Who Owns Africa’s Debt: China or Western Nations & Institutions?

Some Western media and politicians have recently created the phrase “debtbook diplomacy” to accuse China of “miring nations in debt” and “undercutting their sovereignty.”

According to CNN, a new report presented to the US State Department claims the “Chinese government is leveraging billions of dollars in debt to gain political leverage with developing countries.”

“This phrase ‘debtbook diplomacy’ shows the West is nervous of China-Africa cooperation. ‘Debtbook diplomacy’ is what they did to Africa for decades, but now China is actually helping African nations rid themselves of ‘the debt trap’ set by the West,” said Wang Yiwei, director of the Institute of International Affairs at Renmin University of China in Beijing.

The West left African countries with a heavy debt on projects and failed to support their sustainable development, or to increase productivity and help them realize self-reliance, Wang noted. “Western countries wanted Africa to become their raw materials supplier while maintaining their post-colonial influence over the continent. This prevented African countries from realizing their own industrialization, Wang said.

China, on the other hand, is helping the nations move toward self-reliance and industrialization. The West doesn’t like that and this is why it is attempting to slander China, Wang added.

Xu Weizhong, deputy director of the China Institutes of Contemporary International Relations’ Institute of West Asian and African Studies, said that “Africa needs a lot of investment to build infrastructure, and China’s loans, which have increased African countries’ debt, are necessary for their development.”

China’s assistance to Africa differs from what the West offers. China has a “crucial principle,” which is to respect African countries’ will and conditions. China has never forced African countries to accept loans on large infrastructure projects beyond their ability to pay, Wang said.

“China and Africa have walked an extraordinary path in developing relations and cooperation, and our peoples have benefited greatly from it,” Assistant Foreign Minister Chen Xiaodong said at the opening ceremony of the Seventh China-Africa Think Tank Forum in Beijing on July 4.

“A minority of Westerners are blinded by their ‘pride and prejudice’ and choose not to see this… maybe that is what they call ‘sour grapes’?” Chen said.

West is largest debt holder

Data shows that Western countries and West-led organizations are the largest owners of African debt, not China, Shen Shiwei, a research fellow at the Charhar Institute and former government relations and business consultant for Chinese enterprises in Africa, said in an article published on CGTN’s website.

Research from SAIS and the China Africa Research Initiative at Johns Hopkins University shows that China has provided loans worth $114.4 billion to Africa from 2000-2016, which accounts for 1.8 percent of Africa’s total external debt. 

“The IMF and World Bank own 36 percent of African debt. These multilateral financial institutions and other giant investors in Europe and the US have far stronger leverage [than China],” Shen noted in his article.

“For historical reasons, the West has many interests in Africa. Those that are reasonable should be respected when we cooperate with Africa. But for those that are unreasonable, should China and African countries continue to respect them? Before accusing China, the West should think about this carefully,” Xu said                   (emphasis added)

 

China’s Global Times Highlights Flaws of US and Europe Policy Towards Africa

By Mark Kapchanga
June 26, 2018

Illustration: Liu Rui/GT

On June 18 in Michigan, US Secretary of State Mike Pompeo addressed a meeting under the umbrella of the Detroit Economic Club. In a question that seemed to have made him a tad uncomfortable, the secretary of state was informed that Africa appeared to be evolving and transforming rapidly, and further, China was asserting itself in the continent.

He rightly confirmed that Africa is facing two issues. One is extremist groups threatening to tear apart the continent’s fabric of unity. But the second issue is the opportunities that lie in Africa. It is here that Pompeo seems to have stained his otherwise well researched address to the people of Michigan. With obvious jealousy that is always expected from Western countries against China’s foray into Africa, Pompeo downgraded Africa’s growth potential that is underpinned by significant Chinese investments and trade by saying that Africa will see actual growth with a Westernized model of development.

He meant that the foundation for growth in Africa is the rule of law and property rights. In his usual way of disparaging China, Pompeo further claimed that Chinese trade and investments are about exercising political influence in Africa.

African countries and their leaders have grown sick and tired of such stereotyped thoughts coming from Western nations. History has proved that America and European countries are behind Africa’s underdevelopment. They not only colonized Africa but also stripped it of resources and displaced people from their lands.

This is described by Walter Rodney in his book How Europe Underdeveloped Africa where he argues that the short period of colonialism and its negative consequences for Africa spring mainly from the fact that the continent lost power. Rodney notes that power is the ultimate determinant in human society, and implies that one should have the ability to defend one’s interests and if necessary impose one’s will by any means available.

There is no doubt that when the question of power emanates, it determines one’s bargaining power, the degree to which a people survive as a physical and cultural entity. But as Rodney vividly says, “when one society finds itself forced to relinquish power entirely to another society, that in itself is a form of underdevelopment.”

Instead of Western powers always complaining about China’s presence in Africa, they should transform and improve their strategies for the continent. The old template they applied to Africa is already stale. Africa cannot be developed through conditionalities that only massage the whims of America and Europe.

Through the International Monetary Fund and the World Bank, Europe and America bullied African countries for more than three decades. Those nations seeking access to the General Account of the Fund had to commit themselves to explicit conditions regarding the conduct of their international policies.

Ultimately, African countries in need of financial support to boost their infrastructure, education and health failed to do so as the conditions were too tough. Globally, economists termed the conditions inefficient and mistargeted.

With the urge for greater development, China filled in the void. Its support to Africa has been less bureaucratic and almost without conditions.

As Pompeo and his fellow Western leaders continue complaining about China and its relations with Africa, youths in the continent are grinning having secured jobs in various projects being pursued by China. In Kenya, for instance, thousands of youths continue to earn an income from the construction of the standard gauge railway whose construction is now being extended from Nairobi to Naivasha.

The enormous investments China is pursuing in Addis Ababa have totally transformed the face of Ethiopia, a country once ranked among the poorest in the world. Today, Ethiopia is the only country in Africa that can manufacture its own leather shoes, thanks to support from China. This is the kind of friendship Africa has been yearning for.

Africa’s development can only be shaped by Africans. Europe and the US can therefore involve African leaders in designing the kind of investments and relations that fit them. If they continue condemning China on its relations with Africa, the continent’s ties with Beijing will only get stronger and thrive all the more.

The author is an economist specializing in China-Africa relations. Twitter: @kapchanga opinion@globaltimes.com.cn