china debt in africa
Home Business China Plays Hardball When It Comes To Debt Collection
Business - World - December 19, 2018

China Plays Hardball When It Comes To Debt Collection

They are rich and willing to lend, but ruthless when they want it back

They say that it is often hidden in plain sight. A Quora user asked if China is now colonizing Africa. They must have wondered about this question because of the increased presence of  the Chinese in Africa. This is both in trade and the ensuing immigration of Chinese nationals. China dangles goodies to many countries in the world in the form of loans and skilled manpower. However, China plays hardball when it comes to getting back their money.

The Rise of China in Africa

Back to the colonization question, a smart user answered that there are considerable numbers of Chinese immigrants in Africa. Some came temporarily, but some have come to stay. Africa is the source of minerals and also a huge market for Chinese products. Therefore, it is to be expected that they will come to have a shot of this market.

The outcome will depend on the nature of modern African leadership and geopolitics.

If we want to be pessimistic about African leadership (and there are lots of reasons to be) then yes – expect some form of neocolonialism. More African leaders like the characters below will lead to trouble.

Chinese Loans

A look at a report by China Africa Research Initiative (CARI) shows that over a period of almost 2 decades, the Chinese have loaned out over 143 billion dollars in loans to Africa.

From 2000 to 2017, the Chinese government, banks and contractors extended US $143 billion in loans to African governments and their state-owned enterprises (SOEs).

Angola is the top recipient of Chinese loans, with $42.8 billion disbursed over 17 years.

Chinese loan finance is varied. Some government loans qualify as “official development aid.” But other Chinese loans are export credits, suppliers’ credits, or commercial, not concessional in nature. China is not Africa’s largest “donor”. That honor still belongs to the United States.

Playing Hardball

In 2017, the government of Sri Lanka signed a concessionary agreement with China’s state-owned port company.  According to the agreement, 70 percent of the Hambantota port will be owned by the Chinese company while the Sri Lanka Ports Authority (SLPA) owns the remaining shares. You can read the article here.

On 19th December, 2018, a Kenyan newspaper, through their online platform, shared an article that Kenya run the risk of losing their coastal port to China. This is due to a possible default in the loan China fronted to finance the construction of a Standard Gauge Railway.

However, Reuters came out to say that the Kenyan Auditor General says ‘he was not aware of the document.’

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