China Eximbank provides $60 million loan to Farmers' World for the acquisition of farming equipment (Linked to Project ID#72969)

In 2007, the Export-Import Bank of China signed a $60 million loan agreement with Farmers’ World — a company in Zimbabwe — for the acquisition of farming equipment. The Government of Zimbabwe issued a sovereign guarantee for this loan, making it a contingent liability of the Government of Zimbabwe. Farmers’ World subsequently defaulted on some of its outstanding payment obligations to China Eximbank. As a result, the Government of Zimbabwe, as the guarantor, paid $34,577,911 of Farmers' World outstanding debt to China Eximbank by 2016. China Eximbank also provided a $970,000 loan to Farmers' World in March 2010, which was guaranteed by the Government of Zimbabwe and became debt of the Government of Zimbabwe when Farmers' World defaulted (as captured via Project ID#72969). In June 2017, the Auditor General of Zimbabwe presented a report to the Public Accounts Committee of the National Assembly, noting that '[l]oan agreements and other supporting documents pertaining to the [China Eximbank] and Farmers’ World loan facility were not availed for audit examination. … In the absence of contractual documentation, there is risk that Government [of Zimbabwe] may fail to recover the loaned amounts thereby prejudicing public funds. It was said the loans were paid on behalf of beneficiaries of agricultural machinery, equipment and implements. [...] The Accountant General advised the Committee that 'the… payment to [China Eximbank] was important for Government [of Zimbabwe] to retain the country’s credit worthiness with [China Eximbank] and ensure continued lines of credit. As part of efforts to recover the funds from Farmers’ World, the matter was been referred to Attorney General Office for guidance.' Then, on February 7, 2017, the Minister of Finance and Economic Development told Zimbabwe’s Parliament that '[w]hen it became clear that we would not be able to access additional Chinese funding, we paid off this loan and thus Farmers’ World became our debtor.' As all China Eximbank debt was repaid, the project was completed. In 2018, Edward Raradza (a former member of Parliament and chairperson of the Zimbabwe Farmers’ Development Company, a company incorporated in Zimbabwe that Farmers' World owned 55% of and the Government of Zimbabwe owned the remaining 45%) and his son (Mathew Raradza) faced criminal charges for stealing farming equipment that was obtained with the proceeds of the $60 million China Eximbank loan.

Additional details

1. This loan is not included in the database of Chinese loan commitments that SAIS-CARI released in July 2020. 2. Some sources suggest Zimbabwe Farmers’ Development Company (ZFDC) was the actual recipient of the loan. ZFDC, a company incorporated in Zimbabwe was owned by Farmers' World (55%) and the Government of Zimbabwe owned (45%). However, several official Zimbabwean sources describe the loan as to Farmers' World. This issue merits further investigation.

Number of official sources

4

Number of total sources

16