in the past two decades china has built
large infrastructure projects in almost
every country in africa
and this has made western critics
uncomfortable
china and africa can forge an even
stronger comprehensive strategic and
cooperative partnership
a common portrayal of china's lending
practices is known as debt trap
diplomacy a phrase made popular after
being used in government documents
during the trump administration
the so-called debt trap is created when
a country lends to poorer countries
intentionally overwhelming them with
unsustainable debt forcing them to
surrender strategic assets or concede
increased political leverage
but so far there's no evidence that such
a debt trap has been sprung in africa
now there's always a certain grain of
truth like with every stereotype to it
but it breaks down very very quickly
upon any type of serious examination
the focus on depth trap diplomacy is
part of wider western anxieties towards
china in africa
we've already seen that chinese
investments in chinese infrastructure
projects have been linked to increasing
chinese influence within the host
country ruling elite that may end up
becoming somewhat of a leverage point
for china to push some of these
countries or ruling elites to side with
china on critical issues that are
important to the u.s or to its allies
but while the u.s has focused its africa
strategy on aid and social services
china has been building
african governments themselves said we
are tired of aid and charity we want to
do trade we want to be treated like
partners the chinese came along and said
great we don't do aid in charity we want
to do business with you global gateway
will mobilize 300 billion euros until
2027. now the us and europe are
answering back with their own
infrastructure initiatives to counter
china but african experts are skeptical
at the end of the day china has been
that guy around the corner with you know
a bouquet of flowers
to africa of the us you know europe and
the uk
have time and time again say be careful
of the flowers you see out of the window
they have phones on them
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in ghana the handover of power from the
british government went off smoothly and
with dignity
from the 1950s into the 1970s countries
on the african continent gained
independence from their european
colonisers
us and european-led organizations like
the imf and the world bank funded much
needed infrastructure across the
continent
but that slowly stopped
the united states and europe kind of
backed away from infrastructure in the
60s and 70s it's something that that we
did very very well for a long time in
the post-war era we built vast amounts
of infrastructure throughout the world
and one of the things you see in africa
is that so much of the railways and the
highways and the infrastructure was
built during the colonial period
and back then it was quite solid but
it's been decrepit because the former
colonial governments are not plowing in
lots of money
enter china
as early as the 1970s beijing began
building the tazara railway a link
between the zambian town of kapiri and
poshi and dara salam port in tanzania
at the time it was the longest railway
in sub-saharan africa allowing zambia to
ship copper bypassing white rule
rhodesia and south africa
it also gave china much needed political
allies
beijing said we have problems you have
problems we will help you out
and they impact on this
and this is really some of the alicia's
that china sold in africa that later you
know came to clearly define the divide
between the west
and and the east as far as china's
involvement in africa is concerned
in the early 2000s as china looked to
expand markets and political influence
abroad its investment in africa ramped
up
the chinese said well guess what we are
the best in the world now at producing
large-scale infrastructure fast and
cheap and we have a surplus of capital
so we'll loan you the money we have our
great contracting companies we have all
of this skill and all this ability to
deliver fast and cheap
and in that sense it was really an ideal
match
they recognized what africa's
development stage was and they said you
know what 30 years ago
that was us
we recognize a lot of what's going on
here you don't have enough
infrastructure you have a large
population that's growing quickly also
let's not underestimate there is a
shared history here of anti-colonial
struggle so you tick all of those
different boxes and africa made a lot of
sense for the chinese to come in
china is currently involved in an
estimated 35 african countries and has
made significant contributions to their
infrastructure including ports railways
and power plants
it's estimated that china has invested
more than 340 billion dollars in africa
so compared to how much china is
investing across the world this may not
be as much but for africa it's a lot of
money because of the huge infrastructure
gap
that africa faces
but there are noticeable differences
between chinese financing and how the
west lends historically with low
interest rates and flexible terms
there must be over millions of different
types of loans out there but if you were
to take an ego's eye view of the
different kinds of loans involving
chinese lenders then you can broadly
categorize them into three different
types
the loans fall into three categories
zero interest loans offered as aid
concessional loans which have a lower
interest rate often intended for large
infrastructure projects and the most
common commercial loans with higher
interest rates in line with what you
would get from a typical private bank
one of the very interesting trends that
we see when researchers discuss chinese
