Zimbabwe in bid for more China business

By Benjamin Robertson

Zimbabwe wants to upgrade its terms of business with China in a bid to attract more inward investment and tourist dollars into the country as part of a wider attempt to revive its economy, said the country’s tourism minister.

Issues under discussion include the establishment of special economic zones, faster visa processing, and mutual recognition of product quality control standards, said Walter Mzembi, the Zimbabwean Minister of Tourism.

“The memorandum of understanding is going to look at travel and tourism, to include investment and give preferential treatment [to Chinese investors],” he said. The negotiations are expected to be completed by year’s end.

Chinese investors will enjoy a five year waiver of corporate taxes and removal of import duties on capital goods and vehicles for the tourism industry under the proposals. “We have a problem in understanding what you want us to do to make you feel comfortable when you visit Zimbabwe,” the minister said.

Zimbabwe, whose economy is slowing down due to shortages of capital and foreign investment, requires US$27 billion – more than twice the size of its economy – to fund an ambitious five-year plan to improve basic services and rebuild the country.

Shunned by Western governments, who have long been critical of strongman President Robert Mugabe, and funding institutions such as the World Bank because of its failure to repay more than US$10 billion in debt, Harare has long looked to China for financial help.

Mzembi spoke to the South China Morning Post on the sidelines of the recently held World Travel and Tourism Council’s annual summit in Hainan, China, and was cautious about how many work visas they would issue.

“It will be restricted to speciality skills. We don’t want Chinese to come and be bricklayers or to be waiters in Zimbabwe,” he said.

There are 50,000 Chinese living in Zimbabwe and more Chinese restaurants than any other foreign cuisine, said Mzembi.

This week it was reported that China wants Zimbabwe to use mineral export earnings as a guarantee for a possible financial package.

Han Bing, economic and commercial counsellor at the Chinese embassy in Harare, told online news agency The Source in an interview that Export and Import (Exim) Bank of China and officials from Zimbabwe’s ministry of finance were working on a possible financial deal.

“We are discussing whether we can take proceeds of sales for some minerals as collateral for the loans,” said Han.

“The [Exim] bank and the team from the ministry of finance are now working at a technical level on how they can set up such a mechanism, how much the collateral would be and how much in loans [the Zimbabwe government] can get.”

Han did not say how much China was willing to lend to Zimbabwe. He added that Chinese loans to Zimbabwe amounted to US$1.5 billion over the last three years.

These would include a US$700 million loan deal signed in 2011, the biggest such package to date and another US$320 million agreed with Exim Bank of China last November to expand Zimbabwe’s Kariba hydro-power plant by 300 MW.

Zimbabwe is teaming up with Zambia to create a Schengen type tourist visa that allows visitors to explore both countries on a single visa, said Mzembi. South China Morning Post