HE IMF and other Western agencies have raised issues with regards to China’s open-cheque approach to Africa. I am an admirer of China and do not buy much of the Western propaganda against Beijing. The reason why the Chinese are in Africa if truth be told, is because West has never treated us as equals with whom they can do business. They are in Africa because no banker in London, Paris or Frankfurt would want to lend to anyone in our continent. Western mass media have painted Africa as a black hole into which everything disappears; a continent of war, poverty, disease and desperate youths trying to cross the Mediterranean in rickety boats. The Chinese, by contrast, view us as genuine partners with whom they can do business. They are not here as Good Samaritans, we all know. But it’s a win-win. If anyone in New York, Washington or Brussels has a problem with that, it’s their headache, not ours. China’s bilateral loans to Nigeria currently stand at US$2.6 billion, amounting to 3.5 per cent of our total national debt of US$83.88 billion and slightly over 10 per cent of our total external debt of US$27.1 billion, the figure becomes more significant, at slightly over 10 per cent.
China is Nigeria’slargest bilateral creditor by far. The others pale behind France, at US$362 million, Germany at US$171 million and Japan at US$76.7 million. China has become the world’s biggest creditor, ahead of the Bank and the Fund. Beijing’s direct loans and trade credits have risen from almost zero in 1998 to more than US$1.6 trillion, or close to 2
per cent of world GDP in 2018. One of the criticisms being levelled against China is with regards to the opaque nature of their lending. The mandarinate in Beijing tend to keep such information close to their chests. What we do know is that several of their debtors in Africa – Kenya, Ethiopia, Djibouti, Zambia and Madagascar – have had difficulties paying back their loans.
Leaders and the discomfort of comfort
As a consequence, Beijing is attempting to make a call on the assets they have pledged as collateral. This includes, for
example, the airport in Lusaka, the main seaport in Djibouti and vast expanses of virgin territory in Madagascar. We have heard that our own federal government has pledged some of our oil fields in the Niger Delta as collateral backing the loans we have taken from Beijing. In principle, any responsible government worth its salt must be prudent when negotiating foreign loans. Wise men would caution that the devil is always in the little details. China has been talking to the Paris Club since 2016, but I do not think they have joined. The Paris Club is a body of 20 national public debt creditors with a secretariat based in the French capital. They would much prefer that China joins the debt cartel
in ensuring a coordinated international approach to debt management. China seems reluctant; preferring its own bilateral approach to international financing.
And I have to say that some of our own experiences with the Paris Club have been rather bitter. I therefore find it rather
rich and patronizing that they should be preaching to us about the Chinese as though they own us. But when it comes to money, I am prepared to listen even to my enemies. A major problem with Chinese infrastructure loans is that they are not based on the kind rigorous project identification that we traditionally associate with the World Bankand other multilateral finance institutions with a formidable intellectual capital at their beck and call. I would strongly advise that when we enter into such loan negotiations we must ensure rigorous project preparation. For my part, I have always
insisted that we take external loans only for projects that have a guaranteed calculated return on investments.
It is also sadly true that the Chinese have not always been transparent with us. When you look at some their infrastructure projects you see that even the labourers are brought from China. In fact, there have also been cases of prisoners allegedly being employed in some projects in Africa. I visited the African Union Commission a few years ago for a Summit of African Heads of State and Government. My gentle readers would recall that the Chinese built it as a donation to Africa. It is an impressive edifice worth some US$300 million.
I was curious to find some Chinese milling in and out during a session of our leaders. When I enquired I was told that they are the people maintaining the building. That cannot be a good arrangement. But let’s face it: the Chinese are in business. It’s said that life gives you not what you are worth but what you negotiate. It is up to us to negotiate the best terms with the Chinese. I like the Chinese game of Go. It is a military-type game where you fight relentlessly for territory and total domination.
When a fool allows himself to b e screwed up, the Chinese are the least people to pity such a fool. They are in business
to win. We must therefore ruthlessly fight our corner, ensuring that any projects they finance include clauses for raining, technology transfer and systemic development impact.
I believe that the Chinese are our friends far more than the Europeans and Americans could ever be. Like us, they have bitter memories of being treated with humiliation and contumely by the trans-Atlantic powers. For more than a century
China was raped and humiliated by foreign adventurers. The so-called Opium Wars were fought in the mid-nineteenth
century because European powers literally coerced the Chinese into buying opiates on pain of death. The Chinese, a people with a long civilization, were reduced into being hopeless drug addicts. New China, with its 1.4 billion people, sees Africa as a partner of destiny. The sentiments are reciprocal.
China is also becoming a surplus capital country, with external reserves of the order of magnitude of US$3 trillion. They are looking for good investments and good projects in Africa and in other emerging economies. They need our natural
resources and markets. We need their goods, capital and savoir-faire. It’s a positive game.
For decades, no Western European country would be bothered to invest in African infrastructures. The duplicitous French invest in African infrastructures in the so-called “Francophone” countries only on the condition that they exercise total monopoly control while the locals pay extortionate rates. The Chinese, on the other hand, genuinely want to help.
Their first major project was as far as back as the 1970s when they built the Tazara railway; a 1,860 km rail from Kapiri Mposhi in central Zambia to Dar es Salaam in Tanzania. The Chinese are only now beginning to understand our continent. They do not always do enough technical preparatory studies in terms of project identification to ensure dynamic integrated sectoral linkages that maximize value and return on investments. The Development Bank of China has assets of a staggering US$2.4 trillion. Their capitalization outstrips the combined assets of the World Bank and the European Investment Bank (EIB). The Industrial and Commercial Bank of China is even bigger, with capitalization in excess of US$4 trillion. I would have expected such institutions to at least have offices in Lagos and Johannesburg so as to work so as to better understand our terrain.
It goes without saying that we must be wary of loans we cannot afford to pay back. Our total national debt stock has recently risen to the astronomical figure of US$83.88 billion. We are currently spending over 50 per cent of government
revenue in servicing our debt alone. Much of the rest goes into recurrent expenditure, with very little (about 23 recent) left for capital expenditure. I have no reason to believe that we are exercising enough financial discipline with regards to expenditure controls. So a lot of money goes down the pork barrel of a bureaucracy that has turned rent-seeking into a sophisticated art form. The model is obviously wrong. I hear people quoting extraordinary billions of dollars as the amount we need to fix our power and infrastructures. Unless the model is changed, it would be foolish to borrow more from the Chinese.
We need a whole new approach to dealing with China. At the same time, we need to engage with them in training our
people in such fields as construction technology and engineering, including the institutionalization of maintenance culture in our public works system. We should also consider direct-labour projects, especially in rural areas, so that millions of our youths will get jobs. We can do it for railways, highways, rural schools and clinics and other similar projects. In so doing we must negotiate deals with China that require them to invest in our people while ensuring technology transfer. We should also encourage them to invest in profit-sharing PPP projects in our infrastructures sector.
and then