Opinion: Museveni – “China might be a problem in the future” – it will be if you default on your debt

“Africa has been having problems for the last 600 years due to the slave trade, colonialism, neocolonialism — and none of it was from China” (…) “not seen any serious problem, because their approach is different” (…) “They do not impose their offers if you do not want them, so we have not seen a problem for now. Maybe a problem in the future, but not now” – President Yoweri Kaguta Museveni (Sinan Tavsan – ‘Uganda leader says China-style diplomacy ‘better than’ the West’s’ 17.03.2022, Asia Nikkei).

President Museveni had an exclusive interview with a journalist from Asia Nikkei and it was published today. These few quotes are from there and it is striking. The former donor darling of the West. The President who has pandered to the interests of the United States and their allies for ages. Who has eaten of the buffet of aid, grants and all sorts of prepositions, which has given him a larger than life persona.

That man is now blaming the West for if all. He is right in going after the colonial past of the West and the neocolonial structures, which are hampering development and continues the cycle of rich versus poor. This is justified, but he also shows a little nativity in concern to China.

It is just like he don’t think the monies, the funds and the China Exim Bank, which works like this:

“The China Exim Bank is increasingly making use of a deal structure – known as the “Angola mode” or “resources for infrastructure” – whereby repayment of the loan for infrastructure development is made in terms of natural resources (for example, oil). While this approach is by no means novel or unique, and follows a long history of natural resource – based transactions in the oil industry – China has taken its implementation to a higher level. By providing preferred lines of credit to Chinese state-owned enterprises and foreign governments wishing to purchase Chinese made goods, the China Exim Bank supports the overseas expansion of Chinese firms in line with the country’s “Go Global” strategy, whose long-run goal is to increase the productivity and competitiveness of these enterprises vis-à-vis their global competitors. The arrangement is used for countries that cannot provide adequate financial guarantees to back their loan commitments and allows them to package natural resource exploitation and infrastructure development” (Institute of Developing Economies – Japan External Trade Organization (JETRO) – ‘China in Africa’ October 2009).

What Museveni is not saying is what the costs of the debt and the structure of the Chinese support to Uganda or anywhere else. It is like Museveni haven’t seen what has happened when Republics or Nations defaults or fail to pay on the debts. Since, the Chinese Banks or Funds are coming with strings, which isn’t always public. That’s why we have seen what has happened to Sri Lanka and Tonga, which both has to give up key infrastructure to be licensed. The same has been told to happen Zambia and there are already fear of what could happen to Entebbe International Airport.

President Museveni should consider all of this, as it is next generation that will cover the debt he has been accumulated during his reign. There will be more than the Toll Road on the Entebbe Express-way to secure revenue for the added debt. It is like Museveni isn’t concerned about this and the threshold for repayments are coming closer. Therefore, at one point or another… if there is lacking domestic revenue… the Chinese companies or China can cease or capture collateral.

So, Museveni is right… China could become a problem. Especially, for all the nations who has eaten loans for the infrastructure projects in the Belt Road Initiative (BRI), which will pass the grace period and the debt of these has to be repaid. It wasn’t free money to build roads, buildings or rail-roads. No, it was an investment, which the Chinese plans to get profits out of. They didn’t give away this money. The first loaned the money, got a Chinese developer and Chinese Engineering company to build it and now later the debtor has to repay it with interests.

That is the brutal truth… I am not saying the loans are a problem, but they could easily become it. Especially, if the debtor doesn’t pay on time or in a fashion, which the creditor accepts. If they defaults or fails to repay. This gives the creditor leverage and possible freedoms or liberties to ensure collateral. Therefore, it could easily become a huge problem…

Museveni should also study how this happened to others. As sooner or later, this could happen in Uganda or anywhere else in Africa. The Chinese is right in doing this. The debtors signed the agreements and the stipulations on the loans are giving it legal binding rights to get it repaid. That is why … they might not use colonial techniques to get resources, ownership or have influence. They just borrowed money and with that has the upper-hand of their poorer states. It is a wise move, because the Chinese knows greed is an easy way of corrupting minds and get them into the fold. The same ways happens here. They don’t come with guns or war, but they are financially binding, which can easily be triggered.

