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Wednesday, 14 November 2012

From China with debts

More borrowing from China - we are becoming ever more indebted to the Dragon in the east. Government earlier this month confirmed that it had obtained a US$150m (K750bn) loan from Exim Bank of China for a new water supply project with China Civil Engineering Construction to help boost potable supplies to homes and commercial areas in Lusaka. The pact signed this week would involve the construction of a new bulk water supply line from Kafue to Lusaka as well as upgrading the distribution system in Lusaka and neighboring areas to expand supplies over a two-year period. The project compliments the Lusaka water supply program funded for free by the U.S. government through its Millennium Challenge Corp.

More money is certainly needed. Lusaka Water and Sewerage Company needs about US$600 million (K3 trillion) in the next five years to improve water supply. So far it has secured, through GRZ and donors, US$350 million (K1.8 trillion). That said, this is a classic Chinese deal - you borrow from them and they do the work. One does not know how such deals work. Very little of it is made public. And therein lies the problem - GRZ continues to borrow endlessly without a clear legislative framework for managing debt. When are we going to learn as a people? We cannot trust politicians to manage public debt because they always want to borrow to get re-elected. There's nothing free - someone has to pay for the current debt we keep piling.

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