African leaders say it is a ‘win-win relationship’, but ordinary Africans feel it is the genesis of a ‘neo-colonialism.’
Whichever it may be, relationships between one state and the entire continent has come under scrutiny and African have their reasons to worry.
In 2017, in a speech to the Chinese Communist Party Congress in Beijing’s Great Hall of the People, President Xi Jinping said, according to The Guardian, “it was time for his nation to transform itself into ‘a mighty force’ that could lead the entire world on political, economic, military and environmental issues.”
While this may sound as pure electioneering if it came from an African leader, the ambitious Chinese government is at it in making sure Africa is indeed their second home.
Analysts have weighed in on the matter with concerns particularity on the sustainability of the generous ‘soft loan’ which conditions are never made public, and are worried what fate the country may suffer, should it fail to pay back the ‘soft loans.’
Since the inception of the borrowing trend, the Chinese have slowly made their presence felt in the African countries with their enterprises. Infrastructure development with an ever increasing construction and retail footprint have been the safe haven as they continue to enjoy an avalanche of benefits denied to the locals. In Namibia, Chinese business people became the first beneficiaries of the much claimed “open door policy” when recently they were able to present their tobacco plant business plan to the Namibian Cabinet. Such privileges are yet to befall Namibian business personalities.
What is an open secret is that most of the funded projects involve infrastructure development such as roads and buildings, which through a murky tender process is frequently awarded to Chinese firms.
Analysts say that in the end these infrastructure from Chinese loans will only benefit Chinese companies and create cash outflows to China while priorities are given to Chinese contractors.
This month, during the Forum on China-Africa Cooperation (FOCAC) summit, China offered African countries US$60 billion held in Beijing. The money will be in forms of export credit, loans and grants. The Namibian government this week confirmed that it intends to borrow N$10 billion from China in the next five years to fund state projects including the upgrading of the Hosea Kutako International Airport. The agreement through which project funding could be requested was signed early this year between the two countries. The plan to borrow was already approved by Cabinet.
China has a problem. Its’ population does not match its resources and gross domestic product. China’s more than 1.3 billion people do not have the resources to adequately care for themselves, thus it is only logical to send out a few heads to African states.
This has led China to begin exporting its people. In a sense, by setting up shop in other parts of the world.
In what appears to be a huge contrast, is the approach of the Chinese government in the manner in which they approach Africa compared to the European approach. In Europe, China has launched the Belt and Road Initiative, which will impacted 68 countries across Europe and Asia. There is significant clarity about the expected impact in terms of GDP while in Africa, a deepening of the Chinese geo-political imperative is increasingly visible. Relations in Europe and Asia show a win-win approach but in Africa, it is strategy focused on poor countries with significant natural resources.
According to the Chinese Embassy in Namibia, in 2017 there were up to 7000 self-employed Chinese businessmen in Namibia and over 60 enterprises registered. Consultancy firm McKinsey the same year indicated in July that up to 10 000 Chinese businesses may be active in Africa, dwarfing previous estimates. This is from the total of about 100 000 Chinese in Namibia last year. Treasury has over the past years discovered that paying taxes has become an eluded responsibility and it is no surprise that several Chinese owned businesses often face accusations of extensively practicing tax avoidance and tax evasion in the country. This is another area of concern.
However, a figure close to a million is said to be the number of Chinese people living on the continent. Some experts are concerned that the plan for China is to increase this number to the hundreds of millions, helping to put a dent into China’s natural resource problem by tapping into Africa’s resources, while thinning the herd in the home country.
Air and sea routes are increasing between China and African nations as massive deals are made for commodities, trade, labour and military cooperation. Chinese private schools, embassies and cultural centers are popping up in places like Rwanda, Nairobi and Angola. Angola and Namibia even has its own ‘Chinatown’ district.
In northern towns like Oshikango, Outapi and Okahao, Chinese enterprises have elbowed the likes of Build-It and Pupkewitz out of business.
While trade has increased in the last 10 years, many are contend that Africa is getting the short end of the stick, importing cheap Chinese goods, while exporting valuable commodities like oil and timber.
Last month, a chief in the Zambezi region traded timber for offices. It came to light that a Chinese company wants to cut 1 000 trees from a 500-hectare plot that is a portion of the 10 000 hectares reserved for the proposed tobacco plantation.
The company wants to chop down trees, export the timber to China, and use some of the money to build the Mafwe Traditional Authority office headquarters. It is estimated that 70 percent of African timber ends up in Chinese ports, a figure that hints at massive deforestation. There are also assertions that Chinese mining operations in Africa are staffed with African laborers earning nothing close to a living wage.
