China in Zambia: The profits and pitfalls of Chinese money in Africa


November 10, 2018 14:11:42

In Zambia, the signs of Chinese money and influence are everywhere you look.

Key points:

  • Africa is part of China’s One Belt One Road strategy, and last year it opened its first military base on the continent
  • In Zambia, China is supplying cheap loans to finance road, rail and water infrastructure
  • Analysts estimate Chinese loans account for between a quarter and a third of Zambia’s $13 billion debt

Surgeries, schools and construction projects bear Chinese characters.

Roadworkers trundle through the city in the trays of trucks bearing Chinese lettering, and it’s easy to buy a delicious bowl of noodles at Chinese foodhalls.

China is also building vast networks of roads, radically updating the ageing transport infrastructure.

Some Zambians welcome the Chinese influence, saying the country has never had it so good.

“Zambia at the moment appears to be much better than it’s been in a very long time,” says Alex Ng’oma, political analyst at the University of Zambia.

“We’ve got roads being built in areas where we didn’t imagine it, we’ve got hospitals and schools and things like that.”

But critics warn that the building activity comes at a cost.

“For the next 10 years and beyond the risks are especially losing of critical national assets and I urge African governments to be really careful,” says Benji Ndolo, a political analyst based in Nairobi.

As nations around the world weigh whether to accept Chinese loans and infrastructure projects, Zambia may serve as a crystal ball for assessing the potential and pitfalls of striking deals with Beijing.

Zambian jobs, Chinese profits

Liu Ruumin came to Zambia from China 20 years ago.

As a young man, he took a job with a state-owned construction company at a time before the internet had connected Zambia to the rest of the world.

After three years he went private, branching into his own business making furniture from Zambian timber.

“It’s good to do business in Africa,” he says.

“We process the local timber into finished product we sell both locally in the local market and export.”

Sixty per cent of Zambian landmass is covered in forest, so timbers are in vast supply.

But Mr Liu’s life is now spread between three continents.

He stays in Zambia to run the business, while his wife and six-year-old son live in Melbourne. His ageing parents still live in China, so he commutes between all three countries as he tries to balance work and family.

Mr Liu employs more than 400 Zambian workers, and plans to double the size of his operation.

Zambians have benefitted from employment opportunities brought by Chinese investment.

“They are actually creating jobs for our local people,” Mr Ng’oma says.

“We may not say that they are the best of jobs but at least they’ve got something.”

Why is China investing in Africa?

Countries like Zambia have a lot of mineral wealth, and China can supply cheap loans to finance the kind of road, rail and water infrastructure needed to extract and export natural resources.

There are geostrategic motivations too.

Africa is part of China’s One Belt One Road strategy, and last year it opened its first military base on the continent, in Djibouti.

Zambia in particular has a long association with China.

China built a railway linking landlocked Zambia with Tanzania in the 1970s, eliminating the country’s dependence on South Africa and Rhodesia, which were then led by white-minority governments.

The West criticised that project then, just as it is now criticising Zambia’s increasing reliance on Chinese loans.

But the Zambian response is the same: the West is not here funding projects, so why should we say no to Chinese assistance?

What’s the risk?

Zambia’s debt stands at about $13 billion, and analysts estimate Chinese loans account for between a quarter and a third of that total.

About a decade ago, vast amounts of debt Zambia owed the IMF and World Bank were wiped clean as part of the ‘Highly Indebted Poor Countries’ initiative of debt forgiveness.

Observers are worried that the country has managed to rack up such huge debt again so quickly.

The risk is that Zambia has borrowed beyond its means and won’t be able to pay the money back, and that the Zambian Government may have offered state assets including the national power company and airport as security for the Chinese loans.

But because the detail of the debt deals with China are not made public, the people have no way of finding out what their Government has promised.

The Government has been forced to dismiss media reports that state assets were offered as collateral.

Others have warned that China’s cultural influence will be hard to wind back.

Already, Zambian newspapers print articles are in Chinese and English on the same page, and Mandarin schools are springing up around the country.

The Chinese state television network has partnered with the local state broadcaster and is building huge new studios for the joint venture.

But even supporters of Chinese investment are wary of employment conditions offered by the Chinese to local labourers.

“I think what’s important is for our Government is that whatever is happening, as far as jobs are concerned, is actually monitored to make sure that our people are not treated like slaves, they’re not underpaid,” Mr Ng’oma said.

There is also anger that Chinese immigrants are setting up small retail businesses: low-skilled work that community leaders say should be left for Zambians.

“We’ve seen a situation for instance where the Chinese have gone as far as gardening, growing cabbages or raising chickens,” Mr Ng’oma said.

Mr Ndolo says African nations need to pay closer attention to the detail of deals being struck with China.

“For the next 10 years and beyond the risks are the loss of critical national assets and I urge African governments to be really careful,” he warns.

“It’s not just about the deals today what you’re signing today.

“You’ve got to have the ability to think 10 or 20 years down the road and beyond for the safety and security of the people.”






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