If you are not yet familiar with the story of the Hambantota Port Development Projecttouted by the influential New York Timesas one of the “most vivid examples of China’s ambitious use of loans and aid to gain influence around the world — and of its willingness to play hardball to collect”, perhaps you should. It is an interesting story of the growing power of Chinese money – and debt – that the poor countries of the south can afford to ignore at their peril. It is a story of how the Sri Lankan government, last December, signed off its strategic port of Hambantota to China on a 99-year lease – the consequence of $8 billion debt owed to state-controlled Chinese firms – a move, government critics said threatens the country’s sovereignty.
Think that is far flung?
How about the latest oneemerging from Zambia – whose electricity utility company, ZESCO is ‘rumoured’ to be on the line for China’s takeover after default on loan repayment? In a report by Africa Confidential, titled Bills, Bonds and even Bigger Debts,Zambia isreportedly in talks with China over a possible takeover of the electricity company. Already, the national broadcaster, ZNBC is owned and run by China.
Move over to Djibouti, the East African which lies more than 2,500 miles from Sri Lanka whose public debt put atsome 88 percent of the country’s overall $1.72 billion GDP of which China owns the lion’s share. Again, the story is one of possible takeover of vital national assets– the consequence of a debt default.
Now, if you ignore the paranoia of the West on what is perceived to be the 21st Century Scramble for Africa, certainly not so the crushing burdens of the debts on economies that are best fragile, and more so on projects that have failed to deliver any real value beyond swelling the accounts of unscrupulous officials. Scarier of course is the real prospects of re-colonisation as most of the debts prove increasingly unrepayable. That is the tragedy of a continent that claims to have very limited resources for development, and yet borrows massively for ill-conceived projects.
This is why thedebate on the extension of $60 billion infrastructure financing package for African countries by President of China, Xi Jinping, at this year’s Beijing Summit of the Forum on China-Africa Cooperation (FOCAC) – first announced in 2015 – has suddenly become animated.
Here in Nigeria, the subject, debt of course remains a touchy issue.Barely 13 years ago, the country celebrated its exit from the iniquitous creditor cartel of London and Paris Clubswith a chant– Never Again – after hefting out US$12 billion in full and final settlement.
Today, the reality is far different. With an infrastructure gap estimated to cost about three trillion dollars in the next three decades and a terribly unpredictable revenue base, even the most rosy-eyed nationalist would deny that Nigeria, the so-called African giant, would require the scale of funds injection such as its internal resource profile – public and private combined – can deliver in order to make a dent on the infrastructural situation. Picture this side by side with the unpredictable nature of oil revenue a huge chunk of which is stolen or mismanaged and the country’s tax to GDP ratio of amiserable six percentwhich makes any serious development effort a non-starter, Nigeria’s dilemma would seem fairly easy to understand.
And so the Chinese have been coming – with their money – lots of it. For good or for ill, we might well face it that they are going to be here for a long time – either as partners or foes depending on what our leaders make of it. Whether in the railways where they are supposed to be doing a brand new multi-billion dollar standard gauge; or in the road sector where their state-backed construction company – China Civil Engineering Construction Corporation, CCECC,increasingly looms large, or even the manufacturing sector where they are known to churn out domestic items ranging from plastics to chinaware, or in the entertainment where they are making a determined foray in the battle of over our minds in the pay TV sector, it is now the case that the petit folks from the Far East are no longer the aliens from outer space that many had thought they were. Not only are they here as engineers, contractors, consultants, they are also trooping in as domestic workers, laundry men and women, labourers and even call girls – in a country where one out two potentially employable youth is out of job.
How much do we owe the Chinese? Like everything Nigerian, it is doubtful if anyone truthfully knows. Whereas the Debt Management Office (DMO) – the agency managing the country’s debt stock – puts the figure at a little over US$1.9billion as at the end of June, (that is what its website says), the presidency puts its own figure at US$5 billion. To paraphrase President Muhammadu Buhari at the just concluded FOCAC summit, Nigeria is leveraging Chinese funding to execute $3.4 billion worth of projects. The projects,at various stages of completion, include the upgrading of airport terminals, the Lagos – Kano rail line, the Zungeru hydroelectric power project and fibre cables for our internet infrastructure. The president also referred to the $1billion loan for additional rolling stock for the newly constructed rail lines as well as road rehabilitation and water supply projects.
Just for the asking: And where does the $5.792 billion (about N2.096 trillion) 3,050MW Mambilla Power Project fit in all of these? Any ideas?
Should we fear the debt situation getting out of control? Fear, ordinarily, should be out of the question. With nearly 200 million people, the nation’s entire foreign debt, officially over $22 billion would seem modest by any standards. Rest assured however that Nigeria is neither Zambia with 16.59 million in population nor Djibouti, a country of less than a million people. That is not even talking of our GDP currently in excess US$405.1 billion which, despite the parlous infrastructure situation, puts us miles ahead on the African continent.
What should we fear then? The answer is the 10-letter word – Leadership. In a world where leadership is everything, Nigeria continues to suffer the plaque of a blighted leadership – a blind, corrupt and utterly self-serving crop of leaders.Elsewhere, the sum $10 billion is a lot less than the amount required to deliver one leg of the railways. Even for the Chinese, it is a pricey bill to pay for interests considered strategic to their national and geo-political goals. Thrown into Nigeria’s impregnable infrastructure of corruption, it would come to pretty little really. The Chinese know asmuch as the multinationals ever so adept at preying on the folly of our leadership to pad up their bloated compensations do. And so they play – while we lose. Imagine blaming the oil majors for the half of century-long joke called local content policy? Or blaming MTN for hefting our billions of dollars in underserved compensation for the sins of the failure of the regulator to raise the red flag when it mattered?
Rather than fear the Chinese or their loans– as many invariably fear they will go bad – we should rather fear the artful crooks ever so ‘careful’at leaving enough gaps in the contracts for themselves and their partners to profit from whenever the bubble bursts.
As it was in the beginning…