Namibia’s Rodney Dan-Ao !Hoaeb, a Trade and Investment Researcher says Africa’s rapid infrastructure growth only lures reckless debt adding that development is not infrastructure alone but investing in critical ways to improve the standards of living for people through good governance with proper debt control.
“Debt repayment through infrastructure is futile if not backed by fiscal expansion through revenue. Wealthy countries are not enriched by flashy infrastructure alone. This is achieved through strategic infrastructure enrichment, resource enrichment and mineral enrichment.”
“Otherwise, you will have infrastructure, resources and minerals and be impoverished through them. What I am saying is debt impoverishment is followed by infrastructure impoverishment, as well as resource and mineral impoverishment.”
According to Second Secretary and Director of Political Affairs at the Embassy of the People’s Republic of China in Namibia, Feng Deheng, China and Africa are good friends, brothers and partners.
“China’s African policy is based on the principle of sincerity, real results, amity and good faith and the principle of pursuing the greater good and shared interests. China values sincerity, friendship and equality in pursuing cooperation. The over 1.3 billion Chinese people have been with the over 1.2 billion African people in pursuing a shared future. We respect Africa, love Africa and support Africa,” he said while responding to questions from The Patriot.
Deheng adds that China pursues common interests and puts friendship first in pursuing cooperation. He says they follow the principle of giving more and taking less, giving before taking and giving without asking for return.
While the above can be highlighted for scrutiny, the second secretary said China is fully aware that long-term stability, security, development and invigoration for Africa is not only the inspiration of the African people; it is also the responsibility of the international community.
“To make sure that the initiatives are implemented on the ground, China will extend US$60 billion of financing to Africa in the form of government assistance as well as investment and financing by financial institutions and companies.
The financing to Africa is broken down in the following order; US$15 billion of grants, interest-free loans and concessional loans, US$20 billion of credit lines, the setting up of a US$10 billion special fund for development financing and a US$5 billion special fund for financing imports from Africa.
“We encourage Chinese companies to make at least US$10 billion of investment in Africa in the next three years. In addition, for those of Africa’s least developed countries, heavily indebted and poor countries, landlocked developing countries and small island developing countries that have diplomatic relations with China, the debt they have incurred in the form of interest-free Chinese government loans due to mature by the end of 2018 will be exempted.”
Asked how China is benefiting from the loans, Deheng reemphasized their principle of giving more and taking less – adding that the country and the continent have long formed a community with a shared future.
“Only by helping African countries to develop, it would be possible to increase the representation and voice of developing countries in international affairs, strengthen the South, a weak link in the global governance system, as well as create synergy in South-South cooperation.”
Sri Lanka is one of many case studies in the world that Africans point to when discussing China’s “generosity” to Africa.
Will Namibia be treated differently?
Experts say should the country decide to renew these loans, the country will be digging itself into more debt, and should government decide to cut ties, the country would have to pay a hefty price.
China is accused of perpetuating a dependency syndrome using opaque contracts, predatory loan practices, and corrupt deals that mire nations in debt and undercut their sovereignty, denying them their long-term, self-and sustaining growth. There are few case studies on countries that have suffered these eventuality.
Just like the west, China is also facing accusations of imperialist behavior when its debt plans go wrong.
If things take that route, Namibia might suffer Sri Lanka’s fate. Struggling to pay debts to Chinese firms, the nation of Sri Lanka was arm-twisted to hand over their strategic port of Hambantota to China on a 99-year lease.
Officials say Sri Lanka owed slightly more than $8 billion to state-controlled Chinese firms. The port is said to be valued at $1.1 billion.
It remains yet to be confirmed, but reports indicate that Zambia’s power company’s ZESCO is set to be among the first casualties of China’s takeover after default on loan repayment.
This month, reports went rife that the country’s national broadcaster ZNBC was already being run by the Chinese. China is now proposing to take over the Kenneth Kaunda International Airport should the Zambian Government fail to pay back its huge foreign debt on time.
The issue of whether Zambia possess the required economic muscle to repay that debt is in contention considering the amount involved. It is typical of the Chinese signature strategy.
All this happening, not so far from Namibia.
Here, the long-term outcome could be effective Chinese ownership of the economy and potentially the biggest loss of national sovereignty since independence
“We are caught up in a cycle that is obvious.
The Chinese have imperialist aspirations with us. We are actually at the verge of re-colonialization at the hands of colonial forces. Let us scrutinize these “soft loans” so that we don’t compromise this generation and that to come. The people who are compromising this country are too old.
They will not be there in 10 years and the people who will be there to face the consequences will be the coming generation,” said the APP leader Ignatius Shixwameni when queried on the matter.