Chinese loans threaten poor countries’ sovereignty – Institute for Security Studies

A South African based Institute for Security Studies (ISS) says Zambia’s reliance on Chinese funding poses a threat to its Sovereignty.

In a statement to News Diggers! Wednesday, ISS Consultant Ronak Gopaldas said Chinese loans usually come with tricky conditions including favourable access to a country’s mineral resources.

“Typically, Chinese loans assume the form of ‘cash for resources’. In return for financing and building the infrastructure that poorer countries need, China demands favourable access to their natural assets, from mineral resources to ports. The recipient nations usually suffer from low credit ratings and have difficulty obtaining funding from the international financial market,” Gopaldas said.

He observed that Chines loans were very easy to access with less paperwork needed.

“China, however, makes financing relatively easily available – albeit with certain conditions and less ‘paperwork’ than conventional sources. China’s ‘tied aid’ for infrastructure usually benefits Chinese companies, while its loans are in many cases backed by natural resources. Through this method China achieves the twin goals of economic penetration and strategic leverage,” Gopaldas said.

He urged Zambia to weigh the costs and benefits of borrowing from China with the option of taking loans from the International Monetary Fund and World Bank.

“Ultimately, the question for policy makers in Zambia and Africa Africa is whether they should adopt a more circumspect approach towards dealing with China. It is important to be aware of exploitative dangers associated with such arrangements, but it is also important to be strategic in how Chinese interest can be exploited to Africa’s advantage,” said Gopaldas.

“Here a level of tactical nous and economic diplomacy are required. By exercising their agency and setting the terms of engagement, Zambians could use China’s involvement in Africa to grow their economies. They could also solicit renewed interest from previously disengaged foreign powers by using their relationships with China to bolster their political capital. If this is done properly, Zambia will emerge as a winner rather than a loser.”

         

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