Chinese Investments
‘Stadium diplomacy’ has been another feature of Chinese investment

China’s growing investment and development in Africa, dubbed “The Next Empire” for its historic potential to reshape the continent and grow Chinese influence, is particularly strong in Zimbabwe and Namibia. The impoverished pariah state whose President Robert Mugabe was recently stripped of his power, has put more and more of its economy and natural resources under Chinese control. As a result, the Asian country has won near-exclusive dominance of everything from mineral rights to labour standards, as well as the apparent acquiescence of local politicians and police. The African country, of course, remains sovereign, but as China’s economic hold tightens, the African nation’s independence is becoming harder to distinguish. As the economic situation of Zimbabwe grew to unprecedented levels of uncertainty, a large part of its population turned to online lotto games in a bid to secure their future. But while some people luck out playing lotto, most find some level of security in the consistent Chinese investments pouring into the country and creating more jobs.

China is the largest consumer of several resources which Zimbabwe has in abundance. China is ranked fourth in terms of the size of mining investment approved by the Zimbabwe Investment Authority (ZIA) in 2009, after British Virgin Islands (BVI), Mauritius, and South Africa.

The involvement of Chinese investors in Zimbabwe stems across all major sectors and is growing each year. Recently, the Chinese company Sino-Zimbabwe offered US$500 million to the Reserve Bank of Zimbabwe to purchase gold. This highlights the Chinese strategy of involvement, which is more targeted at controlling mineral resources than actual mining. There are strategic partnerships with local companies exist in copper, chrome and platinum mining. In 2009 Sino-Zimbabwe announced an $8 billion investment agreement with the government of Zimbabwe.

As part of indigenising the local economy, large Chinese corporates have acquired key Zimbabwean industries. China’s Sinosteel bought 92% of Zimbabwe’s largest ferrochrome producer, Zimasco. Sino-Cement owns one of the country’s largest cement factories, and China Sonangol has been awarded contracts in housing and mining.

Other Chinese technology giants ZTE and Huawei have also won contracts worth more than US$200-million from leading private telecoms operators in Zimbabwe to build mobile phone and broadband infrastructure. Last month China extended a US$53-million grant to NetOne, the loss-making state-owned mobile operator.

The Asian country even agreed to reschedule by three years a US$55-million debt owed by Zimbabwe’s largest steel-maker. Apart from controlling a huge chunk of Zimbabwe’s retail, mining and agriculture sectors, China also invested hundreds of millions of dollars into Zimbabwe’s infrastructural projects, most notably a $144 million water system upgrade for the capital Harare and the addition of 300 megawatts to the 750MW Kariba hydropower station. The US$320 million loan extended by the Chinese government made the project a reality with the Zimbabwe Power Company weighing in with US$213 million borrowed from Development Finance Institutions.

According to Zimbabwe Investment Authority (ZIA) statistics published in the China Daily, the Asian country remained Zimbabwe’s largest investor during the first five months of 2015, accounting for 74% of the total amount of investments – a trend that has remained steady in the following years. During a 2015 visit to Zimbabwe, Chinese President Xi Jinping signed multiple economic deals, including one for more than $1 billion of Chinese investment in Zimbabwe’s largest thermal power plant. That year China also cancelled $40 million of debt owed by Zimbabwe and in response, Zimbabwe made the Chinese currency, the yuan, legal tender in the country. With China bringing in over 30 million dollars per month into Zimbabwe, the Asian country has become the largest source of foreign currency in Zimbabwe and has modernised and strengthened the African country’s agriculture, energy and tourism sectors.