In this instance, Museveni is partly outsmarted. Both are getting their interests nurtured, but at one point he could easily get into real trouble. It would be a huge problem and the state has to find currency or liquidity to actually cough up funds to pay on old loans. This is on the horizon and evidently, people are speaking to soft-heartedly about it. Peace.

Wang Yi Refutes So-Called “Debt Trap” in China-Africa Cooperation (07.01.2022)

Wang Yi stressed, China-Africa cooperation is South-South cooperation and mutual support and assistance between developing countries.

BEIJING, China, January 7, 2022 – On January 6, 2022 local time, State Councilor and Foreign Minister Wang Yi and Kenyan Cabinet Secretary for Foreign Affairs Raychelle Awuor Omamo jointly met the press in Mombasa. Wang Yi refuted the allegation that China’s cooperation with Africa has created a “debt trap”.

Wang Yi stressed, China-Africa cooperation is South-South cooperation and mutual support and assistance between developing countries. In conducting cooperation with Africa, China has never attached any political strings or imposed anything on others. All China-Kenya cooperation projects have been scientifically planned and appraised in detail, bringing benefits to the Kenyan people and boosting Kenya’s national development and revitalization. Eighty percent of Kenya’s foreign debt is owed by multilateral financial institutions, and its debt to China is mainly concessional loans.

Wang Yi emphasized, the so-called “debt trap” in Africa is not a fact, but a malicious hype-up by some people. It is an “utterance trap” created by those forces that do not want to see Africa speed up development. If there is any “trap” in Africa, it is the “poverty trap” and the “underdevelopment trap”, which Africa should get rid of as soon as possible. China is ready to work with all friendly countries to help African countries speed up post-pandemic recovery, eliminate poverty and underdevelopment, catch up with the times as soon as possible, achieve common development and create a better future.

Chinese Embassy in Uganda: Remarks by the Spokesperson of the Chinese Embassy in Uganda on Some Media Reports Alleging that “Uganda Surrenders Airport for China Cash” (28.11.2021)

Opinion: Financial distress and defaulting on loans causes the state to loose Entebbe International Airport

“China is most likely to take over Uganda’s Entebbe International Airport for default on debt repayment. More of Uganda’s national assets are at stake of seizure because of the unrealistic and endless borrowing which has mountained public debt to UGX65 trillion” (Kingdom Media Uganda, 25.11.2021).

The Deficit Financing can only take you so far. The bloated and crony capitalism can only keep you going so far. There been years upon years with loans for all sort of development projects and infrastructure upgrades in general. The loans have gone to buildings, roads and the only international airport in the Republic.

The National Resistance Movement and President Yoweri Kaguta Museveni have over the years promised they have a threshold and control of the amount of debt. However, in 2021 after a downturn and lack of generating revenue. The state is defaulting on it’s loans. The state has taken out loans it cannot carry. Loans are not only the loan, but the services for it too. The loans are with interests and with additional fees, which was accepted on taking the loans. These loans are now maturing and the grace period of not paying interests etc.

The Ministry of Finance, Planning and Economic Development (MoFPED) have promised they can service it and has it under control. They have said it would be used properly and well-spent funds. Nevertheless, the loans are clearly piling up and the state doesn’t have the revenue to pay them. They have recycled to many bad-loans and now they comes to haunt the Republic.

The state is paying for ghosts, huge patronage and a local government structure that is dilapidated from the get-go. Since, the state has such excess of expenditure, but they have to keep that to breathe life into the regime. This is why the state has to spend and use funds like a drunk sailors in port. Just awaiting to be robbed by a bystander or waste a salary at a gentleman’s club. However, this is a serious government and not a drunk lonely man who has been at sea for months on end.

