Beggars can’t be choosers. If you understand that then you’ll understand why leaders from 53 African countries happily jetting to Beijing on Monday for the Forum on China-Africa Cooperation (FOCAC). Beijing is considered the Santa Claus, having pumped a staggering US$124 billion into Africa since 2000. And on Monday, China splashed another US$60 billion for the party.
The US$60 billion “free cash”, as most African leaders would like to think so, comes on top of another US$60 billion announced about three years ago. The money includes US$15 billion in grants, interest-free loans and concessional loans. Others include about US$20 billion in credit lines, a US$10 billion fund for development financing and US$5 billion to finance imports from Africa.
In a nutshell, the African countries do not have to worry what are those money being called. They just need to worry when the money will arrive in their banking accounts. Adding to the excitement, President Xi Jinping promised to cancel the debts of some poor African nations. Only China offers such generosity, so it’s not difficult to understand why the Africans love the Chinese.
Overlooked and ignored by the United States and other Western nations, Africa is now increasingly dominated by China whose influence in the continent includes trade, investment and political relationship. Western corporations would not touch most of the poor African countries with a 10-foot pole without a promising ROI (return on investment).
China’s business model, however, is different from that of the West. Flushed with trillions of dollars in foreign reserves, the Chinese government is the one who takes the lead in shaping the African infrastructure development. More importantly, the Chinese’ offers come without demands for safeguards against corruption, waste and environmental damage.
For that reason alone, African nations are more than willing and happy to accept China’s money although they have heard about the buzzword “debt trap” diplomacy. But hey, if British-educated smart leader like Malaysia ex-premier Najib Razak didn’t find anything wrong at accepting Chinese loans, what possibly could go wrong with Africa, right?
China’s growing presence in Africa – particularly with its landmark “Belt and Road Initiative” – has raised concerns that many of the nations might struggle to repay the Chinese debt used to build expensive infrastructure projects, allowing China to take control of strategic assets. But judging by the feedback from the African leaders in Beijing for the summit, they don’t seem to be concerned.
Addressing the summit, Rwandan President and African Union chairman Paul Kagame said a stronger Africa was an opportunity for investment, rather than a problem or a threat. He said – “Africa is not a zero-sum game. Our growing relationships with China do not come at anyone’s expense.”
South African President Cyril Ramaphosa, meanwhile, delivered a stinging rebuttal to criticism of China’s development aid in Africa. Mr Ramaphosa said the meeting “refutes the view that a new colonialism is taking hold in Africa, as our detractors would have us believe” Nevertheless, he added that China and Africa should work towards a more balanced trade relationship.
In defence of his signature belt and road plan, President Xi Jinping said China was not pursuing “political self-interest” in its investments in Africa. He said Chinese investment in Africa comes with “no political strings attached”. Against critics, he said – “Only the people of China and Africa have the right to comment on whether China-Africa cooperation is doing well.”
However, the issue of debt is very real. Earlier this year, the IMF warned that the African continent is facing a debt crisis, with 40% of low-income countries now in debt distress or at high risk of this. Critics warn that African debts to Western in past decades are yet to be settled, therefore, African nations could be sinking into deeper and unsustainable debt.
Zimbabwe, for example, still owes 77% of its national debt to the Paris Club. In Djibouti, China holds 77% of national debt, while Zambia’s US$6.4 billion in Chinese loans represents the lion share of its commitments. Although details of China-Africa loans are usually kept secret by both parties, the deals often involve African nations mortgaging their mineral and oil resources as collateral.
U.S. officials have repeatedly warned that African countries risk losing their sovereignty because of Chinese debt. In a major blow to China’s ambitions, Malaysia – under PM Mahathir – recently cancelled Chinese-financed projects worth more than US$20 billion, arguing they were unnecessary and would create an unsustainable debt burden.
Deeply indebted Pakistan is also reportedly reconsidering some projects in the multi-billion dollar China-Pakistan Economic Corridor that is a key link in the BRI. But increasing rejection from foreign countries isn’t the only problem being faced by President Xi Jinping. Lately, Beijing’s big spending in Africa and elsewhere faces a growing domestic backlash.
Xu Zhangrun, an influential Tsinghua University law professor, slammed President Xi – “Why is China, a country with over 100 million people who are still living below the poverty line, playing at being the flashy big-spender? How can such wanton generosity be allowed?” On Weibo, China’s version of Twitter, some brave citizens criticize China’s pride in flashing its “big money.”
One Weibo user wrote – “In recent years, China has invested heavily in foreign countries and provided a lot of assistance to many developing countries and poor countries and regions such as Africa and Asia. Is China a developed country? Most people don’t think so, because China’s per capita GDP ranked around 70 in the world, and China still has tens of millions of people living below the poverty line waiting for poverty alleviation.”
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September 4th, 2018 by financetwitter
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if British-educated smart leader like Malaysia ex-premier Najib Razak didn’t find anything wrong at accepting Chinese loans, what possibly could go wrong with Africa, right?###
Im not being offended but I worry for you that wrote this line, so you mean najib is better than the whole Africa’s leaders? I wonder if you guys still respect people of Africa… Have you learned anything about these Africa leaders background? some of them are just better than najib and many of your fellow brothers naturally, and also some have been also educated in the UK, so what are talking about.
Are you speaking for the rest of Africa, being African I never like this attitude of our leaders and Im not only person, so please stop talking like Malaysia or whatever nation is better than Africa. Travelling is also good for you guys, not just typing.