Mugabe pins hopes on China to restore Zimbabwe economy

27 August 2015

President Robert Mugabe pinned his hopes on China helping to revive Zimbabwe’s struggling economy and outlined reforms to investment rules to try to attract more capital.

In his first state of the nation address in eight years, the 91-year-old president, who has presided over economic collapse and diplomatic isolation since he came to power in 1980, said strong growth was just around the corner.

“Government had signed key projects with China, covering energy, railways and telecommunication, water, mining, agriculture, and tourism,” he said.

Although the economy has stabilised since 2009, hopes of a big economic recovery and two million jobs promised by Mugabe’s ruling ZANU-PF party are fading.
A major concern of foreign investors is a law requiring foreign-owned businesses to sell at least 51 percent of their shares to locals. Mugabe did not mention the law, which the government says is being constantly reviewed.

The economy would grow 1.5% this year, half the initial forecast, due to a drought and weak commodity prices.
Mugabe said the government was working to strengthen ties with international lenders like the International Monetary Fund and the World Bank, which Zimbabwe owes $9 billion.

He promised to overhaul investment laws by the end of the year to make it easier to do business and attacked bosses of government-owned firms for huge monthly pay, which, he said “borders on the obscene, reflecting avarice and greed”.

China’s high-profile investment in Africa has failed to live up to the hopes of many on the continent and Beijing is now focused on stemming a sharp stock market slide.
Many companies in Zimbabwe are struggling to pay salaries or are forced to close due to power cuts, the high cost of capital and competition from cheap imports. Labour unions say companies have laid off more than 20,000 workers in the last month alone.

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