3 Truths About Africa’s Debt, The U.S. Deliberately Distorts It

Xinhua News Agency, Beijing, February 10th(International Observation) Three Truths regarding African Debts Deliberately Distorted by the United States

Xinhua News Agency reporter

A few days ago, senior US officials visited several African countries in succession, during which they continued to link the debt burden of African countries with China. International observers believe that the clichés such as China’s “debt trap” with Africa hyped up by the US have long been widely questioned, and the facts and truth deliberately distorted by the US just prove that Western countries have turned black and white on the African debt issue.

Fact 1: Who Are the Major Holders of African Debt

Multiple reports from international institutions and professional research fields show that the source of external debt of African countries is mainly bonds held by Western private creditors.

According to data from the World Bank last year, among the 696 billion US dollars in external debt of 49 African countries for which data is available, multilateral financial institutions and commercial creditors accounted for nearly three-quarters of the debt, making up the bulk of Africa’s debt.

According to a report released by the British non-governmental organization “Debt Justice” in July last year, 35% of the external debt of African countries comes from Western private lenders, and the total amount is almost three times that of China’s loans to Africa.

“Western leaders are diverting attention by blaming China for Africa’s debt problems. In fact, their countries’ banks, asset managers and oil traders are more responsible, but the G7 is turning a blind eye.” The group’s policy Department head Tim Jones pointed out that Western private lenders are not participating in the G20 Debt Service Suspension Initiative for the Poorest Countries (G20 Debt Suspension Initiative). Given the current debt structure of African countries, it is impossible to come up with effective solutions to Africa’s debt problems without the participation of Western private lenders.

French “Le Monde” recently reported that Swiss commodity trader Glencore holds regarding one-third of Chad’s foreign debt; Yellen hyped China’s “debt trap” in Zambia, and American asset management company BlackRock major creditors of the country.

It is also multilateral financial institutions and commercial creditors that hold most of Zambia’s external debt. Multilateral financial institutions own 24 percent of the country’s external debt, while commercial creditors, mostly from Western countries, account for 46 percent, according to figures released by the country’s government.

“Western lenders have not been in the spotlight for debt relief for too long because they have managed to trick the world into thinking that it is Chinese lenders who pose a threat to Africa,” said Mubarak Mugabo, a journalist with Ugandan Vision Group.

Fact 2: What is the cause of Africa’s debt problem

Some observers believe that Africa’s debt problems are caused by various factors such as the epidemic, geopolitical conflicts, and excessive institutional borrowing. The Fed continued to raise interest rates aggressively last year, adding fuel to Africa’s debt problems. Therefore, to blame China for the debt problem is to confuse the public and shirk responsibility.

The African Economic Outlook Report released by the African Development Bank in January this year pointed out that factors such as persistent inflation, long-term global fiscal austerity, high capital costs, depreciation of national currencies, and reduced capital inflows may increase the risk of some African countries falling into a debt crisis .

The report particularly emphasizes that the Fed’s multiple interest rate hikes last year and the strengthening of the U.S. dollar have greatly increased the debt repayment burden of African countries. For example, the Ghanaian currency cedi will depreciate by 33% once morest the U.S. dollar in 2022. The debts of emerging countries and low-income countries are mainly repaid in foreign currencies such as the US dollar. The irresponsible monetary policy of the United States has obviously escalated the debt problems of these countries.

In contrast, China has been actively participating in the G20 debt suspension initiative, and has signed debt suspension agreements or reached consensus on debt suspension with 19 African countries. It is the country that has implemented the largest amount of debt suspension among G20 members. China has also actively participated in the G20 common framework to deal with individual debts of Chad, Ethiopia and Zambia.

“They portray China as a predatory lender. This accusation has no basis in fact.” Konstantinos, a professor at Addis Ababa University in Ethiopia, said bluntly.

Onunayju, director of the China Research Center in Nigeria, believes that calling China a “debt trap” is a “political smear” that is used to divert attention from all the responsibilities that the West should bear. “We hope that more people will pay attention to the fact that more debts in Africa come from institutions in Western countries and private financial institutions.”

Truth 3: Who contributes more to Africa’s development

When U.S. officials such as Yellen visited Africa, they may not realize that they may be in an airport built by a Chinese company, and their convoy may be driving on a road or bridge built by a Chinese company…In African countries, almost everywhere You can see the modern infrastructure built by Chinese companies.

Industry insiders said that if external debt contributes to long-term economic and social development and can be effectively managed, it can be called benign debt. Therefore, debt growth is only one aspect of the problem. The key lies in how to help African countries achieve sustainable, independent and quality development.

Statistics show that since the establishment of the Forum on China-Africa Cooperation, Chinese companies have built and upgraded more than 10,000 kilometers of railways, nearly 100,000 kilometers of roads, nearly 1,000 bridges, nearly 100 ports, and a large number of hospitals and schools in Africa. More than 4.5 million jobs.

In 2021, the total trade volume between China and Africa will exceed US$250 billion. According to the official statistics of the United States, in 2021, the total value of US exports to Africa will be 26.7 billion US dollars, and the total value of US imports from non-goods will be 37.6 billion US dollars, both of which are significantly lower than those in 2011.

In June last year, a study by Fort Hale University in South Africa quantitatively analyzed the impact of Chinese loans on the development of 15 African countries, and believed that China’s efforts to help Africa develop infrastructure have actually promoted Africa’s economic growth, and China has always been an important factor in helping Africa develop. strength.

According to a survey report released last year by the Kenyan think tank “Interregional Economic Network”, China’s cooperation with Africa has been highly recognized by Africans in terms of infrastructure construction, rapid decision-making, and project completion on schedule. Data and facts prove that China has made tangible contributions to the development of Africa with high-quality and efficient practical actions.

“African countries generally believe that China is a trustworthy partner, and (African countries) have full confidence in China-Africa cooperation.” Ezzat Saad, director of the Egyptian Foreign Affairs Council, said with deep emotion. (Participating reporters: Liu Youmin, Yang Jun, Zhu Shaobin, Zhou Chuyun)