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Chinese overseas

Fears in Zambia of huge debt bust from China-fuelled building boom

Critics say Lusaka is hiding the extent of the country’s borrowings from Beijing and could be about to hand over control of key state assets

PUBLISHED : Sunday, 23 September, 2018, 1:32pm
UPDATED : Sunday, 23 September, 2018, 11:16pm

“China equals Hitler”, said the sign held up in the Zambian capital Lusaka by a protester opposed to Beijing’s tightening grip on the economy of the southern African nation.

The demonstrator, James Lukuku, who leads a small political party, was picked up by police and spent several hours in a cell reflecting on his one-man protest.

But he is not alone in opposing China’s growing presence in President Edgar Lungu’s Zambia and, in particular, its major programme of loans to Lusaka.

In fact his criticism echoes concerns shared by many across swathes of Africa and beyond, where some fear that China’s mega-projects risk leaving already fragile economies in even worse shape.

“I want to bring to the attention of the international community the Chinese influence and corruption in Zambia,” said Lukuku who wore a white T-shirt emblazoned with the slogan #sayno2China.

China is the main investor in Zambia as it is in several other African countries and, with its offers of “unconditional” aid, most public tenders are awarded to Chinese bidders.

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In Lusaka and across the country, China is busy building airports, roads, factories and police stations with the boom largely funded by Chinese loans.

“China is about to take everything from Zambia. They have taken over our economy through these criminal debts. This government is contracting debts from China even without parliamentary approval,” Lukuku said.

Zambian public debt is officially around US$10.6 billion but suspicions have grown in recent months that the government is hiding its indebtedness – as happened in neighbouring Mozambique, which in 2016 was forced to admit it had kept secret US$2 billion of borrowing.

Fearing that Zambia might be in a similar position, the International Monetary Fund at one point delayed talks over a US$1.3 billion loan deal.

The slump in the price of copper, Zambia’s leading export, has led to fears that Lusaka might even struggle to service its existing debt.

Lukuku and his supporters believe that the state is on the verge of handing control of the Zesco national electricity company, Lusaka airport and the ZNBC state broadcaster to China.

Stung by the criticism that he was selling out to China, Lungu has hit back at critics.

“I implore you to ignore the misleading headlines that seek to malign our relationship with China by mischaracterising our economic cooperation to mean colonialism,” Lungu told lawmakers.

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Finance Minister Margaret Mwanakatwe has also come out to insist that, in the first half of 2018, US$342 million was paid in interest to creditors, of which 53 per cent were in the commercial sector – and only 30 per cent of which were Chinese.

But the country’s main opposition party has put China’s debt dominance at the forefront of its campaign to unseat the government.

Opposition figure Stephen Katuka warned against the “rate Zambia is entertaining Chinese nationals which are displacing Zambians through big financial offers”.

Katuka, who is the secretary general of the United Party for National Development, described the replacement of Zambian workers with Chinese labourers – as is customary on Chinese-run projects – as “a time bomb”.

“If this situation is allowed to degenerate, it may lead to aggression on foreign nationals,” he added.

There have been several high-profile incidents of Chinese managers allegedly mistreating their Zambian workers.

“In some instances the Chinese are beating Zambians in places of work for simply failing to follow instructions,” Katuka said.

Typically reclusive, China’s ambassador to Lusaka Lie Jie was drawn into the growing furore to defend Beijing’s intentions.

“I feel strange when I hear we want to colonise Africa,” he said, denying that China was seeking to buy Zambia’s publicly owned companies.

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Economist and head of Zambia’s Private Sector Development Association, Yosuf Dodia, said Chinese investment should be seen as an opportunity not a burden.

“Zambia has been dominated by the West for 100 years ... and we are seeing poverty all over the continent,” he said.

“The partnership level is around US$10 billion – and that is good. There is no other country that offers those kinds of opportunities.”

The benefit of such vast investment is not always felt on the ground, however.

“I am not happy with the dominance of Chinese contractors. In the first place, the money that they get from these contracts is externalised and all that they return here are meagre wages,” said Edgar Syakachoma, himself a contractor.

“Let the government also give us the contracts so that they benefit Zambians.”