The menace of the Chinese debt trap, which has been rubbished by some African leaders, is threatening the whole sovereignty of Zambia. As Zambia continues to default on repaying Chinese loans, the Chinese are gradually taking over Zambian companies and a whole lot other economic interests.
The national power utility in Zambia, ZESCO, is going to be taken over by a Chinese company. There are growing fears that Zambia will have to kiss its sovereignty goodbye if its government defaults on repaying Chinese loans; since the Chinese will seize national assets.
Africa Confidential revealed these reports, and even said that ZNBC (the national broadcaster) was already being run by the Chinese. This came to light in a report titled "Bonds, bills and ever bigger debts" published on September 3, and Africa Confidential said talks were already underway for the takeover of ZESCO.
"A major worry of the IMF and US is that China’s BRI strategy is first to encourage indebtedness, and then to take over strategic national assets when debtors default on repayments. The state electricity company Zesco is already in talks about a takeover by a Chinese company, AC has learned. The state-owned TV and radio news channel ZNBC is already Chinese-owned. The long-term outcome could be effective Chinese ownership of the commanding heights of the economy and potentially the biggest loss of national sovereignty since independence," the report said.
The real figures of the over-exposure Zambia has subjected itself to Chinese debt will frighten many Zambians, Africa Confidential warned. "Over-priced" infrastructure projects with the "assistance" of China have led many African countries into financial difficulties, and currently the United States is urging the International Monetary Fund not to bail out such countries.
China's activities in Africa have been labelled by American politicians as "predatory infrastructure financing" and "debt-trap diplomacy". Zambia is not officially classified as at high risk of debt distress, but this can be attributed to the issue that much of Zambia's debt to China has not been fully accounted for. The government position laid out by the Finance Minister Margaret Mwanakatwe was that all Chinese projects below 80 per cent completion would be halted, but Edgar Lungu, the President, assured Chinese nationals that all projects would go ahead as planned.
The worries that there are economic takeovers in Africa by China are increasingly growing louder. The way African governments sign deals with China is not subjected to a lot of accountability and transparency. The countless loans that China has given out to Zambia in the past five years are now haunting the country because almost all of the time, China has an upper hand in negotiating these deals.
Zambia may seem to be at the highest risk right now, but if the way deals are negotiated are not changed, the whole relationship between Africa and China will not be of partners anymore. Or maybe it never was. How is Zambia going to repay such a huge mountain of debt? Acquiring more and more loans would be suicidal. The government signed up a number of PPP projects in Zambia, which has given the Chinese government through its Chinese controlled firms control of strategic assets for nothing less than 30 years or so. Projects like Lusaka Airport, all tollgate plazas and East Park Mall are just a few examples.
Zambia, and the continent at large, is treading on a dangerous path. China just gains huge political leverage for debts owned to them. It gives them the opportunity to exploit Africa's resources. In this case, Zambia's sovereignty is getting under threat.
Header image credit: Zambia Mining News