Beijing (AsiaNews/Agencies) – China’s action as an alternative lender is creating a new wave of hidden debt in Africa as it backs its companies’ expansion overseas with increasingly aggressive lending, this according to the International Monetary Fund. But whilst some African nations bristle atChina’s economic invasion, others criticise the West’s wrong approach.
Adnan Mazarei, a director at the Fund, said action was needed “to avoid another round of debt accumulation” as emerging lenders such asChinabecame an important source of funds.
A report prepared by the IMF and World Bank showsChinais the largest of six new creditor nations. The others areKuwait,Brazil,India,South KoreaandSaudi Arabia. It said lending byChinahad risen to US$ 5 billion in 2004. In exchangeChinagets access to energy supplies and raw materials.
Chinahas committed $8.1 billion this year toNigeria,AngolaandMozambique, according to World Bank figures.
Nigeriathis year agreed to provide a drilling license to Chinese companies in exchange for a US$ 4 billion commitment to improve infrastructure, including a 1,800 kilometre railway.
Chinagets 25 per cent of its oil fromAngolaandSudan, which is boycotted by other states for the genocide inDarfur.
World Bank President Paul Wolfowitz said that his institution demands economic reforms and tough financial requirements to make loans to benefit the population rather than small elites.Chinais instead bucking the trend and is not interested in these countries’ financial stability. In doing so it is helping local governments avoid pressure to crack down economic mismanagement, clean up corruption and reduce debt.
Chinese loans raise the prospect of a renewed debt crisis inAfrica, just a year after the world's rich nations agreed to forgive as much as US$57 billion of debt.
James Adams, the World Bank’s vice-president forEast Asiaand the Pacific, said inBeijingthe bank had proposed toChinato jointly finance projects, but thatChinahad insisted it would not attach detailed conditions to its loans to governments inAfrica.
Philippe Maystadt, president of the European Investment Bank, has said the EIB and other multilateral banks were losing projects inAsiaandAfricato Chinese banks because they “don’t bother about social or human rights conditions”.
Chen Yuan, governor of the China Development Bank (CDB), the world’s largest development institution by assets, said last week the bank’s lending abroad would rise “very fast” as it backed the overseas push of China’s state-owned energy and mineral companies into Africa.
In some African countries some voices are already criticising Chinese practices. “There is a risk that some governments inAfricamay use Chinese money in the wrong way to avoid pressure from the West for good government,” said Papa Kwesi Nduom, who heads the Ministry of Public Sector Reform inGhana, which is seeking a $1.2 billion loan fromChinafor a hydro-electric dam and rural electrification.
Meanwhile inSouth Africamerchants are complaining that the invasion of Chinese products is killing the local economy. InZambia, where miners are protesting publicly against poor working conditions, a Chinese guard shot three miners.
But some African nations complain instead of Western interference.
“The fact that a country gives you aid makes them think they have a license to tell you how to run your affairs,” Robert Kabushenga, a spokesman forUganda's government. “These conditions are probably well intentioned, but they are humiliating.”
Chinese officials have also responded to criticism saying thatChinahas forgiven part of the debt of African countries and that it helps them by building roads, railways, hospitals and schools.
Other experts point out however that the work is generally done by Chinese firms and that the amount of moneyAfricaowes Chinas keeps on piling up and that it has to continue to secure loans against concessions.
Chinais the world's biggest consumer of zinc, nickel and copper and the second-largest user of crude. (PB)
