Compiled by Farai Mutondoro-Africa Institute of Environmental Law

Overview

At no time has the Sino-Zimbabwe relations become a topical policy issue than it is today, especially at a time Chinese investments in Zimbabwe have been pigeonholed by records of unfair labor practices, human rights abuse and disregard of environmental laws and regulations.[1] While the relationship between China and Zimbabwe predates back to the colonial period as China supported Zimbabwe and other African countries in the fight against imperialism, the Sino Zimbabwe relations became more pronounced at the turn of the new millennium. This was made possible by strained relations between Zimbabwe and the West which culminated in some trade restrictions. Zimbabwe adopted the Look East policy in 2003 and ever since this, several deals have been signed between Zimbabwe and China. Between 2003 and 2013, China’s economic and commercial links to Zimbabwe became so extensive and so diversified and as a result bilateral trade between them surged by 20% to $533 million in the first five months of 2012[2]. By the end of the year, Zimbabwe’s trade with China stood at $800 million, double the trade levels recorded in 2011.[3] Post the November 2017 military takeover of Government, the footprint of Chinese commercial activity continues to increase. Big Chinese corporations such as the as Anhui Foreign Economic Construction Group (AFECC) through its subsidiary Anjin and the Chinese state-owned arms manufacturer the China North Industries Corporation (NORINCO)[4] have all registered a commercial interest in Zimbabwe’s mining sector. It is estimated that Chinese investments in Zimbabwe from 2005 to 2019 is within the range of USD9.82 billion of which over USD 6 billion of this has been invested in the mining and energy sector[5], a critical sector to the Zimbabwean economy.  Interestingly as China’s commercial footprint in Zimbabwe increases, the make-up of the state has drastically changed, as the state has come to display overt characteristics of a captured predatory state.[6] It becomes key therefore to question who the state does business with and understand their converging interest. In this blog article we therefore seek to situate a political economy discussion on Chinese investments in Zimbabwe in a context of state capture and predatory relations. It is important to note that this is not unique to Zimbabwe. Tom Burgis ‘s Looting Machine Warlord, Tycoons, Smuggler and the Systemic theft of Africa’s Wealth[7] provides wealthy of narrative evidence on how Chinese enterprises have locked deals with elites in African Governments and such deals are characterized by corruption and plunder especially in the extraction of natural resources. In like manner this blog article uses the conceptual framing of Burgis’ Looting machine to examine Chinese investments in Zimbabwe’s extractive sector. This article is a call to action on the need for responsive policy to guide foreign investments in a context marked by capture and accumulation.   

The Political Economy of State Capture in Zimbabwe and the Extractive sector

Primarily as a result of its constant failure to provide key services to citizens track record of corruption and failure to provide for transparency and accountability, the Zimbabwean state has been the subject of immense scholarly research. Mandaza as far back as the 1986 argued that thelong years of colonial domination and deprivation, not to mention imprisonment and the hard days of the struggle, became almost the license- albeit for only a few among the many who might claim such a license – to accumulate quickly; and the state  appeared the most viable agency for such accumulation”. Thus, from the genesis of founding the post-colonial state exhibited characteristics of a captured state. State capture implies that the state has lost its social autonomy and is unable to function in such a way as to serve broad social interests or to make decisions that might achieve long-term developmental goals (Southall as cited in EISA, 2018). State capture is a severe form of corruption which involves the appropriation of state institutions, organs, and functions by individuals or groups (Mbaku, 2018). By doing so, these individuals and groups can have control over or influence the design and adoption of new laws, rules, and regulations, as well as the amendment or modification of existing ones (ibid).

State capture became topical in the Zimbabwean political discourse narrative in 2017 at the height of the factional power struggle to succeed former President Robert Mugabe within ZANU PF between two factions, Team Lacoste (which backed Mnangagwa) and G40 (which supported former First Lady, Grace Mugabe) (Mungwari, 2019). These power struggles culminated in a military take-over of Government and a new President in November 2017. The November military takeover could therefore be interpreted as a battle between two factions all competing to control the state and thus have access to material benefits that comes along with that control. As Bratton and Masungure (2011) note the state is the most precious prize in Zimbabwe because its power can be used to generate opportunities for private gain. However even before the events of November 2017, Sachikonye (2012) in Zimbabwe’s Lost Decade refers to how the Zimbabwean state had been captured by private interest through the creation of the Joint Operations. Likewise  Shumba (2016)  in his PhD thesis entitled Zimbabwe’s Predatory State, Party, Military and Business concluded that Zimbabwe has a predatory state of ruling class anti-developmental accumulation and reproduction project characterized by: (1) party and military dominance in the state; (2) state-business relations shaped by domination and capture; and (3) state-society relations shaped by violence and patronage. Shumba aptly argued that Zimbabwe’s power elite (state, military and business) exhibited anti-developmental accumulation patterns across key economic sectors: land and agriculture, mining, transport and energy, and banking and finance.

