The first African victim of the Chinese "Debt Trap" has emerged; Zambia. Upon hearing that Zambia's national assets were being taken over by the Chinese, I wondered to myself, what could possibly make the leaders (or should I say "misleaders") of a country enter into such a terrible strategic arrangement? How could they jeopardise their country to the point that national security assets such as power and broadcasting infrastructure are quite literally handed over to a foreign power? How could they essentially pave the way for their re-colonisation? Well, let's see if we can find some answers together.
Zambia is a country located in southern Africa. Its population is estimated to be about 15.9 million strong. It is comprised of several ethnic groups such as the Bemba, Chewa, Tonga, Lozi, etc. As can be expected, several languages are spoken in the country. In fact, about 70 languages are spoken in the country. However, English is the official language of the country. This is an indicator of the country's colonial history. In short, Britain was the colonial power that controlled the Zambia until the country's independence in 1964. It is the country of the great statesman, Kenneth Kaunda.
Economically, the country is largely dependent on the export of copper. The country also exports agricultural produce but these export volumes are less significant than its copper exports. In other words, its economy is poorly diversified and fluctuations in the global price of copper have a profound effect on its economic performance. What does Zambia do when commodity prices are not going its way? It borrows from foreign lenders! Unfortunately, this is rather typical behaviour for African economies which are largely dependent on commodity exports. Nigeria's government is busy traipsing across the globe racking up loans left, right and center. How will the loans be applied? How will they be repaid? What are the terms of the loan agreements? That's a story for another day. Back to Zambia.
The Zambian government has been borrowing for decades. At one point in 2016, the debt to GDP was at a whopping 66.7%! Currently, it is at 55.6%. This is more than half of its GDP. This high value means that the cost of acquiring money (interest) is pretty high for Zambia. In other words, Zambia is paying out tonnes of cash as interest to its creditors. Based on this, Zambia was the perfect victim for China's "debt trap" strategy.
There is an old saying that, "it is easier to catch flies with honey than with vinegar". Apparently, China understands this very well. They engaged with Zambia first as trade partners. The relationship quickly blossomed into one where China was financing infrastructure projects. At that point, probably even before that point, the Zambian leadership fell asleep at the wheel and the fly was caught! Now, here we are with a "sovereign" African country in so much debt that it has essentially had to hand over national security assets to a foreign power.
Source: Anzetse Were
The African continent is rife with old men parading around as leaders with no vision for their countries. Their governments are mired in corruption and staffed with self interested and shortsighted cronies who are equally visionless. They squander the resources of their countries and then go cap in hand to beg for funding from the east and west. Funding is acquired usually at a high cost, and terms are probably unfavourable. Nonetheless, these intellectually challenged misleaders go ahead to shackle their countries to the creditor just so that they can enjoy short-term gratification. To add salt to an already festering sore, the acquired funds are equally squandered while the countries continue to slide deeper and deeper into the abyss of poverty and irrelevance. Can you really blame the foreign creditors when the goat walks up to the slaughterhouse and begs to be slaughtered? Who will look a gift horse in the mouth and say get lost? Don't get me wrong, the foreign creditors are part of the problem but it is up to us, Africans, to change the paradigm. Well, Zambia has fallen and China's "debt trap" is alive and well. The question is, which African nation will be the next victim?
Sep 11, 2018