China Eximbank provides RMB 280 million government concessional loan for Phase 2 of Agricultural Machinery, Equipment, and Implementation Project (Linked to Record ID#61257)

Project narrative

On February 22, 2008, China Eximbank signed an RMB 280 million ($37.6 million) government concessional loan (GCL) agreement with the Government of Zimbabwe for Phase 2 of the Agricultural Machinery, Equipment, and Implementation Project. However, the face value of the GCL was subsequently revised to RMB 257,185,070.04. The loan had a 10 year maturity (final maturity date: 2018); however, its interest rate and grace period are unknown. China Eximbank allowed the Government of Zimbabwe — in partnership with Zimbabwe Farmers Development Company (ZFDC)— to repay this loan with the proceeds from tobacco sales to China. The Government of Zimbabwe reportedly agreed to sell 30,000,000 kilograms of tobacco to China for four straight years, followed by an increase to 80,000,000 kilograms in the fifth year. This project supported supported ZFDC’s acquisition of more than 2,480 pieces of agricultural machinery, including 384 tractors, 300 disc harrows, 300 ploughs, more than 100 generators, excavators, front-end loaders, 300 reapers, 30-ton trucks, 10-tonne trucks, 30 combine harvesters, electric irrigation motors, irrigation sprinklers and pipes. The intended beneficiaries of the equipment (local farmers) were expected to cover 20% of the cost of the farming equipment they received. ZFDC is referred to as Zimbabwe Farmers' Development Trust by some sources. China CAMC Engineering Co Ltd. was the contractor responsible for implementation. The project was officially completed and handed over to the Zimbabwean authorities on May 15, 2009. However, there is some evidence that the loan supporting Phase 2 underperformed vis-a-vis the creditor’s original expectations. As of 2018, the borrower had accumulated principal and interest arrears and penalties worth $13,581,139.59.