China playing key role growing Zimbabwe economy
(At the company’s new sales site and showroom along Samora Machel Avenue in the capital’s leafy Eastlea suburb, a Lovol Group representative says he is very very busy for a sit-down interview but obliges a walk-about chat among the machinery and equipment in the yard.
It’s a mid-January midsummer day in Zimbabwe and light showers – on since morning – have taken a break and its back to business.
Two customers – one signing for a second delivery of agriculture equipment and the other signing for a purchase of road construction equipment – are sipping bottled fruit juice.
‘’Busy, busy,’’ says Terry, a manager at the project site.
Most days are like.
Lovol is one of the new kids on the block, having come onto the scene a short three years ago as a subsidiary of the Tsapo Group. The global giant’s plans in the infrastructural equipment manufacture and distribution of agriculture and road construction equipment were derailed by the Covid-19 pandemic but are now back on track.
The company find themselves in an encouraging situation – one that has become an increasingly familiar story around the country in the last three or so years.
The rise of Chinese companies as major players on the Zimbabwean landscape is shaping the country’s economic trajectory as they expand and make their presence felt across the value-chain.
And this has not gone unnoticed.
Noting the Asian giant’s influence across all sectors, the Zimbabwe Investment Development Authority (ZIDA) say Chinese investment has been significant.
Duduzile Shinya, acting chief executive has been the largest in 2021.
‘’China has been a significant player in the economy, with companies from that country bringing in over US$800 000 million worth of investments,’’ she says, before the purchase of Arcadia Lithium mine by Huayou from Australia Stock Exchange-listed Prospect Resources last month.
That deal and other recent ones have reignited investor interest among global investors, with Swiss Ambassador speaking of bright prospects of his country increasing investments into Zimbabwean the very short term.
But it is companies from China that have displayed massive appetite and show of confidence in the Zimbabwe economy.
The recent infrastructural boom has many causes but since the advent of the Second Republic, Chinese megaproject investments have surged and the country has witnessed significant amount of investment from the Asian giant.
From agriculture, mining, power, tourism to industry and commerce, Chinese companies are ‘’industrialising’’ and rejuvenating the country’s manufacturing sector that had sunk to unprecedented levels.
Now, despite the global pandemic that has played havoc with economies worldwide, prospects of a recovery are real.
Terry, at Lovol, says there are massive opportunities in Zimbabwe and regionally in the sectors they are investing in.
‘’We are optimistic,’’ he says, adding: ‘‘Such investment help create jobs, and develop local industry and facilitate trade.’’
And nowhere is that optimism clearer than in the mining sector and infrastructural development which has always been a bellwether of national fortunes as a place to live.
Zimbabwe’s reliance – like most of Africa – on foreign jurisdictions for its manufactured goods shows that for its industrialisation agenda to succeed, reliable infrastructure is vital for it to scale up manufacturing for regional exports.
The country also needs to redouble efforts to ensure that adequate supplies of water and power are available.
‘‘Investment in utilities infrastructures will benefit by incentivising foreign companies to come set up production facilities on the ground,’’ says Donald MacDonald, an investment analyst in the capital.
China’s trade with Zimbabwe – small by global standards – is steadily rising and could return and surpass pre-pandemic levels as economies adapt and heal from its devastating impact if recent momentum is maintained.
Since 2000the United States, Britain and their western allies imposed economic sanctions on in order ‘‘to make the economy scream’’ and force a political outcome favourable to Whitehall and the White House.
Although the accumulative impact of these sanctions has been devastating, losing the country over US$14 over the period, Zimbabwe has remained standing through assistance from progressive nations like China and new emerging markets in Russia and India.
After 2018, President Mnangagwa embarked on a serious catch-up process to industrialise and the economy – by most accounts – has stabilised and is now on a growth mode.
Chinese company names – Afrochine, SinoCement, SinoTruk, Tienz, Chilota – have joined a Zimasco, Tianze, Anjin and a several others in making their presence on the scene.
‘‘Despite the pandemic and US sanctions – that have been condemned by the United Nations – Chinese companies have struck by Zimbabwe, optimistic the country would ride the storm,’’ say researchers Jacqueline Sande and Rutendo Matinyarare.
In 2019 China exports to Zimbabwe amounted to US$407m with the main products being stone-processing machines, pesticides and rubber tyres. Zimbabwe ‘s top exports the other way have been mostly raw tobacco, chromium, ferro-alloys, granite, nickel ore and precious stones.
In August 2021, the top exports to Zimbabwe were blood antisera, vaccines, toxins and cultures – obviously driven by the Covid-19 pandemic –
Telephones, pesticides, rubber tyres stone-processing machines still remained steady. While the country is still not anywhere near home yet, the economic turnaround looks compelling.
And as more Chinese executives consider investing in the country, they’ll be following the lead of Afrochine (Tsingshan Holding Group) – literally building a new town in the Midlands – and Zhejiang Huayou Cobalt – recent acquisition of Arcadia Lithium mine.
‘‘We are proactively sharing our experiences and practice and transferring advanced technologies and collaborationg with our overseas friends and partners is the norm,’ says an economic counsellor at the Chinese embassy in Harare, adding, tongue in cheek: ‘’China, no sanctions against people.’
By Patrick Musira
