Choosing the lesser evil

While many detractors see China's US$60 billion infrastructure funding offer as a possible debt trap, local analysts say the Asian giant is acting no differently than former colonial powers in Africa.

06 September 2018 | International

The tug-of-war between east and west for Africa's resources appears to have swung China's way after its president, Xi Jinping, put US$60 billion on the table to assist the continent with infrastructure development, with “no political strings attached”.

The offer at the just-ended Forum on China-Africa Cooperation (FOCAC) summit in Beijing, which was attended by 50 African leaders, including President Hage Geingob, has raised the spectre of a possible debt trap.

Political commentator Ndumba Kamwanyah felt Namibia did not have an investment agenda prior to the FOCAC summit.

“China has the upper hand in the direction, justification and application of that partnership. They (African leaders) took nothing to the summit but their begging bowls. It is in this context that Namibia stands to gain nothing from the Chinese loans in the long-run. All we are gaining is debt that our government is incurring for future generations,” he said.

In Sri Lanka a massive pile of debt led to that country handing over an entire port to China in December 2017, on a century-long lease.

Now Djibouti, home to the United States' military main base in Africa, looks set to cede control of another key port to a Beijing-linked company.

In both countries, China's Belt and Road Initiative, under which the U$$60 billion is also now being offered, led to massive debts that Sri Lanka and Djibouti could not repay.

Other local analysts said while China is being referred to as a neo-colonialist, its actions are no different from what the European Union (EU) and the US have attempted to do in Africa.

“Like China, other cooperation partners, such as the EU and her member states, provide a combination of grants in the form of budgetary support and preferential loans. The US, through Pepfar, has provided substantial financial resources for combating the spread of HIV and Aids,” said independent analyst Klaus Schade.

He, however, did caution that policymakers would have to closely scrutinise loans from China.

“China's loans are often conditional on the procurement of Chinese goods and services and such conditionality has to be factored in when calculating the total costs of a loan.”

Schade felt that doing business with China would be beneficial, if there were investments in the manufacturing space, as opposed to transport, which was enjoying particular attention as part of the Belt and Road Initiative.

He added that for Namibia to benefit, local companies would need to be the drivers and beneficiaries of Chinese-funded projects.

“Namibia needs investment in manufacturing industries that complement existing industries, diversified exports and/or substitute imports,” Schade said.

Economics professor Roman Grynberg said China was no different than Africa's past colonial masters, but added it was using a different modus operandi.

“It wants resources but it has a different modus operandi. It does not normally create colonies, but does send its people in very large numbers,” said Grynberg.

Like Schade, he also cautioned the Namibian government to scrutinise any Chinese loans to avoid falling into a debt trap.

“If leaders in Africa do not carefully scrutinise the projects proposed by China and Chinese firms, we will end up with many white elephants, and we will have to repay what was borrowed.

“If those projects are poor and do not result in rapid growth, then we have only ourselves to blame for the debt trap we will eventually create,” Grynberg said.

“The Chinese who come are not colonialists, but simply immigrants and behave as such. They are aggressive and seek out business opportunities and many of the honest opportunities are in Namibia's interests.”

While at the summit, Geingob and his South African counterpart, Cyril Ramaphosa, jumped to the defence of the Chinese, dismissing the notion that they are neo-colonialists.

“Where others saw Africa as a source of wealth, where others saw Africans as slaves, China saw commonalities and the potential for long-lasting friendship,” Geingob said, with Ramaphosa adding: “We are dealing with partners that are not arrogant or pushy, but who want to engage with us.”

Meanwhile, it was reported that western countries are using aid to Africa as a smokescreen to hide the “sustained looting” of the continent as it loses nearly US$60 billion a year through tax evasion, climate change mitigation, and the flight of profits earned by foreign multinational companies.

“The common understanding is that the UK 'helps' Africa through aid, but in reality this serves as a smokescreen for the billions taken out,” said Martin Drewry, director of Health Poverty Action, one of the NGOs behind a 2014 report.


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