via China emerges consistent top investor since 2010 Sunday, 24 November 2013 by Enacy Mapakame Sunday Mail
Zimbabwe’s relations with China continue to strengthen. The country embarked on the Look East policy after the West frowned upon far-reaching agrarian reforms. Zimbabwe-China co-operation has seen the implementation of massive projects
China has emerged as a consistent top investor in Zimbabwe since 2010, with its investments contributing 72 percent, or US$670 million, of the total US$930 million worth of projects approved last
year, reflecting the dividends of the country’s deliberate Look East policy embarked on more than a decade ago.
The Zimbabwe Investment Authority (Zia) announced last week that by the end of October it had approved Chinese investments worth US$347,8 million, concentrated mainly in the energy and mining sectors.
Russia came in a distant second, with approvals worth US$40,1 million, underlining the increased influence of some of the Brics (Brazil, Russia, India, China, South Africa) countries.
Investments from South Africa and the UK were measured at US$39 million and US$34 million respectively.
Mauritius completed the top five foreign direct investment (FDI) sources with approvals worth US$25 million.
Chinese capital into Zimbabwe is looking for opportunities mainly in mining, where the country offers a diversity of over 40 tradable minerals.
Of its cumulative investments in 2012, China ploughed US$583 million into the extraction of minerals such as diamonds, gold and chrome.
This represented 62 percent of the total US$688 million FDI approvals for the entire Zimbabwean mining industry last year.
Agriculture accounted for US$18,6 million of Chinese investment, manufacturing US$35,5 million, while US$23 million was sunk into the services industry.
Approvals for the Asian country in construction reached US$7,4 million.
It channelled only US$300 000 for tourism.
Zia head of operations Mr Sichoni Takoleza said the Chinese were bringing in both large and medium sized projects in many industries.
“Some observations on Chinese interest in Zimbabwe (are that) they have appetite across all sectors of the economy, whilst other countries are cherry picking,” Mr Takoleza told a regional conference on China-Africa Cooperation in Victoria Falls last week.
Chinese capital has been crucial to Zimbabwe in an era blighted by illegal Western economic and trade sanctions that have affected FDI inflows from traditional source markets. Although Chinese investments into Zimbabwe might seem insignificant when compared with its US$2 billion one-time investment into the Angolan oil industry, they, however, remain very important to the country’s economic recovery efforts.
Mr Takoleza singled out the extractive industry as the biggest destination for Chinese capital due to an abundance of under-exploited minerals such as platinum, gold and coalbed methane.
Interest in this sector, which raked in US$790 million in export revenue last year, will continue to grow.
“The rich resource profile means there shall continue to be heavy resource seeking FDI into Zimbabwe from China and other investor sources,” he predicted.
Zimbabwe has premised its future growth on the exploitation of mineral resources, where it expects to unlock up to US$5 billion over the next five years.
Zimbabwe is the fourth largest producer of chrome worldwide, fifth largest gold producer in Africa and is geared towards producing a quarter of all world diamonds.
However, there still exists several factors curtailing FDI growth.
Issues such as unnecessary delays in accessing permits, corruption, bad partnerships, poor infrastructure and unreliable utilities did not augur well for attracting foreign capital, said Mr Takoleza.
“For untenable partnerships, some joint ventures are breaking down due to weak legal structures hence we recommend they use legal services to develop tight shareholder agreements. This is true for Zimbabwe and Chinese investors,” he said.
To ease some of these challenges, Zia is now pushing for serious business reforms, including the simplification of permit processes across institutions, utilisation of joint venture database at the investment authority by prospective investors, as well as strengthening the One Stop Shop concept by end of next year.
Chinese investments into Africa, including FDI, development aid and export credits, are believed to be in the region of US$30 billion per year over the past five years.
In 2011, the China-Africa Development Fund – the primary vehicle for investing into Africa – poured US$14 billion of FDI across the continent.
In terms of trade, China is now Africa’s biggest partner with the volume of trade climbing to nearly US$200 billion per year in 2012 from a few millions 25 years ago.
In 2010, trade between the two parties was worth US$114 billion, and in 2011 it was gauged at US$166 billion.
China-Africa trade has grown by 26 percent since 1995.
Africa exports to China minerals, base metals, precious stones and textiles. African imports include transport equipment, clothing, value-added manufacturing products, machinery, footwear and plastic products.
Sadc was the biggest trading bloc with China in Africa last year, with trade worth US$83 billion.