Zim strikes lucrative export deal with China
PRESIDENT Emmerson Mnangagwa was in China last week for the Forum on China-africa Cooperation (Focac) in Beijing, where leaders from more than 50 African countries were gathered to discuss climate, infrastructure, security, and debt.
The Focac, established in 2000, serves as a platform for collective dialogue and cooperation between China and African nations, aiming to enhance political, economic, and cultural ties through various initiatives.
The three-day forum was held on September 4 to September 6. While African states are poised to benefit from Chinese financing for key infrastructure, Beijing is likely to use the Focac summit to seek African support and strengthen ties amid its growing geopolitical rivalry with the United States and Europe.
China is currently facing heavy trade tensions with the United States, Canada, and Europe, particularly in the manufacturing sector, and aims to leverage its relationship with Africa.
The main objectives of the forum include promoting trade and investment, providing development assistance, and facilitating cultural exchange. This emphasises efforts to boost trade and encourage Chinese investment in African infrastructure, industry, and agriculture, as well as to offer financial aid for sustainable development projects and promote educational exchanges to strengthen people-to-people connections.
China has already pampered the African leaders with multi-billion dollar aid. President Xi Jinping has pledged US$50 billion in financial support to Africa over the next three years, alongside a commitment to enhance military cooperation.
This sweeping initiative aims to strengthen China’s ties with a continent critical to its geopolitical ambitions. Xi announced plans to exempt import tariffs for products from 33 least-developed African countries and expand market access to China’s vast economy.
Additionally, China will provide one billion yuan in military assistance to train 6 000 military personnel and 1 000 police officers across Africa. Mozambique has been extended a hand to export its three agricultural products duty-free valid for three years and automatically renewed while Kenya will be seeking new funding for its US$450 million railway to Uganda.
However, this will continue to increase Africa’s shooting debt. The big one to be discussed in this article is President Mnangagwa’s historic deal in avocado exports. This is part of already 17 agreements on trade and investment signed with Chinese investors, making Zimbabwe the fourth country to qualify for the Chinese avocado export market, alongside Kenya, Tanzania, and South Africa.
China imports 66 000 tonnes of avocados annually, and this new agreement provides Zimbabwe with access to a market valued at approximately US$151 million, according to Zimtrade.
As Africa’s fifth-largest avocado producer, Zimbabwe expects to produce a record 6 000 tonnes of the fruit this year.
Over the past decade, avocado exports from Zimbabwe have seen steady growth. In 2021, the country shipped nearly 6 000 tonnes of avocados, representing a 7% increase from the previous year, with exports valued at nearly US$3 million.
This marked a 10% increase compared to 2020. The most significant increase occurred between 2012 and 2013 when export value rose from about US$177 000 to around US$431 000. This is expected to boost agriculture’s contribution to the country’s gross domestic product.
Not-withstanding the El-niño-induced drought, agricultural exports increased by 29%, from US$440,8 million in the first half of 2023 to US$568,4 million in the first half of 2024.
The Horticulture Development Council has set a target to develop a US$1 billion export industry by 2030, which will require an annual growth rate of 30%. Besides the new
Chinese market, the main destinations for Zimbabwean avocados are the United Kingdom (UK) and the European Union (EU).
Europe is the largest market for Zimbabwean avocados, particularly the Hass variety, due to duty-free access provided under the interim Economic Partnership Agreement (EPA) between the EU and Eastern and Southern African (ESA) countries.
President Mnangagwa also met with Wang Pingwei, chairperson of Sinomine Resource Group Co. Ltd. Sinomine is a global mining company operating in over 40 countries and presided over a meeting between Zesa Holdings and TBEA Corporation of China.
During this meeting, Memoranda of Understanding were signed to enhance power generation and distribution in Zimbabwe.
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This partnership positions China as the largest investor in Zimbabwe and Africa as a whole.
In 2023, trade between China and Zimbabwe amounted to US$3,12 billion, with Zimbabwe exporting goods worth US$1,71 billion and importing US$1,41 billion from China, according to data from the Chinese embassy in Harare.
China is the largest foreign investor in Zimbabwe. In 2023, the Zimbabwe Investment Development Agency (Zida) issued 369 new licences to Chinese investors, with an expected project value of US$3,9 billion.
Despite the increase in Chinese interest, Zimbabwe accounted for only 3%-5% of China’s total investment in Africa in 2022, according to an analysis by Lauren Johnston, an associate professor of China Studies at the University of Sydney.
However, China has slowed its spending in Africa, putting pressure on leaders to present more bankable projects for consideration.
Debt question
This is one of the pillar questions of the forum. For over a decade, China has been Africa’s largest trading partner, extending loans exceeding US$182 billion to African nations from 2000 to 2023 for mega projects like ports, railways, highways, and hydroelectric dams.
China is the largest single lender to African countries, holding over US$73 billion in debt across the continent. Countries like Angola, Zambia, Ethiopia, Kenya, and the Republic of Congo have significant debts to China.
At the summit, President Xi Jinping pledged US$50 billion in financial support to Africa over the next three years, alongside a commitment to enhance military cooperation.
This sweeping initiative aims to strengthen China’s ties with a continent critical to its geopolitical ambitions.
Xi announced plans to exempt import tariffs for products from 33 least-developed African countries and expand market access to China’s vast economy.
Additionally, China will provide one billion yuan in military assistance to train 6 000 military personnel and 1 000 police officers across Africa.
However, this will increase Africa’s shooting debt to the world’s second-largest economy.
Zim debt
Mnangagwa was expected to seek new funding for the energy sector, particularly expansion of Hwange and other electricity projects. Though it will provide solace to the economy, the debt to the Chinese will keep on shooting setting the country in a debt trap.
The government owes China approximately US$2 billion, primarily for energy projects related to the expansion of Kariba and Hwange power stations.
Zimbabwe’s largest debt lies with Western creditors, particularly the Paris Club, to which it owes US$4 billion.
Outside the Paris Club, China is the biggest creditor, representing 95% of Zimbabwe’s total Non-paris Club external debt. Zimbabwe accounts for 1,7% of the value of China’s loans to Africa between 2000 and 2023.
Over this period, China provided 1 306 loans worth US$182,3 billion to Africa, with Zimbabwe receiving 28 loans totalling US$3 billion.
Angola, which owes China US$46 billion, holds the largest share of Chinese loans in Africa at 25%.
Chinese companies have collectively invested over US$1 billion in acquiring lithium mines and building processing plants since 2022.
Notable deals include Huayou Cobalt’s purchase of Arcadia Mine for US$422 million and Sinomine's acquisition of Bikita Minerals for US$180 million, with additional budgets for processing plan.