Debt Trap Grows Unease In Africa Against China's BRI Projects

China Africa

A recent attack on Chinese workers in a gold mine in the Central African Republic has brought the grievances of common African people against the Belt and Road Initiative projects of China to the forefront.

On March 9, 2023, gunmen stormed the Chinese-operated gold mining site at 5 a.m., overpowered the guards at the site and opened fire, killing nine Chinese nationals and seriously wounding two others.

They were employees of China’s Gold Coast Group. The mining site had only recently been launched.

A panicked Chinese embassy in the CAR has advised Chinese nationals not to leave the capital city of Bangui for the threat of killing and kidnapping.

The attack at the gold mine came only days after gunmen had kidnapped three Chinese nationals near the borders of CAR with Cameroon.

After the kidnapping, President of CAR Faustin Archange Touadera had to make a trip to Beijing to reassure Chinese investors not to panic.

The CAR is one of the poorest countries in the world, despite having a vast mineral wealth of gold and diamond.

This has attracted the attention of Chinese companies which want to extract these valuable minerals and carry them off, to the detriment of the interest of the poor African nation.

Many of the mining exploration companies in CAR are now Chinese-run and they have faced security challenges.

Earlier in 2020, two Chinese workers were killed when local residents led an uprising against a mine operated by a Chinese company in Sosso Nakombo.

gain in 2018, three Chinese citizens were lynched by an angry mob after a local leader died in a boat accident while accompanying Chinese miners to a site.

By multiplying heavy infrastructure projects in Africa, China aims to establish its influence on the continent.

But experts warn that the poor African nations run the risk of being trapped.

China is the main donor in gigantic projects like railway lines and civil infrastructure, being built under the highly criticized Belt and Road Initiative of China.

“One in three major infrastructure projects in Africa are built by Chinese state-owned companies, one in five is financed by a Chinese institutional bank,” Paul Nantulya of the African Center for Strategic Studies has been quoted as saying.

He reports to the U.S. Department of Defence. Western countries were hesitant to invest in these projects.

The Chinese saw this void and decided to invest in infrastructure,” says Nantulya.

For the poor African nations, however, this hobnobbing with China is proving to be costly.

Anna Borshchevskaya of the think-tank Washington Institute warns of a “debt trap” for African countries.

China offers loans for expensive infrastructure projects and when a country cannot repay its loans, China takes control of its strategic assets,” she has said.

“Be careful about tempting deals. These can be opaque and ultimately fail to help the people they were meant to help,” U.S. Treasury Secretary Janet Yellen has said about deals China has made in Africa.

Many of the poorest states in Africa are heading towards over-indebtedness or default, U.N. agencies have warned at a conference of the least developed countries organized by the United Nations in Qatar in early March 2023.

In Kenya, China is engaged in the construction of a gigantic project; a railway line linking the city of Mombasa with the Rift Valley at a cost of $5 billion.

Beijing is financing 90 per cent of the project.

Tanzania has signed a contract of $2.2 billion with a Chinese company for a railway line linking the main port of the country to its neighbours.

The real benefit for all these projects lies with Beijing, with maintenance contracts that can last up to 99 years.

The local benefit is low because the employees are overwhelmingly Chinese.

An Observer Research Foundation study sums up succinctly the real nature of BRI projects in African countries: “Over the past two decades, China has established a significant economic presence in most African countries.

Its lucrative economic investment package, flexible political approach and focused big-ticket investment projects under the BRI provide an ostensibly massive opportunity to African countries.

However, the unilateral nature of the initiative, the lack of transparency and accountability to African countries, and the absence of projects that directly benefit the locals have raised suspicion and fuelled local resentment.

There are increasing instances of African countries cancelling or postponing BRI projects over rising debt concerns.”

The claim of Beijing that the BRI projects offer a “win-win situation” to both China and the recipient country of a project is really a facade.

Beijing is driven by its need to find new emerging markets for its overcapacity amid a slowdown in the domestic economy of China.

Besides, Beijing is using the BRI to mask its geopolitical and geostrategic objectives.

Chinese investments in ports along the east coast of Africa and the first Chinese military base in Djibouti are pointers to this.

The local African population benefits little from these projects.

The skilled labour in most projects is from China, with a few African locals engaged in low-end employment.

Many BRI projects in China in Africa have been cancelled or postponed because of a lack of employment opportunities for local people, rising debt concerns, undermining of quality and standards and malpractice at the ground level like bribing officials.

As early as 2015, present External Affairs Minister of India S. Jaishankar had rejected the concept of the BRI and correctly described it as “China’s national initiative” without any discussion with the recipient countries, saying there was no need for the latter to buy these projects.

To serve its strategic interests, China is investing in ports along the coastline from the Gulf of Aden through the Suez Canal towards the Mediterranean Sea.

Of the 49 countries China has claimed to have engaged through BRI, 34 are located along the coasts of Africa.

China can use these ports for a typically colonial pattern of trade of transporting out raw materials and bringing in finished goods and also use the ports for the military purpose of surveillance and blockade of overseas and deep sea maritime traffic.

In 2017, China built its first overseas naval base in Djibouti.

The connectivity projects like railways and roads link the industrial and energy projects of China like mineral processing, oil and renewable in the hinterland of Africa to projects along the coastline like ports.

These in total make up 90 percent of all BRI projects in Africa.

An oil refinery in north Sudan is located close to a railway line connecting Port Sudan and Dakar Port in Senegal.

A petrochemical and phosphate transformation industries hub at Gabe’s in Tunisia has been connected by a railway line to the Zarzis Port.

The transportation network under the BRI has been built in such a way to use the maritime route to ship out raw materials like phosphate, copper, cobalt, gold, iron ore, cocoa, bauxite, coal, lithium and granite back to mainland China and bring in to Africa finished goods and Chinese labour.

The claim of China that the BRI projects are being used to build infrastructure and thus meet local necessities is not correct.

Though the majority of Chinese projects in Africa are in the infrastructure sector, the African Development Bank has estimated that by 2021 the annual deficit in the infrastructure sector in Africa is $93 billion.

The Chinese projects only help to ease the overcapacity of Chinese companies in sectors such as steel, iron and cement.

The local population in China do not benefit from the connectivity projects under the BRI.

The bidding processes for these projects are opaque and bribes are paid to local officials

Particularly in the case of energy and industrial projects, the local population living in the proximity of the key resources have to be relocated.

The transport projects encroach upon existing human settlements and are environmentally damaging.

Because of this, local protests against Chinese projects in Africa are mounting, together with the kidnapping and harassment of Chinese workers.

There were protests in Nigeria in April 2017 over the lack of compensation for buildings demolished for a railway line.

In Kampala, local traders have protested against Chinese traders setting up small businesses.

The Bagamoyo Port project in Tanzania was suspended as over 2,000 people were forced to relocate in 2016. Local fishermen are protesting against Chinese investments in the blue economy.

In Kenya, Chinese nationals are found to have created a small kingdom in which Kenyan workers are being discriminated against.

Besides, there are growing concerns amongst African nations that they are going to be caught in a debt trap.

The public debt of Sub-Saharan Africa rose to a record of $789 billion in 2021

Of this $636 billion was long-term external debt.

China owns 72 percent of the external debt of Kenya which was nearly $40 billion at the end of 2022.

The Auditor General of Kenya has warned that the country runs the risk of losing control of Mombasa Port if it defaults on loans from the China Exim Bank.

Copyright Greekcitytimes 2024