lows is that there is a tendency to
bunch all three together well the very
first question you should ask yourself
whenever you see something like that is
well are they comparing apples to
oranges because if you're comparing
commercials to something available from
the world bank or one of its different
agencies then you're not really
comparing like for like
and the fact of the matter is this and i
hope the borrowers out there are
listening
95 if not 99
the loan agreement are there in favor of
the lenders no matter who you deal with
this is because by the time you sign
that loan agreement and you get the
money
you'll have the money in your hands and
the only thing the bank will have is a
piece of paper that is why the loan
agreements are in their favor
in one report which analyzed 100 chinese
contracts it revealed that the loans are
structured to give an advantage over
other creditors and allows action to be
taken if the borrower acts contrary to
the interests of a people's republic of
china entity
there are also unusual clauses that
shroud agreements in secrecy
we look at multilateral lenders like the
world bank and the different agencies
their shareholders are countries and
they're required to publish
their lending and activities just to be
transparent they don't have any choice
on the other hand when you come to
commercial banks then you'll see a very
different case and that is banks often
are under a duty of confidentiality to
their clients i think the chinese banks
are no different
but the rush to give out loans by the
chinese has meant some of their early
investments weren't as profitable as
projected
so when china stepped into the field it
was much welcomed by the developing
world that there would be increased
financing for infrastructure
however with the rush to get projects
off the ground to put them into action
and to begin construction critical due
diligence was often left by the wayside
financial sustainability
social and environmental sustainability
assessments
kind of never were done or were done
haphazardly or were simply not
transparent or available to the
populations what this has ended up
causing is states to take on projects
that they initially thought were
affordable but unfortunately they've
been now saddled by debt
china is coming for its pound of flesh
in uganda
in 2021 the entebbe international
airport in uganda came under fire after
local media reported that the airport
would be taken over by china we call
this a debt trap
after closer examination of the contract
it was found there was no debt trap and
both sides have denied that the airport
is in danger of a takeover
i think there is a assumption that
certain governments are not able to look
after themselves or they're not either
not sophisticated enough or which is
simply too corrupt to look after its own
interests i think in my personal view
and experience that just simply has to
be true
experts say more should be done by
borrowing countries to make sure loans
are more favorable to their interests
but the chinese argue that the risk
level is higher in african countries and
greater repayment assurances are needed
for loans that might not otherwise be
available
certainly in my 20 years of experience
i've never seen a case where the chinese
bank would just say look don't read this
just sign on the dotted line in fact
they will spend days and days and
they're sitting with us going through
every line of document and making sure
the other side understands because they
know
in 10 years time if they don't explain
this clearly this is going to come back
and haunt them
certainly
there are issues with how china finances
projects there are issues around
transparency but i don't think this is
some sort of grand master plan from
beijing in order to ensnare developing
countries
into debt and become further beholden to
beijing
in kenya and nigeria debts to beijing
are growing
these include kenya's 3.6 billion
railway from mombasa to nairobi which
reportedly lost 200 million dollars in
three years of operation
and a 1.3 billion loan from the china
exim bank to fund nigeria's largest
infrastructure project
a 157 kilometer segment of the lagos
kano railway
the government itself can't afford to
finance these things the private sector
isn't really stepping up the west has
not got a alternative program so
therefore
china is the
only game in town and the terms of the
loans are reasonable at the same time
you have members of the national
assembly particularly from the main
opposition party
vocally criticizing the government for
what they perceive to be a lack of
transparency around the management of
the loans from china they often
articulate this worry that you hear in
other parts of africa
that
china will try and seize nigerian assets
in the event of a default by the
nigerian government
but looking closer at kenya and
nigeria's total public debt it doesn't
appear that china's in a position to use
the debt it's owed as leverage
in kenya chinese loans account for about
10
of the country's 70 billion total debt
and it's even less acute in nigeria
where the chinese debts are just about
three to four percent
so again we have to focus on the data as
it is not as these narratives and these
storytelling which which we have these
fantasies that kenya is going to be
taken over by the chinese
one country cannot control another
country just by owning four to ten
percent of its debt
only a handful of countries on the
african continent have a significant
amount of debt owed to china and most of
them owe much more to private bond
markets
africa does not have a chinese debt
problem angola weights about a third of
all chinese debt in africa so take
