Sunday, July 26, 2020

"Africa is starting to have second thoughts about that Chinese money"

From Bloomberg via GhanaWeb, July 22:
Dipak Patel can still recall the dizzying grandeur of his 2003 visit to Beijing’s cavernous Great Hall of the People: the rows of stern guards all the same height, the state dinner that included stewed shark fin and bird’s nest soup, and the People’s Liberation Army band playing songs from Patel’s native Zambia—even singing in one of the African country’s scores of dialects.

As Zambia’s minister of commerce at the time, Patel had joined the delegation to cement ties and—crucially—secure financing for big-ticket infrastructure initiatives. While most delegates were eager to accept anything they could get for projects such as a hydropower dam and a 50,000-seat soccer stadium, Patel urged caution. “My view was that we needed to build a strategic partnership and think it through,” he says. “But I was one voice in the cabinet.”

His warning went unheeded, and Zambia started to take out loans from Chinese banks for airports, hospitals, housing projects, and the roads connecting them. Chinese credit has grown to about a third of Zambia’s external debt, which has surged sevenfold over the past decade, forcing the government this year to ask creditors to reschedule loans.

Patel, now a real estate investor, is challenging in court the legality of billions in foreign money Zambia has borrowed without what he says was required consent from Parliament. “Nobody other than the government knows the terms,” he says. The government says it didn’t need parliamentary approval.

Patel is among a growing number of African activists and policymakers questioning the deluge of Chinese credit—some US$150 billion in 2018, according to researchers at Johns Hopkins University—that has fueled a debt crisis aggravated by the new coronavirus. Nigerian lawmakers are reviewing Chinese loans they say were unfavorable.

Activists in Kenya are demanding the government disclose the terms of Chinese credit used to build a 470-kilometer (292-mile) railway. And Tanzanian President John Magufuli calls an agreement his predecessor made with Chinese investors, to build a $10 billion port and economic zone, a deal “only a madman would sign.”

While it will be tough for cash-starved African governments to win many concessions, a wave of looming defaults poses the biggest test ever for China’s influence in the region. “This has the potential to produce the most profound change in relations since China became a major economic player on the continent,” says Chris Alden, an international affairs professor at the London School of Economics. “African governments and society are increasingly asking China to come up with answers to this problem.”

Chinese lending to Africa dates at least to the 1960s, when Mao Zedong channeled arms and training to rebels fighting for independence from European colonial powers.

The support was limited, because China was as poor as many African countries, but it has since grown into an economic superpower in need of new markets and raw materials and seeking to boost its global political standing.

In the past two decades, Beijing has handed out loans to developing countries at a speed and scope not seen since the U.S.-financed Marshall Plan in Europe after World War II.

In Africa, Beijing was eager to fill the vacuum left when U.S. and European interest in the continent waned following the end of the Cold War. Governments there were hungry for loans not tied to austerity programs imposed by Western financial institutions, and China was quick to approve credit, with scant concern about the money going to regimes accused of corruption or human-rights violations.

“For China, as the newest power on the block, the only region of the world that was uncontested was Africa,” says Gyude Moore, Liberia’s former minister of public works and now a senior fellow at the Center for Global Development in Washington. “When people complain about Chinese loans, it’s not as if most African countries have a plethora of options.”

It’s hard to miss China’s footprint in Africa. In tiny Guinea-Bissau, the exit signs in a government building are written in Chinese characters. In Mozambique, Chinese money paid for a 2-mile-long suspension bridge, the longest on the continent, that links the capital with beach resorts and neighboring South Africa.

China helped foot the bill for Senegal’s Museum of Black Civilizations—which until recently included Chinese art in its exhibits. It’s become the largest financier of infrastructure in Africa, with the likes of the China Export-Import Bank and the China Development Bank funding a fifth of big projects, according to consulting firm Deloitte.

To guarantee a quarter of that debt, African countries have effectively mortgaged future earnings from exports of commodities such as oil, cocoa, and copper....


If interested see also:
"Natural Resources & Sleeper Cells: China’s Plan For The Next 5,000 Years"