News / Africa

Investment in Zimbabwe Plunges as Mugabe Seeks Chinese Lifeline

Zimbabwe's President Robert Mugabe (L) and his Chinese counterpart Xi Jinping shake hands during a signing ceremony at the Great Hall of the People in Beijing, Aug. 25, 2014.
Zimbabwe's President Robert Mugabe (L) and his Chinese counterpart Xi Jinping shake hands during a signing ceremony at the Great Hall of the People in Beijing, Aug. 25, 2014.
Reuters

Foreign investment into Zimbabwe plunged 59 percent to $67 million in the first half of this year, the central bank said on Monday, reflecting worries over President Robert Mugabe's policies and the risk of investing in his country.

Mugabe, at 90 Africa's oldest leader and one of its longest-serving, is visiting China this week. Officials say he will seek funds to rebuild decaying roads, rail and power facilities and to help mechanize Zimbabwe's agriculture.

Official data show China has extended $1 billion in loans to Zimbabwe since 2009 and trade between the two nations rose to $1 billion last year from $300 million five years ago.

Mugabe has increasingly leaned on China after being shunned by Western trade and financial partners. They have been put off by concern over human rights and alleged fraud in elections won by the president and his ZANU-PF party.

Announcing the drop in foreign direct investment, Reserve Bank of Zimbabwe governor John Mangudya said exports, mostly minerals and tobacco, were also down 13 percent in the first half of the year, to $1.3 billion, compared with the first six months of 2013.

"There is therefore need for the country to create an investor-friendly environment so as to tap into these external capital resources to boost employment, production and exports," Mangudya said in a half-year monetary policy statement.

Zimbabwe's economy is experiencing a serious dollar crunch and electricity shortages. Several companies have failed to pay salaries or have closed altogether, in a country where only 500,000 out of a total 13 million people hold formal jobs.

The economy did return to growth in 2009, after nearly a decade of recession, when Mugabe was forced to share power with his opposition rivals. But his landslide victory last year has coincided with a rapid slowdown.

The government has cut its growth target for this year to 3.1 percent from 6.1 percent previously.

Mangudya said the tough economic conditions had strained the capacity of companies and individuals to repay loans. The percentage of non-performing loans out of total loans had risen to 18.5 percent from 17 percent at the start of the year. Banks in turn have tightened their lending to customers.

"Reduced credit is leading to a decline in economic growth, private consumption, job losses and decrease in government revenue," Mangudya said.

Mangudya said liquidity problems among banks meant foreign banks like units of Barclays Bank PLC and Standard Chartered and larger local lenders would have to raise their minimum capital to $100 million by 2020 from the current $25 million. Smaller banks would be required to maintain minimum capital of $25 million.

Mangudya said in order to ease the dollar crunch in the economy, banks would now be required to keep only five percent of their foreign currency offshore, down from 30 percent.

You May Like

How to Safeguard Your Mobile Privacy

As the digital world becomes more mobile, so too do concerns about eroding privacy and increased hacking More

'Desert Dancer' Chronicles Iranian Underground Dance Troupe

Film by Richard Raymond is based on true story of Afshin Ghaffarian and his friends More

Obesity Poses Complex Problem

Professor warns of obesity’s worldwide health impact More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Rolling Thunder Run Reveals Changed Attitudes Towards Vietnam Wari
X
Katherine Gypson
May 25, 2015 1:32 AM
For many US war veterans, the Memorial Day holiday is an opportunity to look back at a divisive conflict in the nation’s history and to remember those who did not make it home.
Video

Video Rolling Thunder Run Reveals Changed Attitudes Towards Vietnam War

For many US war veterans, the Memorial Day holiday is an opportunity to look back at a divisive conflict in the nation’s history and to remember those who did not make it home.
Video

Video Female American Soldiers: Healing Through Filmmaking

According to the United States Defense Department, there are more than 200-thousand women serving in the U.S. Armed Forces.  Like their male counterparts, females have experiences that can be very traumatic.  VOA's Bernard Shusman tells us about a program that is helping some American women in the military heal through filmmaking.
Video

Video Iowa Family's Sacrifice Shaped US Military Service for Generations

Few places in America have experienced war like Waterloo. This small town in the Midwest state of Iowa became famous during World War II not for what it accomplished, but what it lost. As VOA’s Kane Farabaugh reports, the legacy of one family’s sacrifice is still a reminder today of the real cost of war for all families on the homefront.
Video

Video On Film: How Dance Defies Iran's Political Oppression

'Desert Dancer' by filmmaker Richard Raymond is based on the true story of a group of young Iranians, who form an underground dance troupe in the Islamic Republic of Iran. This is the latest in a genre of films that focus on dance as a form of freedom of expression against political oppression and social injustice. VOA’s Penelope Poulou has more.
Video

Video Turkey's Ruling Party Trying to Lure Voters in Opposition Stronghold

Turkey’s AK (Justice and Development) Party is seeking a fourth successive general election victory, with the goal of securing two-thirds of the seats in Parliament to rewrite the constitution and change the country's parliamentary system into a presidential one. To achieve that, the party will need to win seats in opposition strongholds like the western city of Izmir. Dorian Jones reports.
Video

Video Millions Flock to Ethiopia Polls

Millions of Ethiopians cast their votes Sunday in the first national election since the 2012 death of longtime leader Meles Zenawi. Mr. Meles' party, the Ethiopian People's Revolutionary Democratic Front, is almost certain of victory again. VOA's Anita Powell reports from Addis Ababa.
Video

Video Scientists Testing Space Propulsion by Light

Can the sun - the heart of our solar system - power a spacecraft to the edge of our solar system? The answer may come from a just-launched small satellite designed to test the efficiency of solar sail propulsion. Once deployed, its large sail will catch the so-called solar wind and slowly reach what scientists hope to be substantial speed. VOA’s George Putic reports.
Video

Video FIFA Trains Somali Referees

As stability returns to the once lawless nation of Somalia, the world football governing body, FIFA, is helping to rebuild the country’s sport sector by training referees as well as its young footballers. Abdulaziz Billow has more from Mogadishu.
Video

Video With US Child Obesity Rates on the Rise, Program Promotes Health Eating

In its fifth year, FoodCorps puts more than 180 young Americans into 500 schools across the United States, where they focus on teaching students about nutrition, engaging them with hands-on activities, and improving their access to healthy foods whether in the cafeteria or the greater community. Aru Pande has more.
Video

Video Virginia Neighborhood Draws People to Nostalgic Main Street

In the U.S., people used to grow up in small towns with a main street lined by family-owned shops and restaurants. Today, however, many main streets are worn down and empty because shoppers have been lured away by shopping malls. But in the Del Ray neighborhood of Alexandria, Virginia, main street is thriving. VOA’s Deborah Block reports it has a nostalgic feel with its small restaurants and unique stores.

VOA Blogs