On President Sata’s inaugural trip to China, Beijing’s former critic welcomed Chinese investment as long as it produces clear benefits for Zambia
In opposition, he lambasted the role of Chinese companies in the Zambian economy, but President Michael Chilufya Sata’s April state visit to China marked a point of closure on his previous criticism. At the 11 April Zambia-China Economic and Investment Forum organised by Zambia’s Beijing embassy and China Nonferrous Metals Company, President Sata declared: ‘Zambia needs capital, technology and personnel from China. Our focus is the development and progress investors could bring to Zambia, not their colours.’ The message was that Chinese investment is welcome, especially if it helps the Patriotic Front (PF) to deliver on election promises.
Sata, who had resisted earlier invitations from Beijing, spent seven days on a tour that took in an address to the Boao Forum for Asia, a meeting where he was the only African president in attendance. He left China with the promise that discussions with the China Development Bank would lead to an as yet-undetermined concessional loan facility.
On his maiden trip to China, the President had warned prospective partners that although he was looking for ‘massive investment’, Chinese commercial ambitions should not be furthered at the expense of the interests of Zambians. According to State House sources, he was seeking to strike a balance between assuring Chinese investors and ensuring that he does not betray the bedrock of the PF’s support – the poor and unemployed youths who resent the Chinese retailers with whom they compete for economic opportunities.
Ahead of the visit, Finance Minister Alexander Chikwanda reminded the Sata delegation that Zambia’s economic resilience is largely due to robust commodity demand from China. ‘He [Chikwanda] told us the rhetoric on China needs to be replaced with reality, as Zambia’s economy cannot survive without China,’ said a Treasury official.
The President met Premier Li Keqiang and other officials to present the projects he would like to develop. On the wish list is a national airline to replace Zambia Airways, which was liquidated in 1993. Some of Sata’s rhetorical style has remained, though. Throughout his trip, he cautiously advised China not to use its growing economic influence to colonise weaker countries. ‘If you help us bring back Zambia Airways, we will bring China, Hong Kong, Taiwan together, but don’t colonise them,’ Sata said. ‘Treat them as equal; we don’t want you to colonise them.’
Donation scandal hits MMD
The previous Movement for Multiparty Democracy government’s drive to achieve its own election goals is now coming back to haunt the party. In its anti-corruption drive, the PF government is prosecuting former MMD President Rupiah Banda for receiving nine light trucks from the Chinese company Sogecoa. The company, a subsidiary of Anhui Foreign Economic Construction Group, is the diversified investment company that built Levy Mwanawasa Stadium and the swimming pool at the Olympic Youth Development Centre in Lusaka in a record 90 days. Sogecoa is currently building the new 40,100-seat Lusaka Stadium, commissioned by Banda, and completed the five-star Golden Peacock Hotel in Lusaka in 2012.
Company Director Li Renfu said the donation was made at Banda’s request. ‘Sogecoa donated nine light trucks to the Zambian government in 2011 [and] such donation was asked by State House of Zambia, and Sogecoa handed them over to the State House directly but not to any individual,’ Li said. He explained that his company could not deny a request for a donation. Sogecoa insists that all of its projects in Zambia were won through competitive bidding. Sources in the Government Joint Investigative Team say that they recovered the trucks from companies connected to Banda’s family members and associates.
Railways, jobs and power
Back in China, when President Sata asked for help with the new airline, he also praised the Tazara railway that links Zambia to the Tanzanian coast. In fact, the Chinese-built railway has ongoing problems and Tanzanian officials say that six of the Chinese locomotives bought in late 2012 have already developed faults. Sata also invited Chinese investors to get involved in other rail projects. China Railway Construction and China Railway Engineering began talks with the Zambian government about national rail plans and urban transport in the capital, Lusaka.
Sata told China’s President Xi Jinping how passionate the PF regime was to attract investments in its quest to reduce youth unemployment. ‘China comes first to China, other things come second. So Zambia also has to protect what it has,’ Sata said. A University of Zambia development studies professor told Africa-Asia Confidential: ‘We still see Chinese waiters, bartenders, even guards at gates in Chinese hotels and buildings… and these are the jobs Sata and the PF promised to grab and give to the one million Zambian youths who voted for them in 2011. And who is issuing work permits to those Chinese nationals to come and do donkey jobs here? It’s the PF government.’
The Lusaka government plans to spend US$5.6 billion on building roads over the next five years. At the same time, it plans to spend more than $4 bn. on power projects to meet the growing demand for energy which is driven by the 7% annual expansion of the country’s economy.
In its hurry to deliver on campaign pledges, the government has chosen Chinese companies to implement many road projects. China Henan International Cooperation Group started repair works on the Lusaka-Chirundu Road in April and is also building the Chiawa Bridge on the Kafue River. In March, Sinohydro won the contract to build a dual carriageway from Kitwe to Chingola in the Copperbelt. In China, Sata also obtained finance from the policy banks for repairs to the Mansa-Luwingu and Mbala-Nakonde roads.
The bulk of works in the power sector has also gone to Chinese companies, with an estimated 85% of projects contracted. The government is asking for bids for the Kafue Gorge Lower Hydropower Station, which is to be developed in partnership with the China-Africa Development Fund, and the Batoka Gorge Hydropower Station. Sinohydro and China International Water and Electric have expressed interest in both. Sinohydro is also adding 120 megawatts of capacity to the Itezhi-Tezhi Dam, in a project financed in part by India’s Export-Import Bank. ‘The Chinese have both the money and the technology. It’s impossible to ignore them,’ says a senior official from the state-owned Zambia Electricity Supply Corporation.
Indian-based and Singaporean-listed Nava Bharat, which owns the Maamba Collieries, is in talks with banks to source the $550 million needed to build a 300-MW coal-fired plant. Nava Bharat has sought to work with China Development Bank and other financiers.
2,000 jobs in Kabwe
Chinese-backed projects sit high on the government’s industrialisation agenda, too. Officials say that discussions between shareholders in the Mulungushi Textile Factory – the Zambian state (34%) and Qingdao Textiles, a Chinese company (66%) – could lead to its reopening this year and the creation of some 2,000 jobs in Kabwe. Defence Deputy Minister Davies Mwila had said in March that the government would lease the factory, which shut in 2008, to another foreign investor, if events in Beijing did not pan out.
In April, the Chinese state-owned defence company Norinco offered to loan the PF government almost $20 mn. to expand the operations at the Mupepetwe Military Factory in Serenje, which produces ammunition and uniforms. Mwila says the loan will allow the factory to increase production and export.
During Sata’s state visit, China Non-Ferrous Metals Mining Company signed a $110 mn. deal with a group of twelve companies for various businesses which will be located in the Multi-Facility Economic Zone, which CNMC is currently developing on the Copperbelt.
The government is also rolling out new Chinese language programmes in a few public secondary schools. Having bankrolled Zambia’s first ultramodern stadium, a 41,000-seater in Ndola in 2011, China is financing another 50,000-capacity stadium in Lusaka this year before moving to Mongu, Western Province, where the PF plans to build a 20,000-seater to quell secessionist tendencies.
The ‘slave’ and ‘master’ themes of Sata’s early campaign speeches on China are gone. Upon his return in April, the President told crowds in Western Province: ‘You have wetlands, I am bringing Chinese investors who want to produce rice and they will show you.’
See Original article from African Asia Confidential here