Research shows Western lenders are behind most of Africa’s debt crisis


* African governments owe three times as much debt to Western banks, asset managers and oil traders as they do to China, and have to pay double the interest.

* The so-called narrative of the debt trap operated by the West against China is false, African scholars and economists told Xinhua.

* Campaigners have called on Western countries, particularly Britain and the United States, to force their private lenders to do more to help reduce the debt burdens of emerging and developing countries, including those in Africa.

Recent studies have revealed that Western private creditors are responsible for the lion’s share of Africa’s debt burden.

In a report published last week, the British charity Debt Justice found that African governments owed three times more debt to Western banks, asset managers and oil traders than to China, and had to pay double the interest.

The report said 12% of African governments’ external debt is owed to Chinese lenders, compared to 35% to Western private lenders, adding that the average interest rate on private loans is 5%, compared to 2.7 % on Chinese public and private loans. lenders.

The new finding came after Harry Verhoeven of Columbia University’s Center on Global Energy Policy and Nicolas Lippolis of Oxford University’s Department of Politics and International Relations published a new study in May, which said that the increase in African debt due to Chinese loans pales in comparison to the debt burden created by private creditors in other countries over the past decade.

The new findings lay bare the absurdity of so-called ‘debt trap diplomacy’ that has been touted for too long by Western politicians and propaganda machines in smear campaigns against China, experts have said. .

A man sits in front of the office building of the African Continental Free Trade Area (AfCFTA) secretariat in Accra, capital of Ghana, on Aug. 17, 2020. (Ghana’s Presidency/Handout via Xinhua)

DEBT TRAP?

The so-called narrative of the debt trap operated by the West against China is false, African scholars and economists told Xinhua.

Charles Onunaiju, director of the 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 repayment period, describing them as manipulative and strangling.

“The issue of the debt trap has always been a political slander…” he said, adding that the narrative is nothing but a distraction to absolve the West of its responsibilities.

Costantinos Bt. Costantinos, a professor of public policy at Addis Ababa University in Ethiopia, said Western administrations and media have failed to take a rational perspective on the growing influence of the China in Africa.

“They portray China as a predatory moneylender arming capital to practice a new form of colonialism in Africa. However, such accusations have little factual basis,” the expert said.

Beatrice Matiri-Maisori, a lecturer in economics at Riara University in Kenya, 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.

“Debt trap diplomacy…has nothing to do with the reality of Africa’s debt structure,” she said.

“Western lenders have not been in the spotlight for a long time for debt relief because they managed to deceive the world by saying that only Chinese lenders pose a threat to Africa,” the official said. Uganda-based Vision Group journalist Mubarak Mugabo.

Photo taken on July 1, 2022 shows the berthing of the first ship at the high seas port of Lekki under construction in Lagos, Nigeria.  (CHEC/Handout via Xinhua)
Photo taken on July 1, 2022 shows the berthing of the first ship at the high seas port of Lekki under construction in Lagos, Nigeria. (CHEC/Handout via Xinhua)

WEST INVITED TO DO MORE

Campaigners have called on Western countries, particularly Britain and the United States, to force their private lenders to do more to help reduce the debt burden of emerging and developing countries, including those in Africa. .

Emerging and developing countries have seen sustained capital outflows for four consecutive months, International Monetary Fund (IMF) Managing Director Kristalina Georgieva told a recent meeting, adding that more than 30% of emerging and developing countries development and 60% of low-income countries are at or near debt distress.

China has extended debt suspension to other developing countries during the pandemic, but Western private lenders have not, said Tim Jones, policy manager at Debt Justice.

“Western leaders are blaming China for Africa’s debt crises, but that’s a distraction… The UK and US should introduce legislation to force private lenders to participate in debt relief. debt,” he said.

Official data showed that China ranked first among the members of the Group of 20 in terms of the amounts of debt carried over. “China has done a lot to reach a common agreement with more than 19 countries in Africa, to reach a common understanding on how they will pursue debt relief,” 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 such examples.

At a press conference last week, Chinese Foreign Ministry spokesperson Wang Wenbin called on developed countries, their private lenders and multilateral financial institutions to take stronger measures to provide financial support. to developing countries and alleviate their debt burden so that the global economy achieves an inclusive economy and sustainable development.

Members of the Kenyan Independent Locomotive Driver Cohort work in Nairobi, Kenya, on Feb. 19, 2022. (Xinhua)
Members of the Kenyan Independent Locomotive Driver Cohort work in Nairobi, Kenya, on Feb. 19, 2022. (Xinhua)

CONCRETE SUPPORT FROM CHINA

Over the years, China’s financial support to Africa, particularly in the area of ​​infrastructure investment, has been widely applauded by African governments and peoples, especially at a time when the ambitious African continental free trade is promoted.

“We are seeing connectivity, we are seeing airport remodeling and we are seeing port remodeling,” Onunaiju said, adding that China’s support for Africa is clearly felt in different areas.

Referring to Lekki Deep Sea Port in Lagos State, Nigeria’s economic hub, as an example, he said the Chinese-funded port project will create up to 170,000 jobs and bring in billions. dollars of revenue to the government through taxes, royalties and fees. after being in operation.

“This is not propaganda. These are reality,” Onunaiju said.

In the past two decades since the establishment of the Forum on China-Africa Cooperation, much of the Chinese funding has quickly translated into infrastructure in Africa, as evidenced by countless connectivity projects, such as railways , roads, dams, and telecommunications, said Matiri-Maisori.

 Photo taken on May 8, 2022 shows the Nairobi Expressway built by the China Road and Bridge Corporation (CRBC) in Nairobi, Kenya.  (Xinhua/Dong Jianghui)
Photo taken on May 8, 2022 shows the Nairobi Expressway built by the China Road and Bridge Corporation (CRBC) in Nairobi, Kenya. (Xinhua/Dong Jianghui)

“It is very important for us in pursuit of our aspirations to be an integrated Africa, the African Continental Free Trade Area and all countries in Africa trading with each other,” she said.

“What is really happening is that this connectivity is contributing to Africa’s future and long-term growth, so that Africa can start participating in global supply chains,” the expert added.

China has provided African governments with access to good financing to support development, said Peter Kagwanja, CEO of the Kenya-based Africa Policy Institute.

Speaking of the Chinese-built Mombasa-Nairobi Standard Gauge Railway, he said the railway “opened up our country, Kenya, and we started to see industrialization develop around there, business develop around the railway line, land values ​​increase dramatically around that, and people finding employment around the railway.

“And these are things we could never have dreamed of before China became Africa’s partner,” he said.

(Xinhua reporters Cao Kai, Li Cheng, Bai Lin, Li Hualing in Nairobi, Guo Jun in Abuja, Zhang Gaiping in Kampala, Wang Ping in Addis Ababa and Xu Zheng in Accra also contributed to the story.) ( Video journalists: Li Cheng, Guo Jun, James Harry, Adewale Amzat; video editors: Liu Ruoshi, Cao Ying, Zhao Yuchao)

Send your news to [email protected] and via WhatsApp to +233 244244807
Follow Ghana News on Google New

Robert P. Matthews