Zambia’s power company, ZESCO, is set to be among the first casualties of China’s takeover after defaulting on loan repayment, a report revealed.
The report released by Africa Confidential – a United Kingdom (UK) based newsletter – titled: Bills, Bonds and even Bigger Debts, claims that Zambia leaders are in talks with China over a possible takeover of the country’s electricity company. The report also said that Zambia’s national broadcasting corporation, ZNBC, is already owned and run by China.
The report states: “A major worry of the International Monetary Fund (IMF) and United States (U.S.) is that China’s BRI strategy is first to encourage indebtedness, and then to take over strategic national assets when debtors default on repayments. The state electricity company ZESCO is already in talks about a takeover by a Chinese company. The state-owned TV and radio news channel, ZNBC, is already Chinese-owned. The long-term outcome could be effective Chinese ownership of the commanding heights of the economy and potentially the biggest loss of national sovereignty since independence.”
Zambia is one of the African countries whose leaders were in China earlier this week for the China-Africa summit. Zambia President Edgar Lungu was reported to have gone back home after visiting a number of Chinese companies and after receiving a grant of $30 million for the Lusaka East Multi-facility Economic Zone electrification project.
Zambia President Edgar Lungu with Chinese leader Xi Jinping after securing a grant of $30 million for the Lusaka East Multi-facility Economic Zone electrification project at the just-concluded Africa-China Forum.
The Africa Confidential report also indicated that a number of projects in Zambia are financed by China, while the country’s debt profile rises in the last five years.
The report states further: “Since President Edgar Lungu came to power, Zambia has signed off on, at least, $8 billion in Chinese project finance. Over $5 billion of this has not been added to the total, because Zambia insists the money has not been disbursed, and more large loans are in the pipeline. Yet the Finance Ministry does not have the capacity, insiders say, to police, let alone stem, all the spending. In some cases, the financial penalties for halting disbursement on projects would outweigh the savings. Donor governments have offered technical assistance to bring the project debt mountain under control but have been rebuffed.”
Going by the report, analysts say Zambia may have been Africa’s first casualty in China’s suspicious trade deals and aids to countries on the continent.
But, Zambia’s Minister for Energy, Mathew Nkhuwa, has rubbished the Africa Confidential report, saying the takeover of the country’s electricity company would not go through without being vetted by the cabinet. He further added that the company is a national asset with a massive valuation and cannot be sold.
Mr Nkhuwa said: “There is no such decision by Cabinet. As you know ZESCO is such a huge company and anything to do with it will have to be decided by cabinet and I can confirm to you that there has not been anything decided on the future of ZESCO.”
China has been considered a good partner by many African governments. However, there have been growing concerns over the increasing debt incurred by African leaders from the Chinese loans and treatment being meted out to Africans by the Chinese.
In Kenya, revelations of racism at the China-funded standard gauge railway did not only shock many, but also uncovered a series issues that African leaders need to address.