By Wanambwa M. Rogers
Starting from the later half of the 20th century and maybe even a little before, China under Chairman Mao their great and benevolent leader(and here I’ve tried to be as much as possible in good light about him) went through an exponential growth rate with some of its Asian neighbours like Singapore, India, Korea(now North and South Korea), Taiwan, Vietnam and a few others that has seen them become economic giants in the 21st century.
My curiosity or perhaps something more akin to necessity of study has led me to concentrate on China though, considering the just concluded China-Africa summit in Beijing that saw even those rarely seen travelling African presidents all attend it. Why? This will be my emphasis throughout the following paragraphs.
According to Tim Jones, an economist with Jubilee Debt Campaign, more wealth leaves Africa than enters it by more than $41bn(£30bn).
This leaves one to wonder whether we as Africa actually need financial help from outsiders at all, this will be a topic for another day though. My emphasis on the one hand, is on China and its growing influence on Africa.
For example, during the just concluded China-Africa summit/forum also known as Forum of China-Africa Co-operation(FOCAC) 2018, according to an article written Catherine Wong of the South China Morning Post on Wednesday 5th September 2018, President Xi Jinping of China told his guests(over fifty(50) African presidents and other dignitaries) and the world at large that China is committing $60billion to Africa and this is on top of the $60billion they committed to us just a few years back making it a total of $120billion dollars in a space of five years.
In the New Vision of Friday, 7th September 2018, it was reported that H.E Y.K Museveni and H.E Xi Jinping had signed a three pacts MoU(memorandum of understanding) following the terms of the Silk Road Economic Belt, a China initiative to invest in Europe, Asia and Africa.
This is to see China become more invested in our economic and technical activities. In the same article it was reported that China was Uganda’s biggest FDI(Foreign Direct Investor) having injected over $290million(just above UGX1trillion).
The three pacts/agreements signed are worth UGX109billion, UGX38billion and a take on the $60billion promised to the whole of Africa respectively.
This is just one agreement signed between China and one member state of Africa, each African country got to make their own deal(s) in turn.
So how did this come about?
According to the Center for Global Development(CGD) Policy Paper 121 of March 2018, last year, 2017, the Chinese Communist Party adopted a Belt Road Initiative(BRI) that would see 68 countries in Asia, Europe and Africa engage in “business” with China through a vast $8trillion project that encompasses energy, telecommunications infrastructure that links the three continents.
President Xi Jinping started his second term in office by implementing this initiative clearly seen from the above mentioned 2018 FORAC.
Now all this seems too good, however some economists have established fears about the ulterior motives of China considering its lending policies and their consequences on the countries they are dealing with.
For example, already countries are facing a big debt-GDP deficit ratio most especially in Africa!
According to internal reports from the International Monetary Fund(IMF) and the CIA World Factbook, African countries are having upto in some cases a deficit of over 100% debt-GDP ratio; countries like Eritrea see over 120%, Djibouti also exceeded the 100% mark, Cape Verde being the biggest defaulter with over 130% deficit and although Uganda is still having a 38% debt-GDP ratio, the borrowing trend has been predicted to keep increasing considering that our export-import ratio with China is imbalanced. Consider a deficit of UGX2.5billion last year alone with China according to our BoU(Bank of Uganda financial report, 2017).
This has led to China taking over vast tracts of land, and other projects like the international airport of Zambia(where it is injecting over $200million) among other things. These reports can be gotten from IMF, World Bank and China sources.
China in response to the allegations that they just want to grab a hold on these countries, it said these countries need the financies, they have them and can offer them. It also noted that the main issue was mismanagement on the borrowers’ side(which is partially true, with all the corruption in African countries).
Away from that, African countries have surely benefited from the “Silk Road” initiative that was started in 2013. For example, Uganda this year, 2018 saw the completion of the 50km Entebbe-Kampala express way which has the most fly-overs in Uganda currently, the on-going building of the largest hydropower dams Karuma-Isimba, 600MW and 183MW respectively.
Negotiations are underway to secure funds from China for the $2.3billion(UGX8trillion) for the railway project that will connect 5 East African countries. On April, 27th 2013, Ethiopia acquired a $1.2billion loan from China to construct a 6000MW dam called the Grand Ethiopia Renaissance Dam. Zambia has also benefited, China helped it construct the Kariba hydropower dam that has two 180MW generators, a new $397million international airport is going to be built at Ndola city(in the Copperbelt province).
In Nigeria, China agreed to provide $4billion in the oil and infrastructure development as early as 2006, their contribution there is still going on todate.
These are just a handful of examples given China has had its influence in all 54countries on the African continen. (All figures in this paragraph are subject of the mentioned country national bank(s), China Exim Bank reports, IMF reports and World Bank archives)
It must be noted that this economic relationship has come under scrutiny of late but it is left to see how it’ll all turn out.