It is tragic, but there been warnings. The Sri Lankan debt to China and what happened there should have been a “red flag”. What happened in Zambia as well should be another story of which the Ugandan government should have reacted too. However, that is clearly asking to much, as kickbacks, graft and grand corruption is part of the diet at the Entebbe/Nakasero State House. They are just eating and doesn’t care about the ramifications of it. Since, the cattle in Rwakitura farm is better taken care off, than how the budgets are financed. This is the sad reality of the Republic in 2021.

The amount of loans and debt will cause more distress. Why? Well, there is no future or ability to clear the debt without any proper revenue. The state needs to find new measures to get fiscal responsible. However, the state cannot just tax things and start to tax people for their every transaction. Because, with doing that… they are taking away money, which will generate more revenue and even more possibility to create new businesses. Yes, the state gets more taxes, but they are also creating a wormhole where there is no option to generate any real income. Since, if you have any transactions, the percentages of money is siphoned by the state and instead of getting invested to make new markets.

Therefore, the state is forced to change the way it operates. However, by doing so… the NRM and Museveni will have to drop cronies. That is something it cannot afford, because they are to eat and not to make the Republic better. This state cannot sustain itself …. and it’s own fault that it defaults on loans. Nevertheless, the citizens and the taxpayers are the first to be hit by this. Not the ones who has issued or taken out the loans over the years. They are the ones that has to fix it or for generations pay the Chinese for ordinary services. Because, the current regime wants SUVs and envelopes to cover for funerals or pay for medical tourism. Peace.

Opinion: 7 years down the line and the China Exim Bank loan to upgrade Entebbe Airport can become a liability

“The State Minister of Finance, David Bahati assured the legislators that the implementation of the project will be monitored to ensure the funds are properly utilised” (The Observer – ‘Parliament endorses Shs 680bn Entebbe Airport expansion loan’ 30.10.2015).

It is now evident that the Government of Uganda and the National Resistance Movement (NRM) might struggle with a loan it took out in March 2015 from the China EximBank to fund upgrades of the Entebbe International Airport. We are now in October 2021. There was forewarnings about taking expensive and extensive loans to build and development infrastructure projects. The ones who was steadfast and worried about the rate of loans the state took out was silenced. The state had a plan and initiated with thresholds of loans the state could borrow.

Alas, the state is starting to struggle to cope with all of these loans. It is not shocking as the NRM and the state have been busy with deficit financing it’s budgets to balance it. They are operating with a higher expenses than it has domestic revenue. So to go from red to black the state borrows vast sums from various entities, both locally and internationally. These are taken out with interests and with that… the debt burden is ballooned and at one point… the creditor will either ask for the collateral or make an agreement to cover the funds to cover the defaulted debt. This is what that could happen to Entebbe International Airport…..

Here is how the story went…

How the loan was made:

“On October 8, 2014, Uganda’s Civil Aviation Authority (CAA) and China Communications Construction Company (CCCC) entered into a contract for the up grading and expansion of Entebbe International Airport (Phase 1). To access funding for the project, the Government of Uganda (GoU), represented by the finance ministry, signed a concessional agreement with EXIM Bank of China dated March 31, 2015 for the principal amount not exceeding Renminbi 1.26 billion (about $200m) and interest to be charged at a rate of 2% per annum” (Africa Tembelea – ‘AG Muwanga raises queries on Entebbe Airport Expansion’ 12.01.2019).

How CAA looked at the agreement in 2019:

“Current overall progress for the upgrade and expansion of Entebbe International Airport is at 52 per cent as opposed to the planned progress of 55 per cent. This is commendable progress. At one point in time, there was a delay in release of money from the Exim Bank of China to the contractor (CCCC), which led to a slight delay that has since been resolved. There was a difference of opinion between Exim Bank and the Government of Uganda on the loan agreement clauses. This necessitated the Government of Uganda and Exim bank of China to renegotiate the terms. This was done and the matter resolved amicably. The contractor has since increased resources committed to the project including manpower and equipment. The rainy season also affected works” ( Dorothy Nakaweesi – ‘Renegotiating loan terms slows Entebbe Airport expansion’ 03.06.2019, Daily Monitor).

