China has announced that it has written off 78 million dollars from Cameroon’s debt as part of its efforts to ease economic hardship in the country.
The debt write-off was announced on Friday shortly after a meeting between President Paul Biya and Yang Jiechi, a special representative of China’s President Xi Jinping.
The 78 million dollars written off is but a drop in the ocean as Cameroon owes China 5.7 billion dollars according to figures from the Autonomous Sinking Fund, a public entity that manages Cameroon’s external debt.
The money written off was supposed to have been paid in 2018 but due to tough Economic times, Cameroon defaulted to which it’s President flew to China for the 3rd Summit of the China-Africa Cooperation in September. President Paul Biya pleaded with the Chinese Government to ease Cameroon’s debt burden.
African leaders are known for their heavy appetite in taking up loans with China availing itself as an easy lender. China’s lending to African countries has been seen to be very strategic with Africa’s immense wealth in mining and minerals
The relationship between China and Africa has always been treated with a pinch of salt and is now suspected to be manipulating Cameroon at a vulnerable moment so as to use it as the entry point to the sub-regional market.
Cameroon’s loans from China have been used to construct roads, dams, and hospitals.
Chinese lending to African countries has been 10 times higher than ever in the last half a decade leading to anxiety amongst Africans as the World witnessed as China took over strategic assets in countries that have defaulted in paying.
China used to lend Africa 1 billion dollars a year or less but 2012 and 2017 have seen Africa take up over 10 billion dollars in a year according to credit analysts at Moody’s.
African leaders should therefore not feel encouraged to continue taking up huge Chinese loans for they do not know what leverage the economic powerhouse has on them.
Kenya has been named as the country at the highest risk of losing its strategic assets to China over the accumulating debt it owes Beijing by the Moody’s Investor Service.
Moody’s Investor Service, a global rating firm, has reported this in its newly-released report adding to the anxiety among Kenyans over the debt that has largely been blamed for the choking taxation of taxpayers.
The global rating firm has weighed in on the transparency of the predictability of credit implications saying that China’s response to Africa countries facing liquidity pressure has not been even or transparent.
“Countries rich in natural resources, like Angola, Zambia, and the Republic of the Congo, or with strategically important infrastructure, like ports or railways such as Kenya, are most vulnerable to the risk of losing control over important assets in negotiations with Chinese creditors,” Moody’s warned through in their report.
The report noted that Kenya, amongst such other countries, alternatively, faced the risk of being offered liquidity relief at higher resource concessions that could only diminish the value of future export earnings.
Read More on Kenya’s Probability of losing her assets here.