Seven Countries Trapped in China’s Exploitive Loans-Debt Trap Diplomacy
China has been taking control of economies in a number of African countries with research data revealing that it has overtaken the United States as Africa’s economic powerhouse.
The number of loans, totalling to 130 billion dollars, China has given Africa is worrying given previous cases of the country taking over major companies of countries that failed to repay.
China’s population has on a number of occasions been ranked as the highest in the World at 1,384,688,986 by 1st July 2018, with the numbers increasing rapidly. This large number of China’s population need jobs and living space and China’s government is doing right by its people, irrespective of what the consequences for Africa might be.
For any loan to be recovered, the finances need to be put into projects with high economic returns, Africa is drowning in corruption and these loans cannot be an exception especially in Kenya where almost half the budget results into scandals that are forever unsolved. Kenyan leaders therefore don’t seem to have a favourable exit plan which is likely to lead us to what the countries below have had to experience.
Sri Lanka
Sri Lanka has experience on just what could happen to Kenya if it fails to pay up its loans.
Sri Lanka officially handed over its strategic Hambantota port to China on a 99 year lease, last year after it failed to repay a debt of 8 billion dollars to Chinese firms that are state-controlled. This gave China a crucial access to Indian Ocean’s sea lanes which greatly alarmed New Delhi.
Africa countries signing off so much of African assets risk taking us back to colonialism after our fore-fathers sacrificed their lives to deliver our countries.
Zimbabwe
Chinese companies offered strict terms for Zimbabwe to secure loans four years after it had defaulted in paying in 1990 under President Mugabe.
China requested to be exempted from the local labor laws and be prioritized in mineral exploration. Zimbabwe almost sold off mineral rights to China due to the loan.
Djibouti
China formed a relationship with Djibouti and finally got to set up a full scale military base in the country despite the U.S. also having a base there. The Chinese military allegedly fired lasers at U.S. aircrafts from the base further escalating tension between the two countries.
China’s influence on Djibouti could not allow the country to take any action on the Chinese militants given China owned 82 percent of Djibouti’s foreign debt, according to Center for Global Development.
Djibouti is now at the edge of handing over control of a significant port to state controlled Chinese firms following defaulting in Chinese loans.
Angola
Angola, in 2000 took loans from China totaling to 21.2 billion dollars. The loan, currently, is estimated to be around a quarter of cumulative Chinese loans to those of the rest of the continent.
Angola’s loan with China is however not financially serviced but is paid back with oil since the country is the second largest producer of the product in Africa. Angola’s ability to repay China is hence pegged on the price of the oil leaving very little oil for Angola to export to other partnering countries.
Namibia
According to statistics from Namibia’s Finance Ministry, the country owes China N$1,99 billion.
This debt is broken down in two categories, N$302 million for the interest free loans and N$1,694 billion for the concessional loans.
China has gone further to provide grants to Namibia’s government totaling to N$1,340 billion which all totals to N$3,336 billion.
Zambia