Report: African debt burden caused by Western lenders

According to a report released by UK-based charity Debt Justice last week, African governments owe three times more debt to Western private lenders than to China, and are charged double the interest.
According to a report
released by UK-based charity Debt Justice last week, African governments owe
three times more debt to Western private lenders than to China, and are charged
double the interest.
The report said just 12
percent of African governments' external debt is owed to Chinese lenders
compared to 35 percent owed to Western private lenders, citing calculations
based on World Bank data.
It added that the
average interest rate on private loans is 5 percent, compared to 2.7 percent on
loans from Chinese public and private lenders.
African experts said the
debt-trap narrative exploited by the West against China is nothing but
clap-trap.
Meanwhile, experts said
China's support for Africa has been clearly impactful.
Experts said China has
demonstrated what a responsible global power should do by fully implementing
the G20 Debt Service Suspension Initiative for Poorest Countries, adding that
Africans want to see more of such an example.
Anti-China propaganda by
West
The so-called debt-trap
narrative exploited by the West against China is untrue, African scholars and
economists told Xinhua.
Charles Onunaiju,
director of Nigeria-based Center for China Studies, said Western private
creditors not only account for a third of Africa’s external debt, but also
charge higher interest and offer a shorter period for repayment, describing
them as manipulating and strangulating.
“The debt trap issue has
always been political slander …,” he said, adding that the narrative is nothing
but a distraction to absolve the West of its responsibilities.
Costantinos Bt.
Costantinos, professor of public policy at the Addis Ababa University in
Ethiopia, said Western administrations and media have been unable to adopt a
rational perspective on China’s growing influence in Africa.
“They depict China as a
predatory lender that is weaponizing capital in order to practice a new form of
colonialism in Africa. However, such accusations have little factual basis,”
said the expert.
Beatrice Matiri-Maisori,
a senior economics lecturer at Kenya’s Riara University, said the figures and
percentages revealed by the studies clearly indicate that Africa’s external
debt is largely owed to private financial groups, Eurobonds, and oil creditors.
“The debt trap diplomacy
… has got nothing to do with the reality of the debt structure in Africa,” she
said.
“Western lenders for
long have not been put on the spotlight for debt relief because they
successfully managed to dupe the world that it’s only Chinese lenders that pose
a threat to Africa,” Uganda-based Vision Group journalist Mubarak Mugabo said.
West must do more
Campaigners have been
calling on Western countries, particularly Britain and the United States, to
compel their private lenders to do more in helping address the debt burdens of
emerging and developing countries including those in Africa.
Emerging and developing
countries have been experiencing sustained capital outflows for four months in
a row, said International Monetary Fund (IMF) Managing Director Kristalina
Georgieva at a recent meeting, adding that more than 30 percent of emerging and
developing countries, and 60 percent of low-income countries are at or near
debt distress.
China has extended debt
suspension to other developing countries during the pandemic, but private
lenders in the West did not, said Tim Jones, head of policy at Debt Justice.
“Western leaders blame
China for debt crises in Africa, but this is a distraction … The UK and U.S.
should introduce legislation to compel private lenders to take part in debt
relief,” he said.
Official data showed
that China ranked first among the Group of 20 members in terms of debt deferral
amounts. “China has done quite a lot in terms of agreeing to come to a common
agreement with over 19 countries in Africa, reaching a common understanding on
how they are going to pursue debt relief for the same,” Matiri-Maisori said.
Onunaiju said China has
demonstrated what a responsible major country should do in this regard, adding
that Africans want to see more of such examples.
At a news briefing last
week, Chinese Foreign Ministry spokesperson Wang Wenbin called on developed
countries, their private lenders and multilateral financial institutions to
take more robust actions to give developing countries funding support and
relieve their debt burden so that the world economy will achieve inclusive and
sustainable development.
China’s support
applauded by Africans
Over the years, China’s
financing support for Africa, particularly in the field of infrastructure
investment, has won wide applause from African governments and people,
especially at a time when the ambitious African Continental Free Trade Area is
being promoted.
“We are seeing
connectivity, we are seeing airports remodeling, and we are seeing ports
remodeling,” Onunaiju said, adding that China’s support for Africa can be
clearly felt in different areas.
Referring to the Lekki
Deep Sea Port in Lagos State, Nigeria’s economic hub, as an example, he said
the China-funded port project will create up to 170,000 jobs and bring billions
of U.S. dollars in revenues to the government through taxes, royalties and
duties after being in operation.
“These are not
propaganda. These are reality,” Onunaiju said.
Over the last more than
two decades since the founding of the Forum on China-Africa Cooperation, a bulk
of Chinese financing has been quickly translated into infrastructures in
Africa, which can be seen with countless connectivity projects, such as railways,
roads, dams, and telecommunications, said Matiri-Maisori.
“This is very important
for us in terms of pursuing our aspirations to be an integrated Africa, the
Africa continental free trade area, and all the countries in Africa trading
with one another,” she said.
“What is really
happening is that this connectivity is aidin
g the future and
long-term growth of Africa, so that Africa can begin to participate in the
global supply chains,” added the expert.
China has provided
African governments with access to good funding to support development, said
Peter Kagwanja, CEO of the Africa Policy Institute based in Kenya.
Speaking of the
Chinese-built Mombasa-Nairobi Standard Gauge Railway, he said the railway
“opened our country Kenya, and we have started to see industrialization growing
around there, business growing around the railway line, the value of land
increasing greatly around that, and people getting employment around the
railway.”
“And these are things we could never, ever have dreamt about before China came into the picture as Africa’s partner,” he said.