China’s Loans to Africa: To Accept or Not to Accept

Critics of China’s largesse fear Africa is heading into perpetual debt; paving the way for an “economic re-colonization” of Africa by China. Apologists, however, believe this is the best way to get Africa out from its stagnated economy and facilitate socioeconomic emancipation, especially given the strings attached to loans from the Western institutions.

Africa and China have been headlining the international news recently, apparently for mutual benefits. After years of depending on IMF, World Bank, and the West for loans and/or grants for economic developments, the sleeping continent has now found a new partner in the giant of the East.

Hitherto, Western-type loans had come with some stringent conditions that were not easily met, or else were implemented at the expense of the very people the loans were supposed to help. Up the creek without a paddle, Africa has now looked East. But has Africa found the angel in the East?

Since the dawn of the African Union, several African countries have developed economic development initiatives and China has funded several of these initiatives.

Today, a majority of African countries owe huge amounts of money to China, mostly under Sino-African economic partnership program dubbed FOCAC.

In this arrangement, several African countries have pledged significant deposits of precious natural resources as collateral for these loans. It’s now clear that these loans have become an existential challenge for most African countries with Zambia, Kenya and others as prominent examples of bad deals. We can state that China has money and needs the resources of Africa more so than Africa needs China.

Therefore, Africa must bargain from strength with thoughtful demands for value during these negotiations. Protecting citizens and enhancing the national interest of African countries should be the primary goal of any international negotiations, especially dealing with China.

Thoughtful African citizens are understandably concerned about the impact of the barter arrangements that surround some of these negotiations. By pledging huge natural resources for Chinese loans, these countries have in fact mortgaged Africa to China for peanuts.

Our nervousness stems from the fact that not only are we bent on depleting our precious natural resources, we are also causing serious environmental degradation at the expense of future generations.

These existential challenges have compelled countries such as Sierra Leone to reject infrastructure financing from China.

Instead of using these projects to respond to the teeming unemployment rates in African countries, the Chinese are allowed to use their raw materials as well as labor from China. Sierra Leone and Malaysia saw through the prophetic prism of mortgaging their countries to China and rejected plans to contract Chinese loans.

But probably the greatest challenge to Africa is not necessarily loans coming from China or the West. It is the implementation of our policies that have thrown most African countries into perpetual debt.

Servicing an infrastructural loan without optimizing implementation policies would always be an albatross on our government, irrespective of the source of the loan.

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Posted by on Nov 14 2018. Filed under top stories. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

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