Signing a contract with China is like ascribing to the boiling frog effect; a fable describing a frog being boiled alive slowly. If you drop a frog suddenly into boiling water, it will jump out, but if you put that same frog in a vessel of water and start heating the water gradually, it will adjust its body temperature accordingly until it reaches a stage beyond its capacity and dies foolishly.
It’s rather pathetic how China is re-colonizing Africa by appealing to the ignorance and selfish interests of our leaders. Today, the Chinese are offering mouthwatering deals to Africa, both in cash transactions and the outmoded or rather defunct barter trade which seem very attractive on the outlook but dangerous in reality.
After Britain had collatarised Chinese aids and guarantees with Hong Kong for 99 years, China has gained more experience than any country on earth on the intricacies of long term collaterisation of assets.
Here are some examples:
- The Philippines this year cancelled all Chinese aids. The President was in Isreal last week for new partnership in arms.
2) Malaysia canceled Chinese speed train loan contract this year and opted for a costlier Japanese electromagnetic rail. Because all Chinese grants requires collateral with state critical assets.
3) Singapore bluntly told China we don’t need your 25 years tenure loan at 0.5%.
4) Greece handed China a national asset last year on default, and European Union took measures to stop any further member country from Chinese loans.
5) Zimbabwe is the second African country to default and will soon hand over a national asset.
6) Lamu Port in Kenya, which was constructed by China on a Chinese loan of $16 billion, will see Kenya default in 3 years time and the biggest port in East Africa and adjoining towns will be handed over to China for 99 years.
Kindly note that in all these loans, no single dollar cash was handed over to the countries involved. In all cases, China will execute & build the projects (as is being done in the Abuja Metro Line project), using Chinese materials, equipment, technicians, etc all imported from China.
But you owe and they patiently work underground for your default to pay back the loan, through their crafty manipulation and sabotage of your economy. After 15-25 years, they repossess your assets and now determine for the next 75 years your import rates (in case of Kenya) or rail charges (in case of Abuja Nigeria)
In Nigeria: both the current Federal Capital Territory (FCT) minister and Governor el Rufai of Kaduna who travelled with Buhari to China a few days ago, have sent word that they will spend extra days in China to sign off such rail financing loan agreements with China.
By Richard Krah
The Zambian government contracted the Chinese, lazy-thought and glossed over details thinking they were granting consent to genuine terms but the whole thing just morphed into modern day colonialism. China is now proposing to take over the Kenneth Kaunda International Airport should Zambia Government fail to pay back its huge foreign debt on time. The issue of whether Zambia posses the required economic muscle to repay that debt is in contention considering the amount involved. It’s typical of the Chinese strategy.
That moreover is not the only thing Zambian suffered from China; the Chinese own 60% shares of the Zambian National Broadcasting Corporation which means, Chinese have an influence over what should or should not be premiered on their TV/Radio sets.
Another country that is exhibiting all the red flag signals of going the Zambian and Sri Lanka way is Djibouti.
| Debt Distressed Djibouti
Djibouti is projected to take on public debt worth around 88 percent of the country’s overall $1.72 billion GDP, with China owning the lion’s share of it, according to a report published in March by the Centre for Global Development.
On March 2018, Djibouti signed a partnership agreement with a Singaporean company that works with China Merchants Port Holdings Co. or CMPort—the same state-owned corporation that gained control of the Hambantota port in Sri Lanka—to build the Doraleh Multipurpose Port. The project was completed in May 2017.
In recent years, China has emerged as a key investor and a generous, ready and easy lender to African countries.
Beijing’s cumulative loans to Africa since 2000 amounted to $124-billion by 2016, according to figures compiled by the China-Africa Research Initiative (CARI) at Johns Hopkins University School of Advanced International Studies in the United States.
Angola, Ethiopia, Sudan, Kenya and the Democratic Republic of Congo respectively, were the top beneficiaries of these loans. Angola’s oil-related loans worth $21.2 billion since 2000 total roughly a quarter of cumulative Chinese loans to the entire continent.
“Half of those loans were given in the past four years,” Janet Eom, an associate researcher at CARI, told DW. “So Africa’s debt to China is becoming more of a concern moving forward.”
While African Presidents are at least this time round somehow exempted from the indignity of being talked down while clutching their begging bowls at western capitals before a few notes is thrown into their bowls, the readily available Chinese loans are not entirely risk free.
Economists and other international financial institutions are becoming increasingly worried that the East Asian giant under a carefully disguised “debt trap” diplomacy is burying many developing and poor countries in massive debt and then forcing the highly indebted countries to hand over some of their key infrastructures’ such as the case of Sri Lanka.
Djibouti lies more than 2,500 miles from Sri Lanka but the East African country faces a predicament similar to what its peer across the sea confronted in 2017, after borrowing more money from China than it could pay back.
Belt & Road Initiative
In both countries, the money went to infrastructure projects under the aegis of China’s Belt and Road Initiative.
Sri Lanka racked up more than $8 billion worth of debt to Chinese sovereign-backed banks at interest rates as high as 7 percent reaching a level too high to service. With nearly all its revenue going toward debt repayment, in 2017 after being pushed to the wall, Sri Lanka threw in the towel and handed over the Chinese-built port at Hambantota under a 99-year lease with China having a 70 percent stake.
One concern is that the Djibouti government, facing mounting debt and increasing dependence on extracting rents, would be pressured to hand over control of Camp Lemonnier to China.
In a letter to National Security Advisor John Bolton in May, Sen. James Inhofe (R-Okla.) and Sen. Martin Heinrich (D-N.M.), two members of the Senate Armed Service Committee, wrote that Djibouti’s President Guelleh seems willing to “sell his country to the highest bidder,” undermining U.S. military interests.
“Djibouti’s now identified as one of those countries that are at high risk of debt distress. So, that should be sending off all sorts of alarm bells for Djiboutians as well as for the countries that really rely on Djibouti, such as the United States,” said Joshua Meservey, a senior policy analyst at the Heritage Foundation.
And that’s not all, China is not done yet with Djibouti, Beijing has earmarked the country as one of 68 countries set to be involved in its ambitious One Belt and One Road Initiative (OBOR).
Problem is eight of the 68 countries involved in the Belt and Road Initiative currently face unsustainable debt levels, according the Center for Global Development’s report.
The eight nations are Djibouti, Kyrgyzstan, Laos, the Maldives, Mongolia, Montenegro, Pakistan, and Tajikistan.
As past experiences have shown the eight nations will certainly be enticed to chew more than they can swallow only to end of it end up being even poorer than they are now.
As the cradle of mankind continues to sink deeper into debt condemning future generations to economic slavery, the late Whitney Houston feat Deborah Cox classic ‘Same Script, Different Cast’ has never rang truer.