New $800 million loan for Harare leaves sour taste

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Harare town House

When Harare City Council secured a $US144 million loan from the China Exim Bank for the refurbishment of the Morton Jaffray Water Works in 2013, it was seen as the panacea to the water crisis that had bedeviled the capital since the turn of the new millennium.

NewsDay Comment

The Chinese loan was celebrated by city fathers as signifying the end of the water crisis that in 2008 left a trail of destruction, the death of more than 4 000 people due to the cholera epidemic.

Seven years down the line, Morton Jaffray is still in bad shape, even worse than it was in 2013 when it used to pump more than 604 megalitres per day for a hub of 4 million people.

That capacity has reduced and put simply, the US$72 million of the US$144 million availed by the Chinese bank was wasted, invested in luxurious vehicles amid reports of overpricing.
So, the residents are stuck with a loan they benefitted nothing from, which benefitted the local and central government fat cats while the water problems are getting worse.

While mystery surrounds the US$144 million deal, Harare is moving in to borrow a whooping US$800 million from China to address the same water crisis the initial loan was supposed to fix!

Borrowing US$800 million without addressing the mystery surrounding the China Exim Bank deal can only help to add to more suspicion from residents who are ultimately going to pay for the loans but without the precious liquid.

Harare is without doubt sinking in debt that includes the RTGS$77 million to local water purification chemical supplier Chemplex, among others, and is owed more than RTGS$1 billion dollars by government, business and residents.

To think it is wise to borrow more, especially from the Chinese known to be ruthless when following their debt is exposing Harare to serious repercussions.

Though mayor Herbert Gomba has tried to assure residents that nothing will happen to the city assets if they fail to pay because government is the guarantor, it always remains problematic especially after the US$144 million deal remains as dodgy as it is ill-explained to the residents.

The Chinese, we hear, are not happy with the manner that loan was handled, they think money was abused, figures were inflated hence they are not releasing the remainder anytime soon.

In the wake of that, where is the guarantee that the current bailout deal will work and there won’t be any reports of abuse of funds and inflated figures?

Where is the guarantee that the loan will end the water crisis in the city now when the first deal did not?

Yes, the water distribution network is in shambles, too many leakages and nothing done about it in 65 years, so indeed a solution is needed but it remains to be seen whether this is not creating an even bigger problem for the residents. Only time will tell.