Voice of Liberty Africa: Africa in China’s Debt: Financing the Past with the Future – by Ogunyemi Bukola

Voice of Liberty Africa: Africa in China’s Debt: Financing the Past with the Future – by Ogunyemi Bukola

Voice of Liberty Africa: Africa in China’s Debt: Financing the Past with the Future – by Ogunyemi Bukola

On Thursday July 19th 2012 during the opening ceremony of the 5th Forum on China-Africa Co-operation (FOCAC) in Beijing, Chinese President Hu Jintao offered $20 billion in loans to African countries over the next three years to develop infrastructure, agriculture, manufacturing and small and medium scale enterprises – double the amount China pledged for the previous three-year period in 2009.

China is obviously, and expectedly, eager to deepen economic ties with Africa. Trade between China and Africa; fueled by China’s demand for Africa’s raw materials, and Africa’s demand for cheap, often substandard, Chinese products, jumped from little more than $10 billion in 2000 to $166.3 billion in 2011.

Blessed with abundant natural resources, and with infrastructures in a total state of comatose requiring several billions to finance, Africa presents an opportunity for China to sow little, in terms of loans to aid ailing African economies, and reap much, in terms of exploration of the continent’s ample natural capital, at cheap rates. This brings back the memories of European colonization and the slave trade. Unfortunately, unsuspecting African nations are taking the bait yet again, and are gradually repositing from Western imperialism to Chinese neo-colonialism.

Hugely indebted to the IMF and World Bank, and other international donor agencies, without clear-cut plans on repayment, African countries are increasingly turning to China for financial aid to finance essential infrastructural projects within their borders. African nations, rich in natural resources, have become beggars, taking loans to finance infrastructural deficits which arose as a result of a tradition of corruption and wastefulness. Two examples readily come to mind: The Democratic Republic of Congo and the Federal Republic of Nigeria.

The Republic of Congo will borrow over $1.1 billion, almost 16.8% of her $6.54 billion 2013 budget, from China. In February 2011, China agreed to grant the Democratic Republic of Congo a loan of $367.5 million to construct a 150 megawatt hydroelectric plant in southwest Bas-Congo province. Only about 9 percent of Congolese had electricity in 2010, according to Congo’s Ministry of Energy. Earlier in 2008, Congo and China signed a $9 billion deal to swap minerals for infrastructure projects. The total amount of the deal was reduced in 2009 to about $6 billion at the request of the International Monetary Fund, which said the debt load was unsustainable.

In September this year China offered Nigeria a total of $1.1 billion (about N170 billion) in loans to develop airport terminals and a light rail line for Abuja, the Federal Capital Territory; as well as communication system improvements. The 20-year, 2.5 per cent interest loan has a grace period of seven years before payment is required.

Analysts at Standard Bank estimates that Nigeria has made over $1.6 trillion in revenue over the last 50 years while an audit report conducted by NEITI, Nigerian Extractive Industries Transparency Initiative, on Nigeria’s petroleum industry from 1999 - 2008 indicated that the Federal Government earned a total sum of $269 billion within the period. The question then arises: what has Nigeria done with revenues earned from oil exploration spanning over half a century?

The story is not different in the case of DR Congo. While the Democratic Republic of Congo is widely considered to be the richest country in the world regarding natural resources; citizens of the DRC are among the poorest in the world. Congo’s untapped deposits of raw minerals are estimated to be worth in excess of $24 trillion. The Congo has 70% of the world's coltan, and more than 30% of the world's diamond reserves, but just like Nigeria, this abundant wealth has not trickled down to the masses due to massive corruption and mismanagement.

Why has the huge revenue African nations have earned from the exploration of their abundant natural resources not improved the lives of their citizens? Why are most of the world's poorest people dwelling in the richest continent of the world? Why are African nations still lacking in basic infrastructures decades after independence from European colonialists? Where is Africa's wealth? These are questions African leaders, past and present, must give suitable answers to before going cap-in-hand begging from 'sugar-daddy' China.

Mobutu Sese Seko, Congo’s ruler from 1965 to 1997, allegedly stole up to $5 billion while in office. Just last year in Nigeria, the government of President Goodluck Jonathan paid about $18 billion to oil marketers under the guise of fuel subsidy in what is regarded as the biggest scam ever in the history of the nation. Cases like these and many more, are the precursors of the beggar-status these nations have adorned under the pretext of China-Africa trade.

Due to corruption African economies like Nigeria and Congo are regrettably sliding into an unconscionable foreign debt trap which will prove difficult for future generations to resolve. Africans must begin to say NO to this wanton wastefulness with strong will and loud voice if indeed we care about the future of this continent. It is even more disheartening to note that most of the projects for which these loans are taken remain unexecuted, and the monies end up in private pockets, laundered by politicians whose conscience have been blighted by greed. Africa is effectively financing its past, in the form of corrupt leaders, with its future.

African leaders at all levels should take the fight against corruption serious and take drastic, painful steps to reduce overhead cost of government and make more funds available for the execution of essential capital projects. They should borrow a leaf from Malawi’s Joyce Banda’s salary cut and proposed sale of presidential jet and Senegal’s decision to scrap its Senate and the post of vice President all in a bid to save costs.

Africa should learn to manage its resources first, before exploring loan options from China.

Ogunyemi Bukola

 

-          Ogunyemi Bukola is a contributor to the Voice of Liberty Africa project and writes regularly for Omojuwa.com

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