Chinese Government provides RMB 50 million grant for Phase 1 of NetOne Expansion Project (linked to #62416, #62426, #52620)

On or about January 21, 2010, the Chinese Government signed an agreement with the Government of Zimbabwe that provided a RMB 50 million grant for Phase 1 of the NetOne Expansion Project (captured via Project ID#62417). On June 1, 2010, China Eximbank and the Government of Zimbabwe signed an RMB 315 million government concessional loan (GCL) agreement, also for Phase 1 of the NetOne Expansion Project (captured via Project ID#62416). Zimbabwe’s President Robert Mugabe and Wang Gang, a member of the Political Bureau of the CPC Central Committee, witnessed the signing of the loan agreement. This GCL carries the following borrowing terms: a 20 year maturity and a 5 year grace period. However, according to the the 2018 and 2019 Blue Book Estimates of Revenue and Expenditure published by Zimbabwe’s Ministry of Finance and Economic Development, the face value of this loan was later revised to RMB 286,080,176.66. The purpose of the project was to facilitate the country’s transition to second generation (2G) and third generation (3G) phone technology by expanding the coverage and capacity of NetOne’s network and more than doubling its subscriber base. NetOne Zimbabwe is a company that is wholly owned by the Zimbabwean government. It is one of three mobile phone operators in the country. It used the proceeds of the GCL for Phase 1 to purchase equipment from Huawei Technologies and implement network upgrades to wireless broadband stations, while expanding coverage to remote geographic areas lacking service. Its ultimate goal was to reach 7 million subscribers. During Phase 1 a Broadband and Ascot Packet Core Switching Centre in Bulawayo was completed and officially inaugurated on December 7, 2011. By 2012, NetOne had successfully launched mobile broadband and 3G service in Zimbabwe. The geographical areas of the country that received upgraded internet service during Phase 1 included the Southern Region, Matabeleland Province, and Midlands Province. These provinces were reportedly able to use improved internet access to for e-health care, online education, and e-government programs. Phase 1 was ultimately completed in 2013, but its precise completion date is unknown. Then, on August 25th 2014, China Eximbank and the Government of Zimbabwe signed an RMB 1,360,000,000 ($218.9 million) GCL agreement with China Eximbank for Phase 2 of the NetOne Expansion Project. This loan carried the following terms: 2% interest rate, 20 year maturity, and a 5 year grace period. Phase 2 involved an expansion in the number of base stations from 400 in 2013 to 2,300 in 2016. It was completed on September 10, 2015, and Huawei Technologies was responsible for its implementation. The China Eximbank loan that supported Phase 2 is captured in Project ID#62426. Then, on June 26, 2019, the Government of Zimbabwe and China Eximbank signed an RMB 485 million ($71 million) government concessional loan (GCL) agreement for Phase 3 of the NetOne Expansion Project (captured via Project ID#52620). This GCL, which was ratified by ZImbabwe’s Parliament in December 2019, carries the following borrowing terms: a 2% interest rate, a 20 year maturity period, and a 5 year grace period. The loan proceeds are reportedly “ring-fenced” in an escrow account that is jointly monitored by the Government of Zimbabwe and China Eximbank and were on-lent to NetOne. Phase 3 will involve the installation of 3,000 additional base stations in 500 new sites, and Huawei Technologies will be responsible for its implementation. In 2020, an initial disbursement of $21.3 million was made through the RMB 485 million ($71 million) GCL. There are some signs that at least one of the GCLs issued by China Eximbank has financially underperformed. In mid-2022, the Debt Management Office of Zimbabwe’s Ministry of Finance released a report, which noted that ‘[t]he low disbursements of loans is due to accumulation of arrears to active China Eximbank loans […] on projects such as the Victoria Falls International Airport ($54 million), NetOne network expansion ($61 million) and expansion of the Robert Gabriel Mugabe International Airport ($3 million).’ By the end of 2021, total external debt arrears to China Eximbank included $13 million for the NetOne Expansion Phase 1 Project, $47 million for the NetOne Expansion Phase 2 Project, $67 million for the Rehabilitation of Municipal Water and Sewage Treatment Works Project (City of Harare Project), $7 million for the National Defence College Project, $54 million for the Victoria Falls Airport Renovation and Expansion Project, $3 million for the Robert G. Mugabe International Airport Expansion Project, $0.5 million for Phase 2 of the TelOne Broadband Expansion Project, and $73 million for the Medical Equipment and Supplies Project.

Additional details

1. This project is also known as Phase I of the NetOne-Huawei Network Expansion Project. The Chinese project title is 移动壹网电信改造. 2. The China Eximbank GCL for Phases 2 was contracted by the Government of Zimbabwe; however, the Government of Zimbabwe may have used the proceeds from the GCL to on-lend to NetOne. AidData has not yet identified any official sources that provide evidence of on-lending agreement. This issue warrants further investigation.

Number of official sources

6

Number of total sources

11