PRESIDENT Robert Mugabe’s ongoing trip to China was hailed as a success before it even started.
The effusive praise singing by China’s president Xi Jinping as Mugabe began his 13th official visit in Beijing, led many to believe that the trip would be the panacea to all Zimbabwe’s problems.
Reports that the president’s delegation had signed nine agreements with China that would open doors for funding for various infrastructure projects are likely to create some excitement back home.
The trip was announced some time ago with various reports suggesting that the government would be seeking a $10 billion bailout from China.
Recent reports have suggested the figure could have gone down to $4 billion as the government feels the pinch to address the liquidity crunch.
Finance minister Patrick Chinamasa was upbeat on Monday when he announced the signing of the nine agreements.
He said some of the agreements had provided funding frameworks for specific projects under the Zimbabwe Agenda for Socioeconomic Transformation – the government’s new economic blueprint.
Chinamasa said the agreements would unlock funding opportunities for the economy and for some this could be the panacea for the recession that Zimbabwe has been grappling with.
However, as Mugabe’s delegation was busy inking the so-called mega deals with China, Reserve Bank of Zimbabwe governor John Mangudya was painting a gloomy picture of the economy. In his maiden monetary policy statement. Mangudya said foreign investment into Zimbabwe plunged 59% to $67 million in the first half of this year.
He said exports, mostly minerals and tobacco, were also down 13% in the first half of the year, to $1,3 billion, compared with the first six months of 2013.
Mangudya’s figures tell us that all is not well in the economy and the Chinese deals may not give us the anecdote for a miraculous recovery. Zimbabwe needs much more than Chinese largesse to turn the corner.
The debts the country would accrue from these deals are toxic on their own as the country is already saddled with a $10 billion foreign debt.
Some of the simple steps the government needs to take is include ensuring that Zimbabwe is open for business not just for Chinese investors, but for everyone with capital. The Chinese deals should not lull us into believing that all our problems have been solved.