“Zimbabwe wants to be a middle-income economy by 2030. The country is open for business. We here these declarations all too often nowadays. It is with these broad objectives that President Emmerson Mnangagwa visited Russia, Belarus, Azerbaijan and Kazakhstan last week. A second bite at the World Economic Forum in Davos however failed to materialise as the President opted to return home and deal with violent protests. Many have questioned what the country stands to benefit from this trip. Obviously, there are others who were fully in support of the trip praising the President for doing something about our situation as a country, rather than sitting and mourning. In this article, we look at what Zimbabwe will reap from the President’s Eurasia trip.
According to state media, President Mnangagwa’s engagements with President Putin yielded a lot of results. Firstly, it is reported that VTB Bank agreed to assist Zimbabwe’s debt restructuring and settlement efforts. Remember, Zimbabwe owes the International Monetary Fund, the World Bank and other international lenders over 7 billion dollars in unpaid debt. Unfortunately, at this stage, we are not sure what how much money the Russians wish to give to us in this regard. Already, this failure to divulge figures raises flags. Is the help going to be significant? Will the help come at all?
In mining, the two Presidents agreed on a US$267 million Great Dyke Investments package for production related works to commence at their Darwendale Platinum claims. Alrosa, a large diamond mining firms is said to also have committed to starting core operations in Zimbabwe. The extent of these operations cannot be ascertained at this point. Russia also agreed to assist Zimbabwe with geological services to properly quantify its mineral resources. This is an area where Zimbabwe has been lagging behind for long and has opened the door to pilferage of minerals.
Russia, through Ulrachem agreed to also venture into agriculture partnerships with Zimbabwe by building a fertiliser and agro-chemicals manufacturing plant. It was also reported that a dealer centre for agro-equipment will be established in Zimbabwe. Supply of 30 000 tonnes of wheat was also agreed on. Other deals are in civil aviation cooperation, supply of 100 wagons for the National Railways of Zimbabwe and for road and rail construction. Sadly, details of all these deals remain sketchy. Many fear that these may suffer a stillbirth.
The major deal announced after meetings in Belarus is the Zimbabwe-Belarus-China tripartite agreement where a road and rail network will link the Indian and Atlantic Oceans across Southern Africa through Zimbabwe. This is going to involve other unnamed countries who are said to have already okayed the deal. We still await to know these countries’ identities. Belarus is also believed to have expressed interest in investments in irrigation systems, housing, roads and a 100MW solar power plant. There are also reports of a Belarusian company conducting geo-survey work on 270 000km whose preliminary report shows availability of gold, chrome and lithium deposits. In the current economic environment, one wonders whether these investment deals will bear fruit and alleviate teething problems in the near future.
There was not much to write home about from Azerbaijan as President Mnangagwa was meeting his counterpart President Aliyev for the first time. This was a new attempt at forging relations. The two leaders explored cooperation in areas of gas and oil. Azerbaijan produces oil and Zimbabwe is currently facing fuel supply challenges. Belarus is also said to have vast sovereign fund reserves and discussions where kick-started around how this money can be brought in to assist Zimbabwe in a mutually beneficial way. Again, as with many other deals of this magnitude, finer details were not divulged. There are no exact figures and timelines to talk about yet.
In Kazakhstan, areas of possible cooperation in agriculture, manufacturing, infrastructure development, transport and logistics were explored. There is no deal tabled yet.
Way to go or waste of time?
The debate as to whether or not this was a productive trip rages on. The World Bank and IMF have already welcomed plans to turn around the country’s fortunes. However, they have advised that Zimbabwe needs to settle previous debt before new funding can be unlocked. There is no money to settle previous debt at the moment. By going to Russia, the President is attempting to borrow from Peter to pay John. This is problematic. One day, when Peter knocks on the door seeking repayment, where will we get the money?
We also need to bear in mind that funds from international lenders come with certain conditions. These may include certain policy reforms, restoration of key human rights, media freedoms and so forth. Zimbabwe right now does not pass this test. America has maintained its sanctions and mind you, they have influence over the same lenders. Already, two violent protests have left citizens killed or injured and property damaged since the last elections in July 2018. The government has been fingered as having a sinister hand on both occasions. In short, money from international lenders is highly unlikely to come anytime soon. Eurasia is our plan B.
The other problem is that Zimbabwe now has fewer friends than before. China have not given us any meaningful assistance since the administrative changes of November 2017. South Africa reportedly turned down a request for a US$1.7 billion bail out package in December 2018 saying they do not have that kind of money. They are rumoured to be considering a much smaller package around US$7 million. Our own 2019 Annual Budget has done little to inspire confidence in the market. Reports that the President and his delegation hired a ridiculously expensive plane for the Eurasia trip have also dented government’s image even further. It is clear that the country cannot go it alone. But, for now, Zimbabwe needs to sort out its internal problems first. Currency distortions, pricing and government spending need to be sorted out once and for all. Otherwise, we will continue selling off our minerals and other resources at a loss.
The ordinary Zimbabwean hopes that something good will come out of the President’s recent trip. The scepticism surrounding previous mega deals still lingers on. The deals have taken too long to take shape. This time around, we are hoping for the best.