Business team shaking hands in front of the flag

6 Eastern African countries currently owe China over $29.4 Billion which they cannot repay; yet China is willing to provide more funding. If China is not worried about repayment of these loans, what could they be getting in return from Africa?

China has used every opportunity available to assure African leaders that their increasing indebtedness to China should be their least concern.

Last month, China’ s special envoy to Africa, Xu Jinghu, denied claims that Beijing was burdening Africa with debt, noting that China was Africa’s main creditor.

Indeed, data shows that the continent owes more to private lenders than to China.

“It is baseless to shift the blame onto China for these African countries debt problems. Their debt position has ‘been built over time even before we came in.

“We have to look at the fluctuations in the international economic situation vis-a-vis the price of minerals, their key exports. This is where the problem is, and not Chinese loans,” Mr. Xu said.

If China is not worried about repayment and is even urging their debtors not to be worried, what could they be gaining from the continent that we do not know?

Mr. Odilim Enwegbara, a development economist and Chairman/CEO Pan Africa Development Corporate Company Ltd. Advocated for the creation of Centre for Chinese Strategic Studies as a way of understanding the way that Chinese conduct business.

Enwegbara contended that as a country that has existed for 5000 years the Chinese are smart negotiators with a large proportion of nationalists. “The Chinese are smart. They came with the notion of introducing projects with counterpart funding but in fact, what you bring as counterpart funding is already enough to complete the project.

“They inflate the project by as much as 1000 percent and know how to bribe government officials. They take government officials to China, give them wonderful treatment and make them look important whereas all they are doing is seeking how to bribe the officials.

“Don’t also forget that in China, external corruption is condoned unlike the West where there are sanctions against their companies operating with opaqueness either in their countries or overseas”, he stated.

East African economies have in the past 10 years borrowed $29.42 billion to grow their transport, communication, manufacturing and energy sectors.

The region’s economies are now spending almost eight percent of their revenues to service these loans, which analysts say are becoming a burden, especially given that their impact is yet to be seen on the growth.

The latest data from the China-Africa Research Initiative (Cari) at John Hopkins University shows that Ethiopia owes Beijing $13.73 billion, followed by Kenya at $9.8 billion. Uganda owes $2.96 billion and Tanzania $2.34 billion.

Rwanda, South Sudan, and Burundi owe China the least amounts — $289 million, $182 million and $99 million respectively.

The complex relationship between Africa and China has become even more complicated this year. Initially, 2018 was set to reaffirm the bond through the latest Forum on China-Africa Cooperation summit held in Beijing in September. The summit delivered its usual pageant of African leaders, side deals, and the announcement of a USD$60 billion financing package. The year also saw the recurrence of misgivings about the relationship.

Could China be securing Africa for the future bit by bit? Something just doesn’t add up.