Economic colonialism – are we repeating history?

In December 2018 the Zambian finance minister announced that Zambia’s national debt had risen from just under 9 billion dollars (USD) to just over 10 billion dollars (USD). A third of this debt is owed to – surprise, surprise – China. The minister stated that the loans had served to boost the economy through infrastructure spending. The minister has subsequently been summarily dismissed (July 2019). “Good riddance”, say all the civil servants who had heard the minister say things like: “All those who do not like the situation should find new jobs…”. This after they had not been paid for three months, as the country’s external debt repayments had been prioritised. The current annual debt repayments represent 59% of the country’s GDP.

Debt-trapping

This is sadly a situation that is not unique to Zambia. Over half the continent’s countries are currently heavily indebted. On average 20% of these countries’ debts are owed to China. The strangling effect on the economies of the debtors cannot be denied. No bank will lend you more than 10-15 percent of your disposable income, for good reason. Yet China is going around the continent dishing out debt to sovereign states like candy and many irresponsible governments, in turn, are lapping it up like crack cocaine.

As a general rule of thumb, the debt that is easiest to come by is normally the most dangerous – I think of loan sharks. However, between 2000-2017 the Chinese government through its state-controlled banks has managed to lend an estimated 143+ billion USD to African countries.[efn_note]As per the China-Africa Research Initiative at Johns Hopkins University School of Advanced International Studies.[/efn_note].

More of the Same

The seemingly unchecked borrowing is not nearly about to end as China, at the 2018 Forum on China-Africa Cooperation, committed to making another 60 billion USD available to “whosoever will”. What is interesting, and reinforces the “loan-shark” narrative is that the countries afforded the most credit find themselves rated as “high-speculative” (or worse) on Moody’s, S&P’s and Fitch’s sovereign ratings. In other words, like with loan sharks, China appears to be a solution for those countries that have no-where else to go. But perhaps it runs deeper than that? At least as far as Zambia and Angola are concerned. Those relationships run deep – all the way back to the 1960s and 1980’s deep respectively.

Origin stories

Zambia and China relations go back to 1964, officially. Unofficially, i.e. before Zambia was even recognised as a sovereign, China supported Zambia in its struggle for independence when it was still called Northern Rhodesia. Shortly after independence (5 days after) China established diplomatic ties on 29 October 1964. Zambia, a landlocked country and impatient to develop its economy and infrastructure sought to establish a transport to a port as soon as possible. With Zimbabwe and South Africa still under colonial rule, Tanzania, which borders the country in the northeast, was approached.

TAZARA

Together the two countries sought help from the Western world and the former Soviet Union but were not successful in obtaining funding for a rail-link that connected Zambia to the port in Dar es Salaam. In 1965, the Tanzanian President Julius Nyerere visited China and requested help to fund and construct the ambitious railway project.[efn_note] The 1 860 kilometre railway line connects the Zambian copperbelt with Dar es Salaam [/efn_note].China agreed to the request in accordance with its strategy of supporting African countries in their quest for independence and economic development in order to foster its influence on the African continent.

In 1967, President Kenneth Kaunda of Zambia on his visit to China also emphasised the project with the result that construction commenced after the three countries signed the “Agreement of the Government of the People’s Republic of China, the Government of the United Republic of Tanzania and the Government of the Republic of Zambia on the Construction of the Tanzania-Zambia Railway” in Beijing. Work started
in 1970 and was completed in 1976.

Trading Colonialisms

Colonialism is defined here as “the attainment of territory, usually by force, with a movement of a population and an extension of the political power of the colonising body into the new territory (“the territory”).” While “force” is absent in the dealings between Zambia and China, the relationship, at face value, seems to meet all the other criteria of being colonised. After shaking off the shackles of British rule, then having its debt erased by the IMF in the early 2000s Zambia now finds itself in a position where it has to prioritise the repayment of its loan to China ahead of paying its civil servants. In addition, national assets need to be surrendered to a foreign power in fulfillment of debt obligations.

Here, we explain that another hallmark of colonialism was the “migration” of the colonising powers citizens to the new territory to safeguard the interests of the colonising power and repatriate resources. We can observe Chinese nationals all across the continent as outlined here. While the individual citizens of Zambia (and other countries in a similar position) may still enjoy their physical freedom, economically they find themselves beholden to a foreign sovereignty.

If it walks like a duck and looks like a duck…