Africa’s Chinese Debt – Who Can “Chop” That Money?

By now the world fully realizes that the ex Nigerian Finance Minister Ngozi Okonjo-Iweala has been confirmed to the top job in the World Trade Organisation (WTO).Though congratulations continue to pour in, perhaps now we need to move beyond that to deliberate on what this new era for this critical global agency is going to bring to Africa and indeed the World.

Media coverage would have us believe the world has turned a corner catalyzed purely by a change of leadership in one country – The United States of America.. or has it?

For sure, US has a huge influence on the socio-economic health of nations globally. At the recent African Union Summit 2021, hosted from Addis Ababa, President Biden said:

“The United States stands ready now to be your partner in solidarity, support and mutual respect,”

The problem with being a US President with a global focus is that ultimately, no President wants to be perceived as not doing their best by the American People. Biden needs leaders in global structures who can push back with integrity as much as they can concur and co-operate. In this way, an American leader with aims as a Global Statesperson can discretely arrive at planned global outcomes, with ‘hard won’ results that are domestically palatable, and without appearing to have given concessions or making compromises that were not hard pressed for. Ngozi Okonjo-Iweala appears to be a mould breaker for the person this agenda needs.

The Biden-Harris Administration is committed to working with the African Union to advance our shared vision of a better future.

Watch President Biden’s Message to African Union Summit Participants: pic.twitter.com/tXFX4Tp9PD

— The White House (@WhiteHouse) February 5, 2021

White house tweet, February 5.

Prime KBS Institute Limited said on LinkedIn:  ‘She will lead the charge for a revival of multilateralism, in the negotiating chambers of the WTO and for a better deal for developing economies’

Ngozi Okonjo-Iweala is former chair of the Global Commission on the Economy and Climate, is a board member of Standard Chartered Bank, has served the World Bank for twenty-five years, and has been Finance Minister of Nigeria (2003–2006, 2011–2015). There are many other stellar career accomplishments.

Clearly Biden sees her as someone that will hoist the ‘African’ flag, were it that there is such a thing.

The big question is, what shape will that take in a China context?

‘…WTO has also failed to police China for its intellectual property offenses that involve companies sharing sensitive technology as a prerequisite for investing. The global trade body’s outdated classification method means that China, the world’s second-largest economy, continues to enjoy concessions by classifying itself as a “developing country.” –  DW Business.

But the real question is, how will the new WHO regime reign in China’s Economic Colonialism (psedo slavery) of Africa?

Nairametrics –  ‘Chinese policy of using Chinese banks to issue grants to developing economies, is deliberately designed to capitalise on their global financial infrastructure to rival the IMF and the World Bank.’

While Chinese money appears on the surface of it to offer preferential T&C to ‘western’ institutions, Chinese development programs associated with the loans involve a mass influx of project labour, imported materials, and management services, so the loan is repatriated while it remains outstanding. In essence, the African country repays twice.

In Nigeria, specifically, Political Capital does not always translate to wellbeing of the citizenry on the long term, as high profile infrastructural achievements from such loans gain media promotion for the incumbent while subsequent regimes and the population at large, have to later, pay the piper with much pain.

At the Ehingbeti Summit in Lagos yesterday, Dr. Okonjo-Iweala said  ‘ A successful Africa, and a successful Lagos State is one that creates jobs for its citizens… about how we create modern, decent jobs for our young people… while Dr. Adesina said.. fiscal incentives (need) to be provided to the private sector’

However, we have been here before with statements in bright lights, and a populist objective.. what is always absent is the clear nitty-gritty details of the journey in between, one of financing, policing and value maximization of project resources, unwavering commitment to enforcement of progress milestones, and, above all else, sensitivity to, and welfare of impacted local communities.

Reverting to the loan issue –

In October 2005, with Okonjo-Iweala as finance minister, Nigeria and the Paris Club announced a final agreement for debt relief worth $18 billion and an overall reduction of Nigeria’s external debt stock by $30 billion.

However… Chinese debt is a world away from the ‘Paris Club’

‘Chinese lenders tend to set more onerous borrowing conditions – higher interest rates, shorter maturities – than multilateral development banks. In April 2020, Tanzanian President John Magufuli reportedly threatened to cancel a $10 billion project launched by his predecessor, because the Chinese funding came with conditions that “only a drunkard” would accept.

Moreover, most of China’s bilateral lending is carried out by so-called policy banks and state-owned commercial banks, which may be controlled by the Chinese state, but operate as legally independent entities, not as sovereign lenders. So, unlike the members of the Paris Club of major sovereign creditors, they often require collateral for development loans. About 60% of their total lending to developing countries is subject to collateral. When a country applies for debt relief, its Chinese creditors can claim the rights to assets held in escrow.’ – Paola Subacchi, Professor of International Economics at the University of London’s Queen Mary Global Policy Institute, and author of The Cost of Free Money (Yale University Press, 2020).

Don’t trivialise corruption, tackle it: Ngozi Okonjo-Iweala at TEDxEuston -2014 –

As an intro – the  ex- Nigerian Finance Minister dancing to a sax solo interpretation of a song called ‘Chop My Money’ – A simple case of ‘You couldn’t make this up?’ or a prophecy of what is really to come!

Screenshots from P-Square – Chop My Money Remix (Official Video) ft. Akon & May-D – but which character(s) in the video could be personified as Africa or China?

‘If you spend so much time trivializing an issue, when the evidence is there in front of you, that is not giving a good service’ – Dr. Ngozi Okonjo-Iweala 2014.

To be successful at the mammoth tasks she has set herself…, Dr. Ngozi Okonjo-Iweala may have to trade her trademark ichafu for aju… Fashion needs to make way for combat fatigues…because heavy is the head that wears the crown, and this is a head that will come under some considerable weight in the days and months to come.

When Ban Ki Moon from South Korea, China’s southern neighbour, took over from Kofi Annan at the UN, he famously sang live on camera. It was his own rendition of Santa Claus Is Coming To Town, inserting his own name.

China needs to be aware Dr. Ngozi Okonjo-Iweala is already in town and paying in-person visits soon. She won’t need any chimney. She will come straight in the front door.

Ngozi in her native Igbo means ‘Blessing’. She is indeed a blessing not only to Igbos but Nigeria, all of Africa, and perhaps the world.

Referenced content/acknowledgements  (others as per main article body) :

https://time.com/5938816/ngozi-okonjo-iweala-wto-climate-change/

https://www.dw.com/en/daunting-challenges-await-wto-chief-ngozi-okonjo-iweala/a-56581993

https://www.independent.co.ug/chinas-debt-grip-on-africa/https://www.brookings.edu/blog/africa-in-focus/2020/04/20/china-and-africas-debt-yes-to-relief-no-to-blanket-forgiveness/

https://dailypost.ng/2018/09/12/okonjo-iweala-spent-years-getting-nigeria-debt-back-buharis-ex-minister/