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Zambia calls off Chinese loans, saves itself from falling in Beijing's debt trap

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Lusaka | August 6, 2022 2:56:28 AM IST
Southern African nation, Zambia, seems to have understood China's debt-diplomacy, which only reaps profits to Beijing while countries are pushed towards an economic crisis, as Lusaka cancelled USD 1.6 billion Chinese loans.

Bad loans by China have already wreaked havoc in Pakistan and Sri Lanka and treading along the same path was Zambia; however, now the South African nation has called off the deal and has also managed successfully in negotiating a USD 1.4 billion IMF bailout to restructure some USD 17 billion external debt, reported Financial Post.

Notably, Zambia, in November 2020, defaulted on a sovereign loan. China is Lusaka's biggest bilateral lender and Zambia has an exceptionally high level of Chinese loan commitments.

The China Africa Research Initiative (CARI) has estimated from an analysis of loan data that Zambia's debt to the Chinese public and private lenders is USD 6.6 billion, almost double the amount disclosed by the previous Zambian government.

Apart from this, there are other penalties or interest arrears that continue to build up. According to the China Africa Research Initiative, copper-rich Zambia has used Chinese loans for more than 69 projects over the period 2000-2018, mostly in the transport and power sectors.

With so many indulgences by China in Zambia's economy there remained suspicions over the nitty gritty of these loans. International creditors have complained that the lack of detail on Zambia's China loans which carry specific non-disclosure terms has hindered the process of restructuring Zambia's debts.

60 per cent of the population in Zambia don't have access to electricity, 77 per cent don't have access to clean drinking water and 46 per cent don't have access to the internet, as per the media outlet.

Lack of transparency over the nature of the terms agreed by African government has led to intense domestic criticism and international accusations that China is seeking control over strategic assets. In fact, Zamia been "lured" into borrowing too much from China, falling into a debt trap.

Debt trap diplomacy is a deceptive method adopted by China under the BRI scheme wherein the Chinese first lend huge monies under opaque loan terms to unsuspecting developing nations in the garb of development only to strategically leverage the recipient country's indebtedness for its own economic, military, or political ends or to seize its assets as a means of repayment.

In 2020, three Chinese nationals were murdered in Zambia's capital Lusaka is testimony to the growing anti-China feelings.

There remains a growing anti-China sentiment among the locals who have raised concerns over rising discrimination by the Chinese, abuse of labour laws and their regular interference in the internal political and economic matters. (ANI)

 
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