Xinhua reports:

“Under the Belt and Road Initiative, construction works started in May 2016 after Uganda acquired a 200-million-U.S. dollar loan from the Export-Import Bank of China (China EximBank). The project is scheduled to be implemented in two phases, said China Communications Construction Company (CCCC), which was contracted to design, construct and manage the project. The first phase, with three-quarters finished, involves construction of a new passenger terminal, a new cargo complex, and upgrade of two runways and their associated taxiways, rehabilitation and overlay of three aprons. “For the new cargo building, it is about 10,000 square-meters and when it is finished, it can handle 100,000 tons of cargo per year; for the new passenger terminal building, it is about 20,000 square-meters (and) can handle 3 million passengers per year,” Li Qinpu, CCCC project manager told Xinhua in a recent interview” (Ronald Ssekandi – ‘Feature: China revitalizes Uganda’s aging airport to carry more int’l traffic’ 15.10.2021, Xinhua).

Brian Luwanga tweeted today:

“EXIM Bank of China can take over Entebbe Airport in case Uganda fails to pay back a loan of 740 billion shillings ,this has been unearthed by COSASE while meeting Finance Minister Matia Kasaija. The loan was advanced to Uganda for upgrade of Entebbe Airport” (Brian Luwanga, 28.10.2021).

It is now a shot that the state promised was safe and would be able to liable for. The state said it would be able to repay the Chine EximBank and service the debt. However, it now seems likely the state is failing to pay back the loans. This means the state is defaulting in it and depending on the agreement. The creditor will have power to cover the debt from the debtor. In this instance, the state has to give collateral or any other sort of value, which will practically cover the lost debt and get returns on the loans issued.

This here is a sad story, but they could have done things differently. Even MPs and some said the state should use other sources to raise the funds for the upgrades of Entebbe International Airport. There was one MP who said the state should borrow this from the NSSF to cover it. Alas, that wasn’t the case and now we are here.

We shouldn’t be shocked at this current rate and with the trillions of shillings of debt. The debt isn’t only the amount you get directly from the lender, but you will also pay additional fees and interests. Meaning the loan isn’t just the fixed funds, which the debtor is receiving, but also the costs of servicing it too. That is what the state has do to when it takes these sort of loans and financial instruments.

The general public should worry about this. Because the state has taken out so many loans and these could it easily default on. The state needs domestic revenue, but is running on huge burden of running costs. While it doesn’t have a growing economy or financial structure to cover the deficits. That’s why the state has taken out loans to cover these expenses and this is why they are defaulting on it.

This was inevitable and the state has to restructure itself. Also, ensure it only has expenses that it can cover and just continue to add debt until the sky. Now the rainy days are coming and the loans taken out in recent years will come to haunt the state. This will hurt the state even more and the spiral of depreciative loans will eat up the budgets, which it is already doing. The rate of paying down on it will be destructive, unless there is a sudden miraculous change of financial fortunes. Alas, await more tragedies like these, as the Entebbe International Airport is the top of the ice-berg. Peace.

Opinion: The Chinese claims the loans to developing countries is not to trap them – I beg to differ!

Today, there was an interesting thing coming through my feed that captured my eye. It was a headline from the Philippines News Agency. It was claiming that the Chinese was not making developing countries in debt slaves or putting them into debt traps by taking up huge loans for extensive spending on infrastructure projects. Now in March 2019, the Chinese are claiming that they are just giving viable loans and not to much.

However, I will beg to differ, but before I do so. Let see what the Chines spokesperson said. Which I have to say is not true.

“Guo Weimin, spokesperson of the second session of the 13th National Committee of the Chinese People’s Political Consultative Conference (CPPCC), said extending Chinese loans to developing countries aims to facilitate infrastructure projects that are expected to bring development and boost the economic growth of these nations. “Chinese investments only account for a very small share to their total debt. And our projects are mostly infrastructure, which can support the long-term development of those countries,” Guo said. “Yet some say, this is a great debt trap. But this doesn’t make sense,” he added” (Kris Chrismundo – ‘No debt trap for developing countries: CN political advisory body’ 02.03.2019, link: http://www.pna.gov.ph/articles/1063438).

