China’s cancellation of debt towards relevant African countries in the form of interests free government loans that are due to mature by the end of 2020 and a further extension of the period of debt suspension is not sitting well with economists such as Eddie Cross and Terrence Zimwara.
“Africa’s debt to China is massive, Kenya alone owes China US$50 billion. The suspension of payments of debt will make a huge contribution to many countries, including Zimbabwe.
However, we should never borrow from anyone if we cannot pay the debt back. China itself has borrowed massively from the developed world to get where she is today and her debt is equal to 250 percent of her GDP, but she pays her interest and repays the loans on maturity, that is the key.
In Africa, we borrow for consumption and not production and we do not have the discipline to service our debts.
Regardless, we have to be more self-reliant and careful, read the small print on every loan agreement as well as watching prices and costs of Chinese contractors and demanding maximum local interests,” said Cross.
Zimwara also said Africa needed to start standing on its own two feet to avoid unprecedented boomerangs.
“Africa needs to unshackle itself from this inferiority complex. We have to realize that there is no multilateral lender or donor country that will cancel debts or reduce interest on loans without gaining something bigger in return.
Therefore, because we choose expediency we now see fellow countries deep in debt to China. Angola, Ethiopia and Kenya are some countries that owe billions to China and they are now growing fears these countries will surrender key national resources to pay off the debts.
However, to avoid these devastating scenarios, learning to live within means is one practical way of doing this. When they say austerity, it has to be for everyone. There should be no sacred cows.
Moreso, as Africa, we need to make long term plans and follow them through. It does not matter that fruits of this will be enjoyed by later generations. One generation must make the ultimate sacrifice for the next one to have a better chance,” said Zimwara.