete impetus for mutual benefit,” said Xi.
The Chinese leader, who is accompanied by his wife Peng Liyuang and government officials, departs from Harare on Wednesday morning and will arrive in South Africa after midday. He is expected to hold talks with President Jacob Zuma before co-chairing an economic summit on China-Africa cooperation.