Concerns over Chinese handouts

Chinese investment in African countries comes with few strings attached — which is exactly what concerns civil society organisations. During the Annual Bank Conference on Development Economics (ABCDE) held last week various members of African civil society organisations expressed concern about the terms of China’s increasing activities on the continent. The World Bank conference, organised with South Africa’s treasury department, ran from June 9 to 11 in Cape Town, South Africa.

“Zambian civil society agrees that international finance is needed for development and it should not matter whether the assistance comes from Europe or China,” said Stephen Muyakwa, an agricultural economist in Zambia and chairperson of the Zambian Civil Society Trade Network. “But there are some problems with Chinese loans and development aid. First of all, loans offered by China are not transparent and neither do they come with conditions on how the money should be spent. This could fuel corruption, as African governments are free to use the money. This could have negative results.”

Muyakwa contended that loans or any form of foreign finance should come with strict conditions. “You can’t just hand over a blank cheque to the minister of finance and assume everything will be okay. We the people need to know how the money will be spent. And China, or any other donor, needs to hold the recipient authorities accountable for that.” According to Muyakwa, governments should be watchful when accepting Chinese loans and development aid. “There might be hidden intentions. These offers of loans and infrastructural development seem to come with no strings attached.

“Unfortunately it has happened more than once that China decided to claim a mine or a stake in a forest reserve — just like that. You can’t just give, make people think that there are no strings attached and then expect something. We rather want a donor country to say that you want to buy the mine, instead of claiming it as if it were part of the loan,” Muyakwa argued.

Luis Brites Pereira, deputy director of the Centre for Globalisation and Governance at the Nova University of Lisbon in Portugal, told the conference that there could a danger in accepting too many loans from China. “Chinese loans seem favourable due to low interest rates. Therefore, the chances of accumulating debt are high. Recipient countries need to manage their finances carefully.” Pereira also confirmed that the large Chinese companies dominating industries such as clothing and textiles could push African enterprises out of business.

Muyakwa is worried about Chinese working conditions. He recalled an incident that caused a stir in Zambia. “Two years ago about 50 Zambian miners were killed in an accident at an explosive factory. The bizarre thing is that no Chinese employee got hurt or killed. This makes you wonder about how committed the Chinese are to make a difference in Africa or whether they here only to serve themselves.”

According to the IMF, exports from Africa to China increased more than 40 per cent between 2001 and 2006. Imports from China to Africa increased 35 per cent. The total trade from China to Africa is estimated $55 billion per year and is expected to grow to $100 billion by 2010. — IPS