The mining sector is key to the narrative on state capture as well as Chinese investments in Zimbabwe. Mining underpins the political economy of the colonial and post-colonial state in Zimbabwe. Zimbabwe became a settler colony on speculation of gold deposits north of the Limpopo.^[8] As shown by the Figure below Zimbabwe is endowed with abundant mineral wealth consisting of over 60 key mineral resources inclusive of gold, diamonds, platinum, copper among many others. Zimbabwe has the 2nd largest Platinum Group of Metals (PGM) in the Great Dyke after South Africa’s Bushveld Complex.[9] Zimbabwe’s is also the 5th largest producer of lithium in the world[10]. In  2018, Zimbabwe and Namibia were among the top 10 countries for global lithium production, with Zimbabwe alone holding 11m tonnes of lithium ore in its Bikita mines^[11].The country has an excess of 4000 recorded gold deposits and in terms of gold productivity per square kilometer, the country is ranked above traditional big producers including USA, Canada, Australia and Brazil.[12] The mining sector is the chief foreign currency earner of the country at the moment, accounting for over $0.60 for every dollar from foreign earnings.

Figure 1 Zimbabwe’s Share of Mineral Value in 2017

Collusion between Chinese capital and the elites in Zimbabwe

Mining is a subject around which China and Zimbabwe’s interests converge: China needs the strategic mineral resources available in Zimbabwe, while the latter needs the income from these resources, especially after its show of defiance against the West.[13] The elites who are the center of the extraction of key mineral resources have thus found a commercial partner in China with capital to finance mining and a market as well. The first companies to receive concessions in the Marange diamond fields were Chinese companies, Anjin Investments and Sino Zimbabwe Development (Pvt) Ltd working in close connection with ZANU-PF political and security elite and Marange Resources (Pvt) Ltd, wholly owned by the parastatal, the Zimbabwe Mining Development Corporation (ZMDC).[14] These companies got such concessions based on their colluding and converging interest with the elites in Zimbabwe’s political, military and security establishment.[15] It is worth noting that Anjin (a joint venture between AFECC which had 50% equity Matt Bronze, the fronted enterprise belonging to the Zimbabwean military with the other 50% equity) was given the diamond concession in exchange for the $98 million construction of the country’s National Defence College.[16] The Defence college was financed with a US$98 million Eximbank loan, extended to Zimbabwe’s Ministry of Finance, to be repaid using the Zimbabwean side’s revenue from the joint venture.

A 2016 report by Global Witness with some corroborating evidence from the former Director General of the Central Intelligence (CIO) organization revealed ZANU PF through an entity called National Reconstruction Group had a 40% equity in Kusena Diamonds, a company with links to the Central Intelligence Office (CIO)[17] Other than the diamond sector, the Chinese have also registered huge commercial interest in the extraction of other mineral resources.  In 2006 for instance, a US$1.3 billion contract for coal mining and thermal generation construction was negotiated with China Machine Building International, and a chrome mining partnership was established between the Zimbabwe Mining Development Corporation (ZMDC) and Beijing’s Star Communications, bankrolled by Chinese funds.[18] In 2007, Sinosteel bought a controlling stake for US$200m in the Zimbabwe Mining and Smelting Company (Zimasco), the leading Zimbabwean ferrochrome producer and fifth largest in the world, (China Daily, 21 December, 2007). It is worth noting that some of these Chinese mining contracts have been signed through the mortgaging of mineral resources in return for arms and loans. During the Government of National Unity, Zimbabwe mortgaged resources such as platinum and chrome to the Chinese and the Russians in exchange for arms. As part of this deal, Norinco the Chinese owned arms manufacturer entered into a joint venture agreement with the Zimbabwe Defense Industries (ZDI) and the Zimbabwe Mining Development Corporation (ZMDC) to mine platinum and chrome along the Great Dyke. NORINCO’s mining joint ventures in Zimbabwe consist of companies formed with a Zimbabwean parastatal, Zimbabwe Mining Development Company (ZMDC) in 2006 and one formed with Zimbabwe’s Ministry of Defence in 2004[19]. The joint venture with the Ministry of Defence, Wanbao Zimbabwe, was to mine platinum, gold and other resources in Zimbabwe. NORINCO also formed three joint ventures with ZMDC: Global Platinum Resources for platinum, Zimbao Mining for copper and gold and Wambao Mining for chrome.[20] It is worth noting that in Zimbabwe the Chinese share of external debt stock has been rising and as of 2018 was estimated around 34%[21]. According to Malaba (2019), the total value of Chinese Debt stands at USD2.49 billion.