Let’s me just take the first victim of the debt trap made by the Chinese is in Sri Lanka where the Chinese has taken over and lease the Hambantota Port for 99 years in 2018. While in Zambia, the Chinese has taken over ZESCO, the state electricity company, majority ownership of the Zambian National Broadcasting Company, and if the Republic fails more on their debt. The Zambian state might loose the ownership of Kenneth Kaunda International Airport as well.

In Kenya, the government have loaned massive funds for the Standard Gauge Railway Part 1 and 2. Now, they are on the limb and its speculated that the Port of Mombasa can be taken as collateral for the possible failing loans.

There are warning signs of the total loans given to Tonga, Fiji, Samoa, Papua New Guinea, Maldives, Ghana, Liberia Philippines and so on. They are clearly strategic about it. There should also be worrying about the loans given to the Democratic Republic of Congo, Uganda, Tanzania and so on. The Chinese has loaned for massive projects and not small-pocketed money. Which the Chinese would like to have back paid.

This is just small examples of what that is coming. Because the states are taking up gigantic loans, which they can possibly default with. That is why the Chinese has been smart enough to sign for collateral, which usually is important parts of infrastructure or mobility. So, that the Chinese can trade and also control vital parts of the economy. They are not joking around and seemingly taken a soft approach to neo-colonize the developing countries. Because they can and have the ability to do so.

We can wonder if there will be more like this. There are also the battle happening in Djibouti over the Doraleh Port, who went from DP World Port Company to a Chinese Company. That was because of the debt that the Republic of Djibouti had. Just like the port in Sri Lanka went to them as well. Both very strategic and important ports in their regions. Therefore, the Chinese has gotten good infrastructure and possible revenue streams in these Republic for their defaulting loans.

There will be more to come out of this. That is why I don’t believe the Chinese, saying the developing countries can manage the amount of loans, as the Chinese are planning to takeover something to get repaid for their services. Peace.

Kenya Pipeline Company: Press Statement – KPC Management is Fully Committed to the Fight against Corruption (20.02.2019)

Kenya Pipeline Company Limited – Press Release (04.12.2018)

Opinion: China is starting to squeeze the Kenyan Economy!

If you were ever thinking that Beijing would loan and build without consequence. Those days should long be gone. The Chinese are planning to earn money on their investments, they don’t care about the Republic’s they are investing in, as long as they are profits on their investments. They want earn on these loans and since the rate of loans are so high. They are now starting to pick collateral for their infrastructure loans, especially the draining of loans to the Standard Gauge Railway (SGR).

“While acknowledging China’s leading role in the Kenyan economy as a trading partner, the President called for increased Chinese investments in the country. “China now ranks as the number one trading partner with Kenya accounting for 17.2% of Kenya’s total trade with the World,” he said. “Kenya is open and safe for business. Kenya has one of the most conducive business environments in Africa,” the President added” (President.Go.Ke – ‘President Kenyatta Asks China To Give Preferential Treatment For African Goods’ 02.11.2018).

While Kenyatta are acting as it all positive, the reality is that the state are having giant issues with their “investments” and loans there. But Kenyatta wants to make it sound positive, when it really isn’t, just the rate of the loans have grown and the consequences of the relationship with China is now starting to cost. It is the Kenyans that has to pay these loans down and with every way possible. As the Chinese has leverage over the Kenyan government. Take a look at these quotes from media recently!

Loan Rate in Kenya:

“Kenya’s current public debt stands at approximately 4.884 trillion Kenyan shillings (USD$49 billion) or 56.4% of the country’s gross domestic product.. This is up from 42.8% in 2008. In other words, the country owes more than half the value of its economic output (GDP)” (…) “China is Kenya’s largest creditor, holding about 72% of the country’s bilateral debt as of March 2017. Studies show that Kenya’s Chinese debt poses a threat because the loan agreements are not transparent, projects are not well prioritised, accounting procedures are weak and it’s not clear what projects are costing” (Odongo Kodongo – ‘Kenya’s public debt is rising to dangerous levels’ 05.08.2018).

