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OpEdNews Op Eds    H4'ed 9/28/15

Chinese Alice in African wonderland

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These concerns, as brought out in a Working Paper (WP) on China, Africa and International Aid Architecture (African Development Bank) centre on the Chinese practice of routing their Exim Bank loans to projects proposed by Chinese companies, which inter alia fuel corruption "through the transfer of large funds to poorly governed regimes."

This happened in Zimbabwe, for instance, when $58 million credit was channelled through a company called Farmer's World. The company's officials travelled to China to select agricultural equipment and machinery to be imported under the loan, "with all payments going from the Chinese bank to the Chinese exporters".

Much worse was witnessed in a rural telecom project in Sierra Leone. There was no competitive bidding and the project ran the risk of "not receiving the best value" for money.

Put simply, in a Chinese aided project there is never any actual transfer of money. Money remains in China through payments to Chinese companies and their sub-contractors. At the same time, the concessional line of credit promotes export of Chinese goods and services. And the recipient country remains beholden to the Bamboo capitalist. These are high cost funds no doubt but China is not a fussy lender. Bottom-line only matters to it as it dons the mantle of the East India Company that once enriched the pockets of British nobles.

China Eximbank has financed more than 300 projects in Africa since 1996. And the Chinese Ministry of Commerce financed another 900 plus projects in various African countries. China has also cancelled $1.2 billion in debt. A recent report on Al Jazeera (Aug 11, 2015) titled "How China is changing Africa", has put China's trade with Africa at more than $200 billion in 2014.

"But as business ties deepen, critics say in some cases benefits aren't felt by average citizens, causing more Africans to question the terms of China-Africa relations" the report said. This is because in addition to being the continent's largest trading partner, China finances infrastructure projects and government loans in exchange for resources such as oil, iron ore, timber, cotton and minerals like bauxite.

World Bank has also endorsed the view that most China-funded projects are somehow connected to getting resources. "Most Chinese government funded projects in sub-Saharan Africa are ultimately aimed at securing a flow of sub- Saharan Africa's natural resources for export to China," a Bank study said.

The presence of the Chinese in Africa has driven a lot of locals out of business, and stunted local manufacturing; it also contributed to the emergence of China enclaves all over Africa including Kenya. And these fast growing China towns are fast becoming eye sores. This is new colonialism at work.

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A blogger since July 2008 James Duglous Crickton is a London based consultant working with a consultancy firm focusing on Asia, particularly South Asia and East Asia. Political Research is his functional focus area. While his interests are (more...)
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