Chinese investment up +5,000 percent

Martin Kadzere Harare Bureau
CHINESE investment in Zimbabwe rose by more than 5,000 percent in the past five years, with the country now among Africa’s largest recipient of FDI from the world’s second-largest economy.This is according to statistics from the Chinese Embassy in Harare.

Annual FDI from China increased from $11,2 million in 2009 to $602 million last year as Chinese investors largely focused on mining, agriculture and manufacturing.

Cumulatively, Chinese companies invested $1,3 billion over the past five years.

Zimbabwe’s portion of Chinese investment into Africa increased from just 0,8 percent of $1,43 billion five years ago to 17,2 percent of $3,5 billion last year.

This made Zimbabwe the top recipient of China’s investment in 2013, said the embassy.

Bilateral trade in 2013 was $1,1 billion and favoured Zimbabwe, a 26 percent growth from $874 million in 2011.

China’s imports were $688 million while Zimbabwe’s imports from the Asian country were $414 million.

In 2012, trade between the two countries was $1 billion with China’s imports at $585 million and Zimbabwe’s imports at $430 million.

In January, the Reserve Bank of Zimbabwe widened the foreign currency basket to include four more, including the Chinese yuan, in the wake growing trade and investment between the two.

Zimbabwe adopted a multi-currency regime of South Africa’s rand, United States dollar, the British pound and Botswana’s pula in January 2009, with the greenback dominating transactions.

It is the use of the US dollar that  has attracted businesspersons to  Zimbabwe, who see it as an easy source of the currency.
Economic analysts say the increase in Chinese FDI is “refreshing and encouraging”.

“However, concerns on Chinese FDIs rest on how they are utilised,” said one  analyst.  “Most of these investments are directed towards infrastructure development such as water, hospitals, airports and education. In these areas, the FDIs from China for the past years have not been seen in monetary terms but rather a ‘donation of   structures and buildings’ with the money staying in China as all the materials are literally coming from that country and to some extent even labourers such as drivers.

“Yes half a loaf is better than nothing but if we want to realise the potential benefits of these foreign direct investments there must be a minimum local content required by law in investments which goes to infrastructure.

“Otherwise, we will continue to see a surge in foreign direct investment without improvements in macro-economic fundamentals such as improvement in liquidity and employment.”

Another economic analyst, Joseph Sagwati, expressed concern over the increased number of retailers from China, saying “any investor who comes with a foresight on trading should be treated as a further hole in our economy as this would accelerate the wiping off of the scarce foreign currency”.

There is anecdotal evidence that Chinese businesspersons transfer huge amounts of money back to their homeland almost daily.

China said it will continue exploring trade and investment opportunities in Zimbabwe particularly in areas on minerals beneficiation, infrastructure and manufacturing.

“Agriculture production and processing, mining deep processing products and manufacturing components (are) areas we could search more co-operation and trade opportunities.

“The Chinese government and Chinese companies will introduce the new technology to Zimbabwe’s mineral industries and work together in deep processing of the minerals,” the embassy said.

The country said it has confidence that Zimbabwe could recover its whole industry chain soon and enlarge the international trade quantum.

“We believe that Zimbabwe could find a best way to develop its trade with the whole world. Zimbabwe has its own competitive industries and it used to be a strong exporting country among Southern African countries.”

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