MinBane

I write what I like.

Archive for the tag “Arjuna Ranatunga”

Opinion: Hope Kagame learns from Sri Lanka!

As conning as President Paul Kagame are, he will never outsmart the Chinese in their loans and agreements, especially when concerning their moneys and the planned extension of the Belt and Road Initiative (BRI). Before I show the naive relations that Kagame has with Xi Jinping on the visit. I will first show the statements made by Kagame as he is signing agreements and loans. Kagame is really risking natural resources and the infrastructure projects that the Chinese are supporting. If there is any default on loans or problematic to pay back. The Rwandan state will repay with the resources in the soil or within bound of the structures put in place. Therefore, Kagame shouldn’t think of himself as an equal with China, he should think of it as a borrower and find ways to secure repayments.

I also want to say a few words from the heart. The growing relationship with China is based as much on mutual respect as on mutual interests. That is evident in your personal commitment to our continent, Mr. President” (…) “More generally, China relates to Africa as an equal. We see ourselves as a people on the road to prosperity. China’s actions demonstrate, that you see us in the same way. This is a revolutionary posture in world affairs, and it is more precious than money” Kagame stressed” (Abdur Rahman Alfa Shaban – ‘’China relates to Africa as an equal’ – Paul Kagame’ 23.07.2018 – Africa News).

When you see this, you wonder if the Rwandan President is naive or if he thinking that the Sri Lankan experiment of high loans and bad repayments cannot hit Kigali, like it hit Colombo. Not that I want this to happen to any state. I am as worried about this in Uganda and Kenya, as the loans to for instance Madaraka express, Karuma Hydroelectric Power project and Kampala-Entebbe Expressway. This has to be repaid to the Chinese at some point and with interest.

Kagame is foolish, if he thinks the Chinese will not expect a return on their investment, that is what they do.

Here what happen with the Chinese loans in Sri Lanka:

Some Sri Lankan economists had privately told me in 2011 that their country will find it difficult to repay the massive loan of USD 8 billion at an interest rate of more than six per cent taken from China for modernising the Hambantota port and that it may ultimately have to convert these loans into equity. That warning came true on July 29, 2017 when Sri Lanka and China signed the Hambantota Port Concession Agreement. Soon after the Agreement was signed, China declared that the Hambantota port is a part of its Belt and Road Initiative (BRI). According to the agreement, China will pay USD 1.12 billion upfront in a debt-equity swap in the ratio of 70:30 approximately, with the China Merchant Port Holdings Company (CMPort) getting 69.55 per cent of the shares and the Sri Lanka Ports Authority (SLPA), a public sector organization, holding the remainder 30.45 per cent. After 10 years, SLPA can buy another 20 per cent of the shares, making the two companies equal partners” (…) “The conclusion of an agreement with China to manage the Hambantota port was seen as inevitable after the government buckled under Chinese pressure when the China Communication and Construction Co Ltd, which was building the port city, demanded USD 143 million as compensation for the stalling of the work. The Sri Lankan government was also compelled to renegotiate the Colombo Port city project last year, which had been suspended due to criticism about the Chinese ownership of 20 hectares of freehold land as well as controversy over the project’s possible negative environmental impact” (Smruti S. Pattanaik – ‘New Hambantota Port Deal: China Consolidates its Stakes in Sri Lanka’ 17.08.2017).

So if the Rwandan take the grants and loans for granted, they might be forced by the financial pressure from Beijing to give away either infrastructure or even make concession of some other vital resources. Because the Chinese expect some value for their money, they are not doing this for charity, but for development of themselves. Therefore, Kagame is not an equal and will not be an equal. I wish that was a serious thing, but the way the Chinese play these agreements. They are not playing around and doling out money for the hell of neither. Neither does anyone else, that is why usually with Western Aid the state expect bought from same source imports and also with strains of governance to get the funds. So, the Chinese does it their way. That is respected, however, the worry is what the aftermath is the for the ones that swallowed to much debt and cannot repay.

Will that happen to Rwanda?

Kagame shouldn’t see himself as an equal, but wonder how he does fit as a piece of the puzzle in the BRI project of the Chinese and how he can pay back with interests. Because that is the next step. The should also worry the neighbors who has borrowed heavily as well from the same They should all be careful and wonder what would happen. This is isn’t only for Kagame, but he was today speaking a bit to friendly to the Chinese.

As if he haven’t gotten the news of what happen in Sri Lanka and for everyone else, that should be warning. Peace.

Advertisements

Post Navigation

%d bloggers like this: