FOR the sake of intellectual transparency, let me place my cards on the table: I like China. For as long as I can remember, I have always been a great fan of the Chinese. When some of us were undergraduates, many of our mates were Marxists of the Soviet persuasion. I dabbled with Marxism for only a few months but was quickly cured of the disease. I had been reading the novels of Russian Nobel laureate Alexander Solzhenitsyn; the works of British mathematician and philosopher Bertrand Russell; philosopher of science Karl Popper and intellectual historians such as Isaiah Berlin; Bernard Henri-Levy and the nouveaux philosophes in France; and the Polish émigré Leszek Kolakowski. Their moral critique of the Soviet Gulag resonated with my spirit. Never again would I be a prisoner to any intellectual idols. My interests turned to China. In spite of the bloody Cultural Revolution madness unleashed by Mao Zedong and the subsequent bloody suppression at Tiananmen Square by his successor, Deng Xiaoping, I was prepared to forgive the Chinese. I was an admirer of communism with Chinese characteristics. After all, they had emancipated the peasants and unleashed an agrarian revolution. The Chinese built the 1,000 km Tazara railway in East Africa. Premier Zhou En-Lai was revered at home as he was in Africa. During my student days in France my Chinese friend and schoolmate refused to buy even a handkerchief in France, even as many of our African colleagues were obsessed with the latest Parisian haute couture. My friend said he would rather go naked than wear anything that was not made in China. He prophesied that they were about to revive the most powerful civilisation on earth. I also read Science and Civilisation in China by Cambridge biochemist, historian and sinologist, Joseph Needham. Today’s China is the second largest economy, with a nominal GDP of US$14.092 trillion and a per capita income of US$18,066. Within the space of a generation, the Chinese have taken more than 300 million out of poverty; built new megacities, fast trains and world-class infrastructure.
President Xi Jinping told African leaders on September 3 that China’s investments on the continent have “no political strings attached”, pledging $60 billion in new development financing, even as Beijing is increasingly criticised over its debt-heavy projects abroad.
I have often reminded my European friends that the Chinese were the first to “discover” Africa. As early as 1405, Admiral Zheng He arrived the East African coast of Mombasa with more than 60 merchant ships. He brought with him scientists and business people. They took back with them ivory, wild game and even a few African volunteers. It was all a civilised affair. By contrast, when the Portuguese, Dutch and Spaniards arrived, Africa was plunged into slavery after rapine. Europe, and particularly the French, has continued their mission of informal empire through subterfuge and mendacity. China’s economic engagement with our continent has been seen as welcome alternative to the Hanoverian duplicity of the Europeans who have continued to view our continent as their backyard. The Chinese have invested heavily in our infrastructures and public utilities while the Washington institutions prefer to dump Shylock loans on our continent for so-called “poverty alleviation”. In recent years, China has become a capital-surplus country, with a staggering US$3 trillion in external reserves. The Industrial and Commercial Bank of China is the largest bank in the world, with assets in excess of USS$3 trillion. What explains the current outward drive of the Chinese is the fact that they have more money than their own absorptive capacity. And given rising labour costs, Chinese companies are looking to relocate production outside their borders. For many of our countries, it is a win-win game. Today, China is the biggest single commercial partner to our continent. Its total investment outlay as of 2017 stood at nearly US$70 billion. For about a decade, China has consistently remained at the top as Africa’s dominant trading partner, valued at more than US$100billion annually. During the China-Africa Cooperation, FOCAC, Summit in Beijing early this month, President Xi Jinping announced an additional US$60 billion of financing for Africa. Since the turn of the millennium, Beijing has given loans in excess of US$130 billion to African countries. The IMF recently warned that 40% of developing countries are in debt distress. It is only now becoming apparent that the little prints in Chinese loan agreements collateralise key domestic assets in the event that the indebted country is unable to pay back its loans. Recent instances include Djibouti in the Horn of Africa, where the main harbour was taken over by the Chinese when the country could no longer pay back its loans. Madagascar recently gave up large chunks of its lands that had been pledged as collateral. The Chinese recently took over Lusaka Airport after the government defaulted on its loan repayment obligations. In Ethiopia, they are planning to take over the railway when the government in Addis Ababa was recently in default. In Kenya, the Chinese are set to take over 70 per cent of the country’s mineral assets after the government of Uhuru Kenyatta defaulted on its loan repayments. The Chinese built the much celebrated ultra-modern railway from Nairobi to the coastal city of Mombasa with Chinese loans. Nigeria has incurred humungous amounts of loans from Beijing. In the last three years alone, the Buhari administration has taken more than US$5 billion from the Chinese. Our total external debt currently exceeds the US$22 billion mark. The domestic debt is even larger, standing at a whopping N15.63 trillion; more than double our annual budget. We are reaching that dangerous threshold where government revenues cannot fully match our debt repayment obligations. We understand that the current administration has taken the Chinese loans while pledging some oil wells as collateral. What worries me more is not the loans themselves but what we do with them. To incur a sovereign loan to build a railway to Niger is not only unpatriotic; it is patently fraudulent and illegal. To borrow foreign loans to prosecute what amounts to a police action in the North East insurgency, as we did in the case of the US$1.3 billion IDA-World Bank loan is foolhardy. Yakubu Gowon and his deputy and finance minister, the legendary Obafemi Awolowo, prosecuted the Nigeria-Biafra war without taking a single loan from the global financial markets. The entire reconstruction of the war-torn region was also successfully implemented without any foreign borrowing. It is a pity that we of today do not have their sense of wisdom, prudence and parsimony in the management of our public finances. I would not be in a rush to blame the Chinese entirely for behaving in the manner they do. But we must not fall for the Trans-Atlantic, Euro-American propaganda against the Chinese which is borne of envy, if not malice. What I must emphasise, however, is that it is incumbent on any sovereign country entering a loan agreement with another to negotiate the best possible terms and to do the necessary due diligence to ensure iron cast guarantees on return on investments. As far as I am concerned, if any loan cannot pay its way back, it’s not worth the trouble whatsoever. Collateral has been the guarantor of all loan obligations since time immemorial. The Chinese do not have the powers to impose macro-economic policy conditionalities in the manner the Washington institutions did in the past. So they have resorted to using domestic assets with steady income streams as collateral. It is about time we entered in serious discussions with the Chinese on our trade and economic relations. As matters currently stand, the Chinese seem to be using capital as a weapon to re-colonise our glorious continent. The Chinese state has existed for three millennia. They are not fools. They know, since Sun-Tzu, that the most effective weapons of political control are economic and financial. Our generation has a duty to protect our hard-won sovereignty and independence as a continent.
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COMMENTS By Obadiah Malafia