HomeOpinion & AnalysisColumnistsJapan’s US$32 billion aid package: Time to think big

Japan’s US$32 billion aid package: Time to think big


President Robert Mugabe attended The Tokyo International Conference on African Development (TICAD) — recently.

Painona with Tapiwa Nyandoro

He has been quoted in the Press as saying Japan “must come with real projects”. Project-based approach is the way to go. But it should be his government that should have bankable blueprints ready for implementation once funding is secured.

The ball is in our court in the race to attract Japanese funds. An integrated approach that aims to grow exports, employment, gross domestic product growth and tax revenues should be adopted.

The following projects which offer advantages to both Japan and Zimbabwe should top the list.

Platinum Group Metals (PGM) — Smelter and Refinery

Japanese companies are the world’s largest producer of motor vehicles. Automobiles are Japan’s lead export. The vehicles use platinum as a catalyst to breakdown noxious emissions in their exhaust. Zimbabwe has this mineral in abundance.

The challenge is to raise production to a million ounces per year, which should earn the country over $1,5 billion annually. Funds must therefore be sourced for ramping up production and building a smelter and refinery for the PGM. Some $2 billion is needed for the smelter and refinery, money the project can pay back.

National Railways of Zimbabwe (NRZ)
It has been reported that Japan has shown interest in re-capitalising, re-equipping, re-furbishing and re-launching the NRZ as an efficient, safe and modern logistics company.

Japan needs our coal for its power stations and needs our iron ore / steel for its industry. The NRZ needs its capacity expanded five fold or more to be able to cope with bulk exports needed not only by Japan, but by India and China as well. Zimbabwe has the coal and iron ore resources.

The NRZ alone may over the five years it may take to upgrade to its current installed capacity, need some US two to three billion dollars.

Zimbabwe Electricity Supply Authority

A stable supply of affordable electricity is needed by any economy, especially one aiming to have labour intensive low technology industries. The installed capacity needs to be raised as soon as possible to around 10 000 Mega Watts. The Japanese funds should be tapped if possible for Batoka Hydro plant, the Gokwe Thermal and expanding and upgrading Hwange Thermal.

Trains are more cost efficiently pulled by electric locomotives, whilst mining smelters and refineries have a high appetite for electric energy. The Mining Industry in general also requires uninterrupted energy supplies for safe and efficient operations. In addition, investment in irrigation, another national project Japan has an interest in energy. Zesa alone might need another three billion dollars in investment as new generation capacity is installed and the grid renewed or refurbished. Surplus power has a ready market within Sadc.

Mining ventures
According to the World Bank, Mining is supposed to lead the Zimbabwean economic recovery and employment creation. Japan has shown interest in our coal. And will take iron ore for its steel Industry. Here is an opportunity for the Ziscosteel Board and Management to take the initiative and present Japan with a bankable project to recover its steel-making mandate.

Another project is also slurry pipeline to export ore in partnership with the likes of ESSAR of India.

ZMDC too, seemingly perennially undercapitalised, could team up with the Japanese to launch a viable exploration unity which will recover its funds as it auctions well explored concerns.

There is nothing much happening in agriculture due to lack of funds as we all know. We are short of soya Beans and Maize, and as a result stockfeeds as well.

The Ministry of Agriculture and the World Food Programme, if agreeable, should put together a project to commission some 200 000 hectares under irrigation, every five years until a target of two million hectares is attained.

The aim should be to produce the equivalent of 2 million tonnes of maize and 800 0000 tonnes of soya beans a year from 200 000 hectares under irrigation. The output would be worth around a billion dollars annually, and the investment over the five years would about as much.

The potential for job creation is considerable. Livestock industries — poultry, pork and beef require huge quantities of maize and soya beans to attain the critical mass necessary to drive exports.

Food prices are going to rise faster than inflation as Eastern diets move from cereals to more protein. It is in Japan’s interest also to secure supplies whilst growing an African market for its machinery and electronic goods.

Water and Sewage infrastructure
The Japanese have shown an interest in the project and the Zambezi Water Pipeline to Bulawayo Water project should take priority and developed to enable Matabeleland North to be turned into a vast irrigated estate over time.

The water and sewage systems for most major cities also need expansion and re-equipping. Grants, loans and equity should all be on the table to provide funding, and projects should be such that capital is recovered over time and loans serviced.

As I see it the US$32 billion should have been for Zimbabwe alone over a six to ten year period. The Japanese have the money but let us present them with win–win projects and I am sure they will bring more, as equity and long-term loans.

Thus the challenge is for His Excellency’s Cabinet to present and sell their projects, not only to the Japanese, but to China, other donors and private capital as well.

“Let us put aside that obsession with talk and policy documents and, as Li Keqiang, upon his election as the new Prime Minister of China said, “Screaming yourself hoarse” was not as good as “rolling up your sleeves and getting to work”.

Send your feedback to nyandoro.osbert1@gmail.com or feedback@newsday.co.zw

Recent Posts

Stories you will enjoy

Recommended reading