The China-Zimbabwe Relations: Impact on Debt and Development in ZImbabwe

Africa has major development aspirations in the broader context of a global and continental economic development agenda. This calls for substantial financial resources at a time when the global development finance landscape is changing, from a model centred on official development assistance and the coverage of remaining financing needs through external debt, to a framework with greater emphasis on the mobilization of domestic resources. Sub-Sharan Africa average public debt increased by 20% in five years to 57% of the GDP as at end of 2017. Almost 40% of countries in sub-Saharan Africa (SSA) are in danger of slipping into a major debt crisis. The number of countries at high risk of debt distress, 15, has more than doubled since 2013, while eight countries are already in distress. Overall, the African government's external debt payments have doubled in two years, from an average of 5.9 percent of government revenue in 2015 to 11.8 percent in 2017, 20 percent of African government external debt is owed to China and 17 percent of African government external interest payments are made to China. In contrast, 32 percent of African government external debt is owed to private lenders, and 35 percent to multilateral institutions such as the World Bank as well as 55 percent of external interest payments are to private creditors. The Zimbabwean public debt has been on an increasing trend, both external and domestic debt, reaching US$18 billion by December 2018. There has been evolving dynamics to debt in Zimbabwe since 1980 with a shift from the multilateral and traditional bilateral creditors to the look east policy with China the major creditor from the east. This has seen China playing a significant role in Zimbabwe trade, finance and investment over the past few years. The Chinese share of external debt stock as of 2018 was estimated around 34 percent. This implies that China and Zimbabwe relations are significantly having a bearing on the debt development in Zimbabwe. The Chinese investments in Zimbabwe have been mainly in the energy and real estate sector