Chinese investments bring Belt and Road Initiative benefits closer home

Tichaona Zindoga

The Briefing
Over the past few weeks, there have been developments that indicate significant Chinese investments in Zimbabwe that will not just significantly change the dynamics of economic cooperation between the two sides, but also pronounce boldly the benefits of the Belt and Road Initiative for the southern African nation.

It is also notable that Chinese companies are becoming more assertive, active and showing results in a manner that has not been experienced in the history of Zimbabwe. A fortnight ago, a local bank – Stanbic – hosted an event dubbed China Day where Chinese and local companies showcased economic cooperation, with companies on both sides exhibiting their activities across economic sectors from industry to services and financing.

One of the key lessons from the event was that there was narrowing gap between Chinese investments and the local economy, with not just companies being players, but also ordinary Zimbabweans looking for ways to participate in economic cooperation.

This latter point is buttressed by yet another significant development. At the end of last week, on November 3-4, the Chamber of Chinese Enterprises in Zimbabwe – a body representing over 80 large and medium scale private and State-linked companies, hosted the second Job Fair event which showcased Chinese investments and opened up employment opportunities for local people.

The companies explained the scope and size of their operations here in Zimbabwe, leaving many people impressed and excited about opportunities that are being presented by China. Unsurprisingly, this edition of the Job Fair attracted well over 1000 people and will go a long way bridging understanding of Chinese investments in Zimbabwe while effectively and showing practical benefits of Chinese capital.

The third development – and perhaps the most important – is the announcement by Zimbabwe’s investment body that the Chinese companies are set to invest nearly US$2.8 billion after they were awarded licenses mostly in mining and energy.

The planned investment is a tenfold increase on the $271 million pledged in the same period last year and is way bigger than the nearest source of FDI, the United Arab Emirates, which won licenses to invest $498.5 million. There are some interesting facts and statistics that need to be highlighted further.
In this period, up to 121 Chinese companies were given investment licenses, compared to UAE’s five and India’s 10 (worth US$10.9 million).

The US and UK provided one investor apiece, with interest to invest US$2 million and US$5.7 million respectively. Four Canadian investors would potentially bring US$4 million. The cumulative investment licenses issued – which also included Zimbabwean investors and those from other parts of the world including African countries – amounted to US$3.408 billion meaning that China will potentially account for over 80 percent of new investments in Zimbabwe.

This confirms the trend whereby the Asian giant has been Zimbabwe’s biggest source of FDI, and set to increase this standing significantly. According to the Zimbabwe Investment and Development Agency (ZIDA), Zimbabwe managed to attract investment interest from 38 countries in the first 9 months of the year compared to 27 in the corresponding period of 2022 – and China provided the most by numbers and size.

Chinese investors are mostly interested in manufacturing and mining while other sectors such as construction and services are also attracting capital.

These developments are taking place against another important milestone, namely that Zimbabwe and China trade hit over US$2.4 billion in the first 9 months of the year, cementing economic relations between the two countries.

Bringing BRI closer home
China’s Belt and Road Initiative (BRI) launched in 2013 by President Xi Jinping aims to enhance connectivity and trade across the globe through physical infrastructure development.

The participation of Chinese companies is key to the success of BRI, and it is clear that continued upward direction of investments by Chinese enterprises will bring closer benefits of BRI – which Zimbabwe joined in 2018.

Chinese companies play a crucial role in constructing bridges, ports, highways, power plants, and telecommunications projects across Asia, Latin America, Africa, and parts of Europe. These investments facilitate better connectivity, trade, and economic growth in recipient countries.

Zimbabwe is attracting high quality investments from China, itself a key premise of BRI, and this is translating into infrastructure boom to support economic development, as well as creation of employment.

Another key benefit is that through high value projects being undertaken in Zimbabwe, we are able to see China exporting its surplus capacity to Zimbabwe, as China’s state-owned enterprises (SOEs) often have excess capacity in construction, manufacturing, and technology.

BRI projects allow Chinese companies to utilize this surplus capacity by exporting it overseas. This is in evidence in infrastructural projects such as construction of dams, hydro and thermal power, the National Pharmaceutical Warehouse as well as the new Parliament projects where Chinese-linked companies were involved.

A significant part of the Chamber of Chinese Enterprises in Zimbabwe cohort is made up of Chinese SOEs, including the tobacco manufacturer and Zimbabwe’s biggest exporter of tobacco, Tian Ze.

The benefits of economic cooperation between Zimbabwe and China continue to grow, and the Belt and Road Initiative framework crystalises these benefits – with promise of unimpeded growth.

Post-2023, the trend is likely to continue.

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