China “60 Billion Dollars” Strategic Financing in Africa:
Alagi Yorro Jallow
What constitutes a loan, debt or strategic partnership?
Does China adopt an affable and respectable stance towards its partners, promoting friendship and win-win cooperation with commercial and trade diplomacy? Does China’s respect for Africa’s sovereignty and non-interference in its internal affairs, a factor in its strategic financing partnership with Africa, that is most significant.
Fifty of Africa’s 55 leaders attended the Forum on China-Africa Cooperation (FOCAC) in Beijing. Chinese President Xi Jinping presented a development framework built around eight initiatives: Industrial promotion, infrastructure connectivity, trade facilitation, green development, capacity building, healthcare, people-to-people exchanges, and peace and security. He also announced $60 billion financing for Africa. Aid would peak $5 billion a year.
China also pledged to support Africa in achieving food security by 2030, expand exchanges and cooperation in addressing climate change and create a joint peace and security fund. And there was, of course, China’s Belt and Road Initiative (BRI) — the most ambitious global infrastructure project in history that involves 76 countries in Asia, Africa and Europe. Beijing suggested, quite reasonably, to formally link BRI with Africa’s continental infrastructure vision.
Scapegoating is failure in defense and in political and economic strategy. It is one easy refuge for cowards and incompetent political leaders. For the accident-prone, incompetent potentates, the bigger the sin, the bigger the goat to be skinned in atonement. When a father bed-wets and blames the son beside him; when a leader daily generates horrid dirt’s uncensored, defecates at the backyard of his opponents and invites sanitary inspectors to arrest the innocent, then know that evil has triumphed. How soon will, Africa will become wise.
Africa Confidential has warned that not only Zambia but other African countries risks losing its sovereignty to China, as the Chinese prepare to seize national assets once governments defaults on loans. Zambia and Srilanka are typical examples of losing its sovereignty to the Chinese.
In a report titled ‘Bonds, bills and ever bigger debts’ published on September 3, Africa Confidential observed that ZNBC was already being run by the Chinese and disclosed that Zesco was also already in talks about a takeover by a Chinese company.
A major worry of the IMF and US is that China’s BRI strategy is first to encourage indebtedness, and then to take over strategic national assets when debtors default on repayments. The state electricity company Zesco is already in talks about a takeover by a Chinese company, Africa Confidential has learned. “The state-owned TV and radio news channel ZNBC are already Chinese-owned. The long-term outcome could be effective Chinese ownership of the commanding heights of the economy and potentially the biggest loss of national sovereignty since independence,” the report read.
Africa Confidential noted that Zambians would be alarmed to learn the real Chinese debt figures. “Zambia is a good example of what the International Monetary Fund and the United States Senate are calling a crisis of accelerating developing-country indebtedness to China.
Concerned by China’s growing economic and political influence in Africa, there remains increasing doubt and misinformation regarding China’s true intention. There are also unanswered questions, for instance, the economic value and financial viability of Chinese-led projects, terming them as unnecessary, wasteful, predatory and debt traps that would inherently plunge the continent into a financial crisis. Other commentators allege that African leaders were being hoodwinked into financial commitments for transport infrastructure that are designed to promote Chinese appropriation and extraction of the continent’s minerals and hydrocarbons. They say, that Chinese activities have not created jobs.
Economic growth is determined by accumulation of factors of production — principally capital, labor and technology. Africa’s labor stock is in abundance and growing in number, skillsets and capacity; capital and technology are in short supply yet abundant in Europe and North America.
For Africa’s economies to grow, they must attract capital and technology. But capital flow into Africa has been dismal, elusive and erratic, undermined by illicit financial flows estimated at $50 billion a year. For more than five decades, African leaders have been either unwilling or reluctant to meet Africa’s capital and technology needs. There has been inadequate attention towards boosting productivity, industrialization in Africa and recently trade and public diplomacy with China has significant growing financial and economic footprints in Africa.
Africa has little choice but to finance it development through external debt. It must carefully consider the merits and demerits of Chinese funding or listen to the naysayers, stay on the sidelines and remain poor. But it must guard against wastage, misguided priorities and corruption.