sharing in governance of extractive industries

Report: Zimbabwe to use Marange diamonds proceeds to repay Chinese for military support

Zimbabwe is planning to use revenues from its Marange diamonds to pay the Chinese government's Anhui Foreign Economic Construction Group (AFECC) for designing and constructing a defense college for top military officers outside of Harare, reports Zimbabwe's Daily News.

According to the arrangement, China's Export-Import Bank, wholly owned by Beijing, will provide Zimbabwe with a US$98 million loan while AFECC will recoup its expenses with diamond proceeds from Anjin, Harare's joint venture with the Chinese government.

As cited in the Daily News, "Article 9 of the deal reads: 'The related Zimbabwe side should establish an escrow account to secure the payment and repayment of the facility with the revenue of Zimbabwe's side benefits from Anjin Investment (Private) Limited. An agreement on the escrow account should be signed by Zimbabwe sides and the Lender (Export-Import Bank of China.'"

The deal also stipulates that Zimbabwe will pay a 0.5 percent management fee to the Chinese, reports the news source.

While Finance Minister Tendai Biti signed the loan agreement in March, it was presented only last week to parliament for approval, which both the House of Assembly and the Senate granted, according to the Daily News.

Sources say that President Mugabe assured AFECC President Jiang Qingde a year ago that the company could exploit Marange diamonds in exchange for strengthening the country's military with the creation of the Zimbabwe Defence College.


Available: http://www.diamondintelligence.com/magazine/magazine.aspx?id=9596

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