By Jonathan Ntege Lubwama
- Zambia’s China debt is $6.6B, significantly higher than the $3.4B originally stated by the government
- Beijing has an Evergrande debt problem in its own backyard
China is Africa’s largest creditor and Zambia is indebted to the country for $6.6 billion. A report by the China Africa Initiative revealed this number is almost double of the $3.4 billion figure that was revealed by the outgoing president Edgar Lungu. Organizations like the International Monetary Fund and World Bank pulled the plug on their loans to Africa, due to fears of dragging some of the world’s poorest nations into debt. Last November, the copper-rich nation of Zambia became the first African country in the post-coronavirus era to default on its loans.
Why This Matters: China has long been willing to loan huge amounts of money to multiple African countries after the West started pulling back its financing. In 2011, the Zambian government revealed a new plan to boost the country’s infrastructure at an estimated $20 billion budget. This required massive loans and substantial assistance that Beijing was willing to provide. Specifically, 83% of projects that have been undertaken have been implemented by Beijing-affiliated companies.
Coronavirus has caused a slow down in economic growth that many African countries are bound to feel for years. It’s expected that across Africa many countries will default on their loan payments.
China also has a huge problem in their own backyard in the property conglomerate China Evergrande Group that is facing one of the country’s largest ever debt restructuring. The company is wrestling with $300 billion of debt, which could lead to a possible collapse, triggering worries about Beijing’s ability to loan money or accept debt defaults.
What’s Next: Beijing is expected to take over some state-owned enterprises in African countries that default on their payments. In the case of Zambia, it might take over copper mining to recover its loans. Zambia is the world’s second biggest copper producer, while China is the world’s largest consumer of copper. This bears hallmarks of colonialism that most African countries faced over 50 years ago. It might also lead to many African countries hiding true figures of their debts with China.
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