Selling State Owned Enterprises:

“The Privatisation Commission has approved sale of 26 state-owned corporations to raise funds to support the budget. The commission, under the Privatisation Act, 2005, was mandated to sell 26 poorly performing state corporations to cut down government spending. Those approved for sale are National Bank of Kenya, Consolidated Bank of Kenya, Kenya Meat Commission, Development Bank of Kenya, East African Portland Cement, Kengen, Kenya Pipeline Corporation, Kenya Ports Authority, and five sugar millers — Chemilil, Sony, Nzoia, Miwani and Muhoroni. Others are Agrochemical and Food Corporation, New Kenya Co-operative Creameries, Numerical Machining Complex and Isolated Power stations, hotels (Kabarnet Hotel, Mt Elgon Lodge Ltd, Golf Hotel Ltd, Sunset Hotel Ltd and Kenya Safari Lodges and Hotels Ltd). Also targetted are Kenya Tourism Development Corporation-associated companies, which include International Hotels Kenya Ltd, Kenya Hotels Properties Ltd, Mountain Lodge Ltd and Ark Ltd” (Cynthia Ilako – ‘State to sell 26 companies to finance current budget’ 03.11.2018, The Star Kenya).

China Selling Infrastructure Loans to Investors:

“The plan will see Hong Kong mortgage insurer Hong Kong Mortgage Corporation (HKMC) buy a diverse basket of infrastructure loans next year and explore the idea of “securitising” or repackaging them into securities for sale to investors, allowing it extra liquidity that it can loan out to finance more infrastructure projects. “This initiative we believe will help ‘recycle’ commercial banks’ capital to be redeployed into other greenfield infrastructure projects, besides enabling wider capital markets participation in infrastructure development under the Road and Belt initiative,” said HKMC Greater China chief executive Helen Wong” (Allan Olingo – ‘China plans to sell off its African infrastructure debt to investors’ 05.11.2018).

We are seeing the growth of loans, that is up 42,8% and the debt level of the 56,4% of the GDP. Because of that, the state are now selling of their State Owned Enterprises. Most likely to Chinese holding companies and investors, who are expecting to gets points on their dollars. As well, as securing their future on the investment. They are selling the central institutions and businesses, which was state controlled, but they will now become para-stalls of the Chinese.

But selling the institutions are not enough for the Chinese. They are planning to take it further. Planning to rehash the loans as sub-prime loans for investors, meaning they are taking the risk instead of the Export-Import Bank of China, where the loans are usually collected and distributed from. Therefore, the loans are another target of more profits as they want to earn on them as well into the Capital Market. Just like the US Banks did with House Loans and mortgages in the past.

While all that is happening and with the knowledge of this, the President is still keeping it cool. Kenyatta is still not saying the brazen truth, that they are a debt-slave to China. Are in such big trouble, that the investment of the SGR are killing the economy and they have to trade-off their assets to keep up with their payments. That is what is happening and this is not really developing, but hurting the economy even more. As this institutions and businesses has been controlling their markets. Now, they will have masters from outside, which are not there to secure the market, but make a direct profit. Therefore, the citizens are not only paying their loans for the railroads, but for destroying their economy. Peace.

Chinese Investments in Africa: It is not a free-lunch, the tab has to be paid!

“African leaders should not turn the continent into a giant collector of donations and loans from wealthy nations—they must find other plausible means to help established their economic security so as to minimize poverty. This incoherent blunder on the mainland must be scrutinized.” – Duop Chak Wuol

As The 2018 Beijing Summit of the Forum on China-Africa Cooperation (FOCAC) is scheduled to happen on the 2^nd and 3^rd December 2018, there is time to remember how the Chinese is operating on the African Continent. The Chinese isn’t coming with empty giving hands of donations or even charity. They come with intent of interests and needs of resources from the continent, by offering loans, serving and building through state owned enterprises (SOE) in various of countries, whether it is roads, ports or railroads are built by Chinese Companies, by Chinese Workers and often on Chinese loans. Therefore, they might end up as Chinese owned enterprises, whose vital for transportation and export of needed minerals and whatnot from the continent.

