• June 6th, 2020

Will Xi's red rising sun really light up the road ahead? (Part 2)

Faced with a saturated market in China and trade barriers from the west, Africa is the ideal destination for Chinese state-owned and private companies to set up a commercial presence. 

Some of the Chinese companies are known to piggyback on regional and trade agreements in order to enter other foreign markets. For example, a number of African countries signed the Africa Growth and Opportunity Act (AGOA) in 2000, allowing at least 6,000 products from 38 sub-Saharan African countries to enter the U.S. market duty free. 

Lesotho is one of the countries that have benefitted from AGOA due to its textile and garment industry and it being classified as a least developed country. Some Chinese firms capitalised on this agreement by establishing textile companies in Lesotho thereby circumventing the trade barriers imposed on China by the United Sates. 

Another point is that China has to a large extent invested in social corporate responsibility by amongst other things, awarding scholarships to African youths. However, the same cannot be said about the treatment of workers by government and private owned Chinese companies. Here, the complaints range from total disregard of basic human rights at construction sites and Chinese shops in Namibia and other African countries. Lack of transfer of tangible skills to locals in the manufacturing and construction industries is also a concern. 

Other areas of concern include unfair investment practices such as entering sectors reserved for African nationals;  illicit expatriation of foreign currencies from African countries in order to avoid banking with local financial institutions; and disregard of environmental laws  such as a surge of rhino poaching in some of the African countries such as Namibia, Botswana and South Africa. The surge has been attributed to the demand of rhino horns in Asia where it is used for medicinal purposes. In Namibia, the total number of rhino poached is more than 80.  In a fair attempt to combat poaching and ward off any negative criticism, the Chinese government in Namibia donated 30 4x4 anti-poaching pickup trucks and camping equipment to the Ministry of Environment and Tourism for its anti-poaching campaign. 

Fourth, according to China Africa Research Initiative, China’s increase in loans to Africa stood at US$124 billion by 2016. Although the Chinese government before granting the loans considers the economic potential of the African countries to repay loans in the long run, the advancement of loans to developing countries  has not been well received by critics of China. Notable criticism is that of former US Secretary of State Rex Tillerson who stated that, “Beijing encourages dependency using opaque contracts, predatory loan practices, and corrupt deals that mire nations in debt and undercut their sovereignty, denying them their long-term, self-sustaining growth.” 

Moreover, critics are of the opinion that Beijing is luring many developing and least developed countries in massive debt by investing in sometimes vanity projects such as roads, harbours and railways without putting in place project management processes and principles supported by risk management strategies in order to mitigate the escalation of debts. The lack of these risk management strategies have in some instances resulted in highly indebted countries handing over some of their key infrastructures. These sentiments seem to hold some truth especially in the wake of the Djibouti saga. According to a March 2018 Report of the Center for Global Development, Djibouti is projected to take on public debt worth around 88 percent of the country’s overall $1.72 billion GDP, with China owning the lion’s share of it. One concern is that the Djibouti government, facing mounting debt and increasing dependence on extracting rents, would be pressured to hand over its key port Doraleh Container Terminal which is at the centre of an arbitration, to China. Furthermore, according to the Reuters Report of March 2018, the port is significant not only because it sits next to China’s only overseas military base but it serves as a main access point for American, French, Italian and Japanese bases in Djibouti. For China, amongst other reasons, the port will strategically advance its One Belt and One Road and most importantly its military activities.  
Similarly, Zambia, is one of the countries that is believed to have fallen into the “debt trap” of China and stands to lose its strategic state assets as a result of failing to honour its loan repayment obligations.  At the centre of this allegation is the Zambia National Broadcasting Corporation, Natural Resource Development College, Zambia Energy Supply Corporation and Kenneth Kaunda Airport. Although the government of Zambia has vehemently refuted these allegations, civil society is concerned that the benefits of massive infrastructures has not trickled down to the average citizen. The other concern is that there is a lack of transparency not only from the Zambian government, but from most of the African governments to share with citizens the terms and conditions of such loan agreements.  

These sentiments have been expressed across most of the African states and Namibia is no exception as the government prepares to borrow N$10 billion (USD 688 900 million) from China under the FOCAC project loan agreements for the next five years. The US$10 billion will amongst other projects be used to service infrastructural projects such as the upgrade of the Hosea Kutako airport for the safety and comfort of passengers including long term plans that tie in with Namibia’s industrialisation and tourism plans. In the defence of the loan, the Minister of Finance has informed Namibians that Namibia’s debt exposure to China is around 2.7 percent and thus refuting allegations that Namibia is not falling into the “Chinese debt trap”. Civil societies are however  sceptical whether the loans from China  will be put to good use or end up in the hands of corrupt officials. For  the average Namibian, especially the youth, the fear is that these projects will not directly benefit the masses. 

The argument is that if China was to set strict terms of conditions on accountability for every penny spent on the projects,  the loans will not end up in the hands of corrupt officials  nor will the loans fund vanity projects. And if the loans end up in the hands of corrupt officials, the borrowing country would be required to mete out punishment against such perpetrators. Unfortunately, China has a policy of non-interference with internal matters of other governments.  Meanwhile in China, if an official is found guilty of corruption, death penalty is meted against such an official ( See case of Zhang Zhongsheng). It is this hypocritical approach to corruption by China that civil societies and the west are finding it hard to believe that Africa and China are equals in the so called neighbourly co-operation. 

In as much as the aforementioned do hold some truth, on the other hand, one cannot help but applaud China for rising to becoming a global player and for becoming an industrialized economy. China has indeed risen to become a global player by leveraging on its comparative advantage and African nations with a common negotiation agenda can do the same through clearly defined tangible goals. Africa is a melting pot of opportunities for both foreign and local investors where these investors can each achieve a win-win situation. However, African leaders need to recognise that China will continue to pursue its own development agenda by leveraging on African resources. Accordingly, the 2018 FOCAC presents for the next three years an opportunity for African leaders to obtain loans which would fund projects that are tangible and are geared towards long term goals of  poverty alleviation, skills transfer, employment creation for youth, value addition to natural resources,  industrialization and access to the Chinese markets. Where there are shortcomings from China, such as the ones highlighted above, Africa as a collective (although bearing in mind that the loans are negotiated bilaterally) need to address these concerns without fear or feeling being seen to be ungrateful for the liberation struggle support to Africa. 

Finally, the time for Africa to deepen industrialization and integration into the global economy is now. As Africans we can only hope that the red rising sun will light up the road ahead where both sides are equals and will leverage on each other’s comparative advantages while minimizing the casualties along the way. However, only time will tell whether “the red rising sun will light up the road ahead” is an illusion or reality. It will be an illusion should African countries fall into the debt trap with China and fail to advance their core social and economic interests in their relationship with China. However, it will be a reality should both Africa and China make significant advancements in furthering their vital strategic interests.  


New Era Reporter
2018-10-05 09:23:10 | 1 years ago

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