18 African countries, the G8 States adopted in 2005 their debts. Now, many are again faced with the financial. China, in particular, pushed the blame on, despite the planned Debt relief.
It just was a translation error. In the case of the China-Africa friendship night in January in Beijing, a big screen showed four key words, which should describe the relationship between China and the African continent: Next to the words “Innovation”, “efficiency” and “transcendence” stand there, in English also “exploitation”. Actually, the Chinese characters meant on the screen “openness” or “pioneer work”, but the mistake raises questions about the Sino-African relations.
China is due to its large presence in Africa in the criticism. From 2000 to 2017, China granted to African States and company loan in the amount of 143 billion US dollars, and is regarded as the largest creditor in Africa. In doing so, China could use the money well. “Why is China, a country with about 100 million people still live below the poverty line, a striking large donor?”, asked the influence of Chinese law Professor Xu Zhangrun 2018 in a letter to China’s President Xi Jinping. International critics say, China, the event falls African countries in the debt and create a dependency.
A respite for Cameroon
China responded to the accusations. 2018 Xi promised to remove some of the poorer African countries, a part of the debt. Including Cameroon. 78.4 million U.S. dollars, China issued the Central African country in January. Cameroon had borrowed since 2000, a total of 5.6 billion dollars from Beijing, found out the research initiative on China-Africa the Johns Hopkins University in a study. Cameroon’s total debt now stands at around 5.8 trillion CFA Francs ($10 billion).
“At the Forum on China-Africa cooperation, held since 2000, every three years, has cut China’s President is always a certain amount of debt,” says Lucy Corkin, Business Manager at Rand Merchant Bank Africa. It’s not going to be large sums of money, but the decree was having a positive impact on diplomatic relations. “The case, there was also in the DR Congo. It is a respite for the recipient countries that cannot meet their obligations,” explains Annalisa Prizzon, a Senior Research Fellow at the British think tank Overseas Development Institute. This will lead to more fiscal space for social spending and allowing the countries to take out new loans. In order to grow, you have to invest.
“Lack of responsibility readiness” of African countries
But it is not only Cameroon is in payment distress. In the year 2017, the international monetary Fund (IMF), nine low-income African countries South of the Sahara as countries with high debt risk, including Cameroon, Ethiopia and Zambia. Six more plug according to the IMF, in deep debt: Chad, the Republic of the Congo, Eritrea, Mozambique, South Sudan and Zimbabwe. These countries are considered highly indebted developing countries (HIPC), which should benefit in the framework of the HIPC Initiative the G8 countries of Debt. By 2018, for 36 countries, 30 of which are in Africa, have approved debt-reduction packages out of a total of US $ 76 billion under the HIPC Initiative.
“It is interesting that China is the largest money in only three of the current and former HIPC countries, distributors, and Djibouti, the DRC and Zambia,” says Prizzon. Thus, China could be the main responsible for the Africa-wide debt. Also of exploitation, one cannot speak about, says Corkin. “One thinks of China, it comes and takes what it wants, and the African States know not what they do”, says the South African.
If there is exploitation, done because of the lack of willingness to take responsibility, the African governments to their own people to showed. “Often they go to China to obtain loans, and negotiate the conditions. Some have the national interest in mind, other the Well-being of citizens and others, it is simply a matter of their own benefits.” The responsibility for the development of a country cannot be constantly blamed external actors, Corkin. Finally, Chinese loans would Finance projects, the Western lenders were not willing to support.
The West mixed with
The first African country has already pulled credit-emergency: Sierra Leone in October 2018, a Deal with China to burst. Sierra Leone aviation Minister Kabineh Kallon announced that the already approved construction of a new airport will not take place. China had said for a loan and associated works in an amount equivalent to 318 million dollars. In all the euphoria, the China have initially triggered to its investments in Africa, should not forget that the cooperation over always smooth, says Corkin: “We are aware of the tensions between Chinese and Africans, in some countries, where the projects were not sustainable.” For example, there are treaties between China and the DR Congo, according to Chinese investors, your suppliers and workers are free to choose – there is no obligation, democratic Republic of the Congo.
China take on projects that the West will stop, says Corkin
But China is not the only international player on the African markets. “The role of China in African countries must be seen in the context of what other actors in Africa,” said Corkin. Otherwise, there is the danger of China as a case to present, while many other countries are in truth the same would do. Indeed, the US with 54 billion dollars in foreign direct investment, the largest Investor on the continent. An estimated 600 U.S. companies are solely active in South Africa, including some of the largest American companies. The EU is Africa’s largest trading partner and accounts for 36 percent of all exports. During the fifth EU-Africa summit in 2017 in Abidjan, the EU also committed to mobilize by 2020, more than 54 billion dollars in “sustainable” investments for Africa – similar to President Xi, the announced 2018 additional 60 billion dollars in loans and other financing.
“There are not Good and Evil, but there are good lenders and bad lenders,” says Prizzon. The core point was, the political decision-makers in the recipient countries the tools to make informed decisions on whether this kind of source of income wages, on whether the country could afford the guarantee. “It is simply a matter to make informed decisions about borrowing.”