Chinese firm injects US$50m into tobacco sector

Enacy Mapakame
Chinese firm, Tiens Group, invests an estimated US$50 million in Zimbabwe’s tobacco sector annually as part of its contribution to the agriculture sector that fuels the country’s economic development.

The money goes towards inputs procurement and other requirements for tobacco producers under the company’s contract farming programme.

Tobacco is the country’s second single biggest foreign currency earner after gold.

During the 2018 tobacco selling season, the company bought almost half of the total tobacco production, according to the Chinese Deputy Ambassador to Zimbabwe Mr Zhao Baogang.

“Chinese firms have interest in agriculture as well, not only energy,” he said at a two-day Zimbabwe Multi-Stakeholder Public Debt Conference by African Forum and Network on Debt Development (AFRODAD) and the Zimbabwe Coalition on Debt and Development (ZIMCODD) which ended yesterday in the capital.

“As China, we are doing our best to support Zimbabwe in every way possible for its benefit. Tiens pours over US$50 million every year into the tobacco sector.

“The company also ensures they buy tobacco at a relatively higher price than the one prevailing on the market,” he said.

The deputy ambassador was responding to assertions that the world’s second largest economy only has interests in the energy sector at the expense of other key productive sectors such as manufacturing and agriculture that are key in the industrialisation agenda.

Agriculture contributes about 70 percent of raw materials needed in manufacturing and also provides over half of employment for the country’s employable population.

But civil society is of the view that China’s interest may be sinister and does not want to support productive sectors like agriculture and manufacturing — essential for value addition and beneficiation.

This is to ensure the Asian giant imports raw materials from Zimbabwe and other African countries as well as impose cheap imports on the country that will effectively crowd out locally manufactured goods.

According to AFRODAD, 61 percent of China’s total investment in Zimbabwe between 2005 and 2019 was in the energy sector while real estate accounts for 22 percent. Agriculture, utilities and health accounted for 1 percent, 4 percent and 1 percent in that order.

“The energy investments are not generating enough revenue to pay back the loans due to the structure of the parastatals and the pricing model used.

“Manufacturing sector received a minimal proportion of investment; this shows that Chinese are more interested in selling finished goods to Zimbabwe, lack of sufficient investment in manufacturing reduces the multiplier effect of investments in sectors such as real estate, agriculture and infrastructure since most of the materials will be imported,” said AFRODAD research consultant Reginald Chaoneka.

The Deputy Ambassador, however, reiterated that China had no hidden agendas in Zimbabwe or the rest of Africa but was committed to the economic development of the region on “a willing buyer willing seller basis”.

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