China Accused of Fleec ing Zimbabwe’s Children

Zimbabwe’s Finance and Economic Development Minister Mthuli Ncube revealed last week that, in 2006, mineral-rich Zimbabwe put up platinum deposits valued at $28 billion as collateral for a $200 million loan from China to buy Chinese farm equipment. Such imbalanced terms are raising questions about corruption and whether China is engaged in predatory lending.

A local watchdog group called the Zimbabwe Coalition on Debt and Development, or “Zimcodd,” has demanded that detailed information about all government loans be made public.

According to research by the Johns Hopkins University School of Advanced International Studies, China rarely claims the assets put up as collateral in such loans. Yet the lack of transparency is again raising suspicions about Chinese practices.

“At this point, a full audit should be required, one in which the final destination of the funds loaned by the Chinese to Zimbabwe are revealed,” Johns Hopkins professor of applied economics Steve H. Hanke told OZY by email. “My guess is that most of the $200 million has found its way into the pockets of people or enterprises closely associated with ZANU-PF,” said Hanke, referencing the ruling political party Zimbabwe African National Union-Patriotic Front.

Zimcodd has also called for an independent audit, noting that loans such as this one, which mortgaged the nation’s valuable platinum deposits, result in citizens being “trapped in a vicious circle of poverty.” Debt repayment effectively limits the government’s ability to fund social programs, even as an estimated 40% of Zimbabweans live in poverty, according to the World Bank.

“It's looting from the future, it's looting from tomorrow, it's looting from our children,” said human rights activist Dzikamai Bere during a Zimcodd Twitter Space held on Aug. 26 to discuss Ncube’s report. “So, it's very important that we create a community to push for accountability.”

Chinese Ambassador to Zimbabwe Guo Shaochun promptly denied allegations that China was intentionally entrapping developing nations, calling it a Western fabrication intended to deflect responsibility and blame.

Zimbabwe's government currently owes China $172 million on the 2006 farm equipment loan, and about $2.6 billion in total, according to parliamentary records.

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