Friday, 12 March 2010

From China with debt

The Daily Mail on the trip to China :

President Banda has attracted investment worth US$1 billion from his recent trip to China. The money will be used to support various priority infrastructure projects, which will see the creation of at least 4,000 jobs. During a Forum on China-Africa Co-operation (FOCAC) summit in Beijing in 2006, Chinese President Hu Jintao committed US$10 billion to support Africa. In an interview, Minister of Commerce, Trade and Industry Felix Mutati said out of the US$10 billion committed to Africa, the Zambian government signed a number of memoranda of understanding (MOU) with commitments amounting to US$1 billion.
The Times version of the same story, but more accurately :
Zambia has secured a concessional loan of US$ 1 billion from the government of China for investment in development projects in hydro power, housing, road infrastructure and other sectors. Commerce, Trade and Industry Minister Felix Mutati said in an interview in Lusaka yesterday, in addition to the US$ 1 billion, the government of China agreed to give Zambia a grant of US$10 million for use of whatever purpose needed for the completion of the Ndola stadium. Mr Mutati said Zambia was able to secure the US$1 billion because it was the first African country, with a high powered delegation to visit China after the Forum for Africa China Cooperation (FOCAC).
For those tracking Zambia's external debt position, it currently stands at $2.3bn, government external debt is around half that. The $1bn raises external debt to around $3.3bn and rising. That is nearly roughly Zambia's external debt around the time we went into HIPC. Little wonder that some NGOs are worried.

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4 Comments:

  1. $1bn yeah? Considering the fact that the Chinese score very high on 'Respect for sovereignty' you wonder how much of this will be syphoned off on single bid/sourcing tenders/contracts? I was of the opinion that Zambia would be better off even spending at least $600m dollars of the country's $1.9bn in reserves on infrastructure. At least we would be spending monies which we have.
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  2. Indeed that has always been the standing advice. May be that is for electioneering...
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  3. Out of the US$1Billion at least 75% will go back to China through Chinese companies supplying building construction services, procurment of this and that from Top Motors, and so on.
    When payback comes, it is our children to think of how to pay back daddy's careless borrowing habits.
    If this money was properly used Zambia could create not a paltry 4,000 low quality jobs. Rather, we could create over 50,000 jobs with this money used in infrastructure development.
    Anyway the cadres who comprise the Zambian think-tank can enjoy the fruits of this loan and have 4,000 jobs!
    ZAMBIANSTHINK
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  4. Very worrying I agree, but we need to face reality and pressure our leadership into setting the rules and limtis for the locusts!
    FYI Here the latest book on :

    China and India in Africa – Neither better nor worse than the West

    The Rise of China & India in Africa, edited by Professor Fantu Cheru and Dr. Cyril Obi, is the first title in a major new book series published by the Nordic Africa Institute and London-based Zed Books. The series, with the brand name Africa Now, is the joint effort of two partners with a long-standing reputation of publishing on development issues. Zed Books has the operative goal of giving a voice to “people, places, issues and ideas at the margins” with an international perspective.
    http://www.nai.uu.se/publications/china-india-article-inter/

    Rolf
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