If there is anything to be concerned about is Africa’s debt portfolio; by day, Africa’s debt is rising-the debt is rising at alarming rate-which threatens future development in Africa.
According to Overseas Development Institute (ODI), “about 40% of sub-Saharan African countries are in danger of slipping into major debt crisis.” For several decades, debt to multilateral financial institutions in Euro-American world has been Africa major problem; debts, most African nations could barely state-their origin or explain reasons for them-as some could be traced to colonial bills charged to colonies on the eve of independence some sixty years ago.
Now the questions, Africans want answers to are:
• How much does Africa owe?
• Who are African nations’ creditors?
• What types of loans are coming to Africa?
• Are they loans or traps to hold Africa down?
HOW MUCH DOES AFRICA OWE?
Between 2006 and 2017, Africa’s debt portfolio stood at $583 billion dollars, about a fifth of $2.58 trillion of African nations combined GDP. Of this amount, 20-29% about $132 billion or more is owed to China; a major power on global stage. From mid 80s, Chinese aggressive venture into Africa began; just twenty years after it transitioned from a centrally planned economy to market oriented-economy that changed China dramatically and even, fundamentally.
Today, China has a different story to tell, with $14.3 trillion (99 trillion Yuan) GDP; China has world largest total banking assets of $40 trillion and a $23.39 trillion in deposits, which should not be idle, but be working or invested somewhere as loans, projected-funded instruments, soft loans to foot imports, grants, decoy and wheedle in Africa.
WHO ARE THE CREDITORS?
Who are African nations’ creditors? None other than those already known; they’re yesterday’s ex-lords or colonial masters, who are today’s old wines in new bottles. Even though they’re no more viceroys, but through certain institutions-modern day, viceroys honk.
Euro-American multilateral and bilateral financial institutions are Africa’s major creditors; mainly, the World Bank, which the continent owes $106 billion, International Monetary Fund (IMF); Paris and London Clubs; European Investment and Development Banks, individual banks across Europe; and Islamic Development Bank, which is very popular in the Maghreb.
It is interesting to know that 32% African government external debt is owed private lenders, which London Club front for; while 35% is owed multilateral institutions, mostly, International Monetary Fund and its twin sister, the World Bank, and public creditor, which Paris Club represents; and 55% of external payment to private creditors.
JUST GUESS WHAT CONSTITUTE AFRICAN LOANS:
Over the years, many different things, which would not have qualified or passed the test for LOANS have been foisted on Africa, including but not limited to eleven Acts/Terms in FRENCH PACT imposed on her African colonies more than sixty years ago; some of the conditions are as follow:
- Colonial Debts, which newly “free” nations will to pay France for all infrastructure provided during colonial days.
- Compulsion to submit countries annual balance and reserve report to France, without which independent French countries would not get funds.
- Former French colonies are required to keep at least 65% of their foreign reserves in an “account of operations” with French Treasury, which invests the funds with a shroud of secrecy; and another 20% to cover financial commitments.
France controls the $500 billion African Silver in its currency; and sadly, this money is not available to French former colonies.
- France allows African nations just 15% of their a year; and if they need more, African nations will have to borrow 65% of their money at commercial rates; there is a cap on amount of money, French former colonies can borrow, which is 20% of previous year’s public income.
Unfortunately, the French Pact without human heart became a TEMPLATE for several Loans and Grants that came to Africa over the years and decades, which stunted growth and development, bred political instability, created social dislocation in sub-Saharan Arica.
It is not surprising that China has taken same pathway; already, China has taken possession of Zambian ZESCO (Electricity Company), Zambian National Broadcasting Company (ZNBC), other critical assets-such as Lusaka International Airport may go, if not gone; just as China is asking for Mining Assets as collateral for loan restructure agreement. If China succeeds, Konkola Copper Mine, African second-largest copper mine may go, and for sure, it will prepare the ground for other national assets being liquidated.
Should Zambia cave in under Chinese debt trap, these African nations-Ethiopia, Democratic Republic of Congo, Angola, Djibouti, and Kenya with weaker economies, but owing China so much may go Zambia and Sri Lanka routes.