As the Chinese footprint is surging especially in Zimbabwe’s extractive sector, there has been an increase in alleged cases of unfair labor practices, human rights abuse and disregard of environmental regulations by the Chinese. On the 21^st of June 2020 a Chinese mine employer allegedly shot two of his employees (Wendy Chikwaira and Kenny Tachiona at Reden mine in Kwekwe.[22] The two were allegedly shot because of a dispute over outstanding wages and poor working conditions.[23] A 2012 study by Southern Africa Resource Watch on Chinese labor practices in Zimbabwe, Zambia and Democratic Republic of Congo revealed that Chinese companies have engaged in widespread labor abuses. The study revealed that at Makwiro platinum concession workers do not receive overtime for 12 hours on the job.[24] A 2015 study by the Zimbabwe Environmental Law Association (ZELA) which focused on the plight of Workers at Chinese Controlled mines and used Anjin Diamond Mine as a case study revealed that the diamond workers at this company were abused.[25] The study noted that the Chinese would beat up or sexually abuse Zimbabwean workers and threaten to fire them. The same study also noted that the same company amongst other diamond mining companies in Chiadzwa was discharging raw effluent into Odzi River and in the process destroying the sources of livelihoods for communities.[26]

Need for Responsive Policy Dialogue on Chinese investments in Zimbabwe

Clearly from this evidence presented above, Chinese corporations in Zimbabwe seem to have taken advantage of the current context of capture and predatory state relations to sign on to mining deals that are so opaque and generally not in the best interest of Zimbabwean citizens. For instance, during the Government of National Unity, Zimbabwe could have got US$ 5 billion from Eximbank of China and in return, the Chinese would have gotten 50% equity in a US $ 40 billion platinum concession[27]. The Chinese would have made a US $ 15 billion profit had this deal been signed. Tom Burgis Looting Machine show that this is not unique to Zimbabwe alone as in countries such as Angola, the political and military elites in the Futungo have colluded with Chinese actors to establish corporate vehicles like China Sonangol to allow for looting and accumulation[28]. There is therefore a need for a responsive policy process on Chinese investment in Zimbabwe’s natural resource sector. That policy process should inform policy responses to the dangers posed by Chinese capital in a context defined by capture, predatory interest and accumulation. To kickstart that process ZELA through its research arm the Africa Institute of Environmental Law is implementing a research on Sino Zimbabwe relations. ZELA hopes that this study and many others to come will lead to candid policy dialogue on Chinese investments in Zimbabwe. ZELA believes that Chinese capital could lead to transformative socio-economic change in Zimbabwe if there is a policy framework guiding such capital injection as well as guarding it from the anti-developmental accumulative interest of the elites.  The blog is the first in a series of many others exploring Chinese investments in Zimbabwe with the main motive of raising awareness on the subject and also influencing responsive policy solutions to the dangers posed by foreign investment in a context of weak controls and context marked by the politics of plunder and accumulation.

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[1] http://www.zela.org/%EF%BB%BFzela-press-statement-on-the-shooting-of-two-miners-at-reden-mine-gweru/

[2] Alao, A. (2014) China and Zimbabwe: The Context and Content of a Complex Relationship. https://media.africaportal.org/documents/saia_sop_202_alao_21041017.pdf

[3] ibid

[4] http://en.norincogroup.com.cn/col/col432/index.html

[5] https://www.aei.org/china-global-investment-tracker/

[6] Shumba, J. (2018) Zimbabwe’s Predatory State, Party Military and Business

[7] https://www.theguardian.com/books/2015/mar/02/looting-machine-warlords-tycoons-smugglers-systematic-theft-africa-wealth-review

[8] I. R. Phimister, ‘History of mining in Southern Rhodesia to 1953’

[9] http://chamberofminesofzimbabwe.com/wp-content/uploads/2019/07/Latest-IMR-Presentation-on-Pt-Vision-2030-Mlambo-1.pdf

[10] ibid

[11] https://www.theafricareport.com/21865/africa-must-assume-its-place-in-the-global-battery-race/

[12]http://chamberofminesofzimbabwe.com/wp-content/uploads/2019/07/Gold-Industry-Growth-Strategies-Presentation-Mr.-Gono-1.pdf

[13] Alao, A. (2014) China and Zimbabwe: The Context and Content of a Complex Relationship. https://media.africaportal.org/documents/saia_sop_202_alao_21041017.pdf

[14] Shumba, J. (2018) Zimbabwe’s Predatory State, Party Military and Business

[15] ibid

[16] Global Witness (2012) Diamonds: A Good Deal For Zimbabwe , Who controls revenues from Marange diamonds? A case study of Mbada and Anjin companies

[17] https://www.globalwitness.org/en/campaigns/conflict-minerals/stones-seed-and-suffrage/

[18] Shumba, J. (2018) Zimbabwe’s Predatory State, Party Military and Business

[19] Annina, K  (2015). Does China have a geoeconomic strategy towards Zimbabwe? The case of the Zimbabwean natural resource sector. Asia Europe Journal. 14. 10.1007/s10308-015-0445-7.

[20] ibid

[21] AFRODAD The China -Zimbabwe relations: Impact on Debt and Development

[22] http://www.zela.org/%EF%BB%BFzela-press-statement-on-the-shooting-of-two-miners-at-reden-mine-gweru/

[23] ibid

[24] https://www.mining.com/south-african-report-highlights-chinese-labor-abuses-in-zimbabwe-and-zambia-80476/

[25] http://www.zela.org/download/no-strings-attached-the-plight-of-workers-at-chinese-controlled-mines-in-zimbabwe-the-case-of-anjin-diamond-mine/

[26] ibid

[27] https://www.theindependent.co.zw/2009/07/09/national-resources-mortgage-heads-you-lose-tails-you-lose/

[28] https://www.ft.com/content/308a133a-1db8-11e4-b927-00144feabdc0