angola out of the issue then you have an
even less serious problem in that
respect so it's very important that we
narrow down this problem to be what it
is
but it only takes one bad deal to affirm
western fears
in the democratic republic of congo a
controversial method of borrowing based
on future natural resource revenue has
meant some projects have fallen victim
to corruption
congo has a very very significant
mining industry it's africa's biggest
producer of copper it's by far the
world's biggest producer of cobalt
cobalt is a key ingredient in the
rechargeable batteries that power
electric vehicles you hear politicians
talk about congo
saying that we are to cobalt as saudi
arabia is to oil
however
up until now at least the
benefits to government revenue and the
benefits to the population at large have
been rather limited
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in 2008 china and the democratic
republic of congo agreed that chinese
companies would finance three billion
dollars worth of infrastructure and
build a 3.2 billion dollar copper and
cobalt project whose tax-free profits
would repay both investments
china with the help of these mines has
now come to dominate an industry at the
heart of future technologies
and leaked documents reveal millions of
dollars that flow from chinese entities
including the multi-billion dollar
mining project to the family and
associates of congo's then president
joseph
kabila if
the example of congo applies elsewhere
these companies operate with a real
deliberate lack of transparency
and if they find a willing partner in a
government as they did in joseph
kabila's government
this lack of transparency can extend to
and really envelop the relationship
between the state and these mining
companies
there is a lot of anxiety in the west
over china's involvement
anywhere really because it's a strong
number two to the u.s
and you know being a superpower and
china having very strong links uh with
africa are setting up
a lot of logistical supply chains
in africa preparing to expand
its trade and take it to to the next
level
is worrisome because whatever happens in
africa or whatever happens in asia
ultimately can affect the world order
there's a lot at stake
ideology may also be on the line
countries that receive help from the u.s
or european multilateral development
banks often require values that fall in
line with democratic nations
anti-corruption good governance
transparency participation inclusion
these are things that really matter
we should want projects that
are beneficial to the populations that
don't negatively affect them and so
while it may hinder the us in being able
to lend to certain countries i don't
necessarily think that's a bad thing
when countries in africa take help from
china they're expected to side with or
at least not participate in the
condemnation of china on key issues
including taiwan and allegations of
forced labor in xinjiang
on these sensitive red line issues in
taiwan is certainly one of them this is
where the political relationship
becomes more evident and much more
important africa more than almost any
other region in the world tends to vote
as a block in major international
organizations and tends to express
itself as a group if not the whole
continent and again this is the
political symbolism that's becoming
increasingly important to china from a
region like africa that is so important
to the chinese much more so in many ways
than the resources which again aren't as
important to china simply because they
can buy the resources now from any
number of other places but getting this
kind of political support is very
important in today's geopolitical
environment we want to show
that a democratic
value-driven approach can deliver on the
most pressing challenges
while the us and europe haven't
attempted to try and match china's
investment on the continent they have
started work to offer alternatives
the eu's global gateway aims to supply
300 billion euros globally between 2020
and 2027
and buildback better world or b3w from
the us aims to address the
infrastructure needed in developing
democracies are messy
things take time in democracies so while
authoritarian regimes such as china are
able to speed up the process or able to
get things done quicker that doesn't
mean it's of a better quality and i
think that's really where the u.s and
others and through the b3w initiative
can really make a difference
is by actually developing and building
high quality infrastructure we believe
in the nations of africa
in the continent-wide spirit of
entrepreneurship and innovation
yet skeptics of u.s and european-led
projects say they're aimed at
specifically targeting chinese influence
rather than working with african
countries as business partners
and they lack specific information that
have many wondering whether or not
they'll result in significant action in
africa
when you talk to the chinese they'll
tell you that we have come a long way
with africa both culturally and
economically we have had similar
problems as africa and we want to help
them grow because they were in a
position where we were
in africa you know the africans will
tell you we need the money we have a
huge infrastructure gap
and it doesn't matter whether the money
is blue or red as long as it can do the
job we will accept it
when we talk to you know some of the
economists that follow china and the
african governments they will tell you
that there has been benefit for these
projects overall for africa
how they have been
done
the terms
as well as how
these projects have been good you know
is another story
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you