China dragged its feet on implementing former President Robert Mugabe’s “mega-deals” because of a poisoned business environment, Beijing’s envoy to Harare has said.
Chinese Embassy to Zimbabwe Counselor Zhao Boagang told journalists at a media briefing that President Emmerson Mnangagwa’s government has made “encouraging” changes that have shifted the business environment.
“You have made changes to the law (Indigenisation and Economic Empowerment Act) because there is a realisation by government that it does not help.
“You do not need the Chinese to tell you that. It’s a known fact and we are businesspeople who want to make profits,” Boagang said.
Mugabe signed numerous deals with the Chinese but only the Kariba South project has come on stream amid claims it was a lot more expensive than a similar one undertaken in Zambia by the same company from China.
After taking over power in November last year, Mnangagwa promised to make changes to the much-vilified empowerment law.
This week government made good on its promise after publishing a notice effecting the changes in which foreigners no longer need to cede 51% of their investment to locals except for those in platinum and diamonds.
With China pouring billions into Africa, Boagang admitted Zimbabwe is not the biggest beneficiary of its investments.
“For example, China has committed over $60 billion in investments and soft loans to Africa but, and indeed, the bigger chunk of these has gone to South Africa, Mozambique, Zambia and Tanzania,” he said.
Boagang added that authorities especially under Mugabe were to blame: “We do not just hand-out money.
“No company or investor says that, its dependent on the environment and I must say the situation has improved.”
Other causes of Chinese investor-flight, according to the envoy, are costs related to labour, electricity and tough legal hurdles around repatriation of foreign currency.
Zimbabwe is however China’s biggest beneficiary of its social handouts.
“Of the $500 million that China has committed to Africa in the past few years at least a third or more has benefitted Zimbabwe,” argued Boagang.
He added: “The Zimbabwean government never complains because they know the details, they are aware.
“Zimbabwe enjoys a bigger share of the aid and we also provide loans.”
Mnangagwa’s government this week published list of “looters” dominated by Chinese companies and individuals accused of externalisation.
Boagang was unwilling to take questions around the issue but he did not hide his government’s disappointment at the move and the apparent targeting of its nationals.
“Some of the things are not factual. They would have done better to investigate more and come up with a more credible list. Some of those people and companies on the list have already regularised their issues with authorities,” he said.