Neocolonial ‘debt-trap’ is relentlessly choking the sovereignty of African countries as the latter are continuously submerged in the financial jargon of repaying, re-negotiating, and restructuring debts owed to Chinese financial lenders. Inversely, African leaders thus neglect to address the sensitive needs of their citizens, who bear the brunt of footing these enormous debts.
Chinese ‘debt-trap’ only rubs salt to injuries as Africa is historically, and in the contemporary, enslaved under the shackles of the West’s International Monetary Fund (IMF) and the World Bank, infamous for their structural adjustment programs (which caused and worsened much of the inequalities and poverty that Africa contends with today).
Expectedly, the Chinese state and the financial institutions disbursing loans to poorer nations obstinately maintain that the financial help advanced to African countries does not constitute any form of ‘debt-trap’. To them, it is of mutual benefit.
But evidence on the ground points to the contrary. It is apparent that at this stage, as long as there is no political will and courage to devise self-sufficient and internally-based economic policies, Africa will never extricate itself from the shackles of not only Chinese foreign debt but Western foreign debt as well.
The bane of Africa’s underdeveloped capitalist economies is the lack of a conscious and collective intention to fearlessly defy the international centers of economic and political power. And the anxiety over Chinese debt is acutely palpable across the whole continent – a call-to-action for African leaders and their finance ministers to eschew profligate borrowing devoid of economic far-sightedness.
China comes into particular focus because ever since its dramatic rise propelled by state-sponsored capitalism, it is now Africa’s largest bilateral trading and lending partner. It has eclipsed the West at its own games in terms of financial numbers.
But in doing so, it has saddled African countries with unreasonably high amounts of debts that are almost impossible to repay – the only respite in this uneven relationship encompasses restructuring, momentary debt suspension, and in remote cases, writing-off the debts.
From strict financial and economic perspectives, China is only doing business and advancing its interests and those of its newfound bourgeoisie – a bourgeoisie abetted by globalization in spreading its [private] capital to all parts of the world. It is vindicated. And because of such its overtures must be countered.
With the devastating effects of Covid-19, the insurmountable debt that Africa owes China has come under increased scrutiny more than ever. The state of public health [in various African countries] in combating not only the pandemic but other diseases lies in a woeful state. And the viability and sustainability of aid for the long-term future of African political and economic sovereignty must be persistently and fervently brought to the fore.
This has sparked various allegations that China will reclaim unpaid debts by seizing the national assets of sovereign African countries – although this will never “realistically” happen. But it substantially shows the uneasiness Africans have over how Chinese money lenders are disrespecting African sovereignty.
African leaders must be held accountable for reckless economic decisions that are often unilateral and undemocratic. Much blame is attributable to them: they lack the spine to challenge unfair deals when borrowing and lending take place.
Estimably, Chinese loans advanced to Africa from the period stretching from 2000 to 2018 now reach $148 billion. These loans are mostly allocated to the materialization of large-scale infrastructural development projects, with a bias in the transport and energy sectors.
It is clear that most of these much-vaunted projects are not feasible for African contexts where the majority grapple with basic public services indispensable for a decent existence such as food, healthcare, education, water and sanitation, power, land, and housing.
Most African countries are forced towards trudging the ignominious path of begging for re-negotiation plans regarding the loans; they are now asking for interest payment deferments and the pausing of non-viable infrastructure projects.
The ominous and omnipresent fear of defaulting on payments looms menacingly over African finance ministries – meanwhile, the public welfare of the masses (the peasantry and the working class in particular), is heartlessly neglected.
Africa’s failure to transform its dependent status into robust self-reliance ceaselessly haunts its people – the politicians who sign these bad deals, giving away their sovereignty under the illusion that foreign aid will lead to “economic growth” never suffer.
The more private capital is used for national purposes of growth, the more people’s needs are neglected because lenders do not advance their money for free – whether from the East or the West.
Lenders demand borrowers to be amenable to their policy measures for the servicing of loans given to them. Global co-operation is desirable, but what currently obtains is down-the-line exploitation. Here, some African countries provide conspicuous examples: Angola, Zambia, Uganda, Sudan, Ethiopia, the Democratic Republic of Congo, Kenya, Nigeria, Egypt, South Africa, and Algeria.
These are resource-rich nations with infinite potential to unlock Africa’s self-reliant patterns of wealth production for its people. But they are perennially subservient to Chinese financial institutions which, since 2010, have sponsored “an average of 70 projects every year in Africa with an average of $180 million”.
The irresponsible borrowing of Chinese loans by African leaders justifiably appears unforgivable. In particular, quieting fears of asset seizures by Chinese financial institutions is far from possible. Even though these allegations are not true. Uganda, Kenya, and Zambia have had to ward off the scare of asset seizure from the consciousness of the majority.
And this, as explained by the Africa Report, stems from the obscure nature of certain clauses in lending contracts hidden from the public – such as the “waiver of sovereign immunity”. This waiver entails that in the event of defaulting on payments, or loan disagreements, the borrower state will be “subjected to the Chinese legal regime”.
Domestic assets are difficult to seize as collateral for “defaulting on sovereign debt” – what follows in cases of foreign defaulting is that the “terms of the debt are renegotiated often leaving the lender in unfavourable conditions”. But beyond some concessions to keep finance ministries alive, most Chinese lenders are reluctant to formulate further cancellations.
Waiving sovereignty in lending contracts does not necessarily entail that domestic assets will be seized. But the fact that this is a conceivable possibility among the greater majority of people reveals that the uneasiness and angst over spiraling Chinese debt is real and not misplaced.
This genuine concern for sovereignty must be addressed with revolutionary urgency rooted in Frantz Fanon’s unadulterated sense of ‘decolonization’ – the whole social, financial and political structure should be overhauled; turned upside down, inside out. It is an ugly but inevitable process.
Chinese money lenders are intransigent when demanding payment – Kenya’s plan this year to extend the “debt service suspension” beyond June was declined by Chinese lenders. Certainly, beyond any reasonable doubt, African leaders should not relax and expect mercy from Chinese financial institutions.
The hegemony of lending regimes devours the self-determination of a people as leaders devote more of their time towards the servicing of such loans.
African leaders should not throw away the sovereignty of their nations and peoples to the highest bidders – hard-won sovereignty for that matter – in order to gain empty stamps of approval from external players that their economies are “progressing” in the right trajectory, the much-vaunted “economic growth”.
Africa is not a playing ground for neocolonial machinations. That China prides itself as a “better lender than the West” is shameful and views Africa as incapable of governing itself. Such a narrative should never be discarded with the contempt it deserves.
It is a narrative that perpetuates a perpetually “dependent Africa” – where the West and China fight over who makes the most out of it. Aptly, this is the new scramble for Africa rooted in vicious neocolonial domination – the global scales of capital are not balanced.
Covid-19 has brought these contradictions to the fore. And with Chinese debt killing African sovereignty, it is time to openly and fearlessly reject the notion of African economies as eternally dependent and distorted structures that serve the metropolitan centers of capitalism (China in this context) in a globalized world fraught with immoral inequalities and poverty.