Instead of coming with loans and direct-aid with strings like Western Powers has done over the last few decades, the Chinese are coming with friendly loans, but the Heads of State should know that the Chinese doesn’t play. They want value for money and expect a return, if it doesn’t they might snatch the new crown-jewel or anticipate to get perks from the state. If that is some sort of trade-off or licenses to extract mineral resources or even minor taxation like toll-roads, where the piece of cash will be sent to Beijing and not the capitol of the country where the road is built. That is how these people operate. They are not in it to play or be giving, but gain advantage and have the upper-hand.

This can be shown by what the State Media in China writes in Xinhua Net wrote today and what a CARI report on the same funds are saying. The Chinese portray the funding as investments on the Continent, as the funds are most likely pushed as loans, which burdens the states and that they have to repay. Loans are not given, but issued because of lack of direct funds to build those infrastructure and investments done. So, what I am saying isn’t mere speculation, but a narrative that has to sink in.

Chinese Investments:

“China’s investments into Africa surged by more than 100 times from 2000 to 2017. In the past three years, annual Chinese direct investment into Africa was about 3 billion dollars on average. By the end of 2017, China’s investments of all kinds into Africa totaled 100 billion dollars, covering almost every country on the continent” (Li Xia – ‘Facts & Figures: China-Africa ties: cooperation for shared future’ 02.09.2018 link: http://www.xinhuanet.com/english/2018-09/02/c_137438845.htm).

Chinese Loans:

“From 2000 to 2017, the Chinese government, banks and contractors extended US $136 billion in loans to African governments and their state-owned enterprises (SOEs). Angola is the top recipient of Chinese loans, with $42.2 billion disbursed over 17 years. Chinese loan finance is varied. Some government loans qualify as “official development aid.” But other Chinese loans are export credits, suppliers’ credits, or commercial, not concessional in nature. China is not Africa’s largest “donor”” (China Africa Research Initiative – ‘DATA: CHINESE LOANS TO AFRICA’ Version 1.1 August 2018).

They might try to conceal the reality, just like make-up is used on the face to fade the age or even marks that shows stress or pimples. However, the Chinese cannot be able to lie about their intent. They would not offer these sums of cash, without expecting a turnover or even profits. The Chinese wouldn’t allow all these billions of US Dollars spent on these nations to be spoiled and lost on the streets of Lome, Harare, Addis Ababa or Nairobi. They anticipate a return on the loans, either straight cash or getting pieces of the built infrastructure to advance the value of the Belt and Road Initiative (BRI).

That the Heads of State in Africa should be concerned as they are getting in debt traps, instead of being in cycle of positive growth, they are getting new loans to pay the old ones. They are using the same creditor to secure new loans on top of the old-debt. That is how it will continue, until a point where they cannot pay the defaulted debt and the Chinese would then come to snatch something of value to recoup the failing debt. Because they don’t want to write-off the big money without having anything in return. That is what the Chinese has done in Sri Lanka and might start elsewhere. There might be soon more control of port in Djibouti or railroad of Kenya, even the Ethiopia-Djibouti railway line too. As they want their value of money.

They might be all smiles and photo-ops in Beijing these days, the smiles and added loans to dozens of countries. The added “investments” and deals struck, but the Chinese will not do so without getting something in return. To think otherwise, is to be naive and think they don’t have an agenda by doing it.

There is nothing like a free-lunch and the people will learn that, the Heads of State will not directly pay the debt, but the states will do so. Maybe not in this decade or next 5 years, but sooner or later. The bill for the coffee and biscuit will come. Than it is all eaten, but tab still has to be cleared. Peace.