Africa's Quest for Economic Independence, and Burden of Debt
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By Adebayo Abubakar
About two decades after the Second World War, many African countries became independent of colonial masters. What that meant is that Africans would now oversee their own political, social, and economic affairs. While the first two (social and political independence) could be said to have been attained, the same cannot be said in respect of the third one (Economic). This is due to many reasons. But, while those reasons are not the focus of this piece, it is imperative that we mention one of the very critical reasons, and that is, “weak institutions”. The weakness of political institutions certainly rubs off on the economic ones, and vice versa, hence, most of the current challenges the continent is faced with, especially the economic ones. Due to a measure of economic dependence on foreign entities arising from indebtedness to those entities for national survival, some African countries are not qualified to be categorized as being independent.
As of today, as many as 34 African countries are prominently on the list of the 39 most Heavily Indebted Poor Countries (HIPCs) of the world. This indebtedness to these entities outside of Africa would make it very difficult for Africa to be able to negotiate a “fair deal” for herself, when dealing with those lenders or creditor countries, whether on a multilateral or bilateral level, within the framework of the African Continental Free Trade Area (AfCFTA). This is because most of the continent’s creditor countries, or entities, are still her prospective trade partners. Countries like China for instance, have given loans running into billions of dollars to many African countries, such that concerned citizens now fear their countries’ sovereignty might have been auctioned or mortgaged to China. Kenya is topping the list of most indebted African countries to China, as reported by a news platform All Africa. The Economic Times reports that “the debts have been triggering a repayment crisis. China owns around 72 percent of Kenya’s external debt, which stands at $50 billion. Over the coming years, Kenya is expected to pay $60 billion to the China Exim Bank alone, sources informed. Mombasa port can be lost if Kenya defaults on loan repayment , according to Kenya’s own auditor general.
Map depicting China-Africa relations
Between 2010 and 2015, Nigeria’s debt to China has also grown by 136 percent from $1.4 billion to $3.3 billion and the country spent $195 million in 2020 as debt repayment to China. Another alarm bell was also sounded by the IMF in a report by “This Day”- a Nigeria daily newspaper. It warned that debt vulnerabilities remain elevated in Sub-Saharan Africa, with no fewer than 20 countries in the region either at high risk of debt distress or already in debt distress.
Recently, there was a viral report that the Chinese government would be taking over Uganda’s Entebbe International Airport and other assets in the Eastern African country, due to the latter’s heavy indebtedness to the former. Although the report had been debunked, the fact that the rumour even came up in the first place means the country’s debt portfolio must be so mind-boggling that it becomes plausible to an extent that such a possibility crossed observers’ minds. At a time, the Nigerian National Legislative Assembly had to summon the immediate past Minister for transportation, Mr Rotimi Amaechi, whose Ministry oversees the construction of a couple of rail lines in the country to present the terms and conditions of the agreement with China before the National Assembly.
It is unsurprising that much as Africa’s debt burden to China appears to be, it is just a fraction of what the continent is owing Western private creditors. A July 21 2022 report by the Daily News Egypt expatriates more on it. The report indicated that 12 percent of African governments’ external debt is owed to Chinese lenders, compared to 35 percent owed to Western private lenders.
With that type of situation of heavy indebtedness, Africa could be arm-twisted into agreeing to terms that may not be so favourable to her because she is negotiating from a position of weakness. Remember, it is only when you are negotiating from a position of strength that you can dictate your terms. But with this heavy burden of indebtedness to the prospective trade partners, whose patronage she can’t afford to lose, it will be very difficult for Africa, within the framework of AfCFTA to cut a fair deal for herself. Thus, as long as Africa is indebted to foreign countries, it remains in shackles and will continue to be exploited economically by the West and China.
Adebayo Abubakar is a Nigerian journalist. You can reach him via email, marxbayour@gmail.com