China is seeking to play a leading role in the global economic recovery in Africa after the COVID-19 pandemic, but its approach to economic recovery may come packaged with corruption and political manipulation, risks that have not dissuaded China’s African partners in the past a new report warns.
The report “Below the Belt and Road: Corruption and Illicit Dealings in China’s Global Infrastructure” by the Foundation for Defense of Democracies (FDD), based in the United States, provides an in-depth analysis of China’s Belt and Road Initiative (BRI), its program for international investment, and looks at how Chinese corruption affects the development of infrastructure globally. Though the report uses Sri Lanka and Malaysia as case studies, a focus on Kenya is included in order to illustrate China's impact on African infrastructure.
A separate 2015 report from consulting firm McKinsey details China's involvement in African infrastructure goes back several decades. In 1976, construction of the 1,710 kilometer Tanzania-Zambia railway was completed, helping to link landlocked and mineral-rich Zambia to the Indian Ocean. Zambia's first post-independence president, Kenneth Kaunda, praised China for their support, describing the project as "a model for south-south cooperation."
The same McKinsey report found that Chinese loans for infrastructure projects tripled within the 2012-2015 period, arriving at a level of $5 to $6 billion each year. More than half of all Chinese investment for infrastructure, around 52.7 percent, has gone specifically towards shipping and port construction. In Kenya, Chinese loans helped pay for the construction of the Nairobi-Mombasa Standard Gauge Railway (SGR), but in the two years that it has been operational its revenue has failed to break even with operating costs.
It is foolish to believe mega-projects like the Nairobi-Mombasa SGR will turn an immediate profit. Nonetheless, Kenya cannot afford to suffer losses year on year, especially when its public debt makes up 61 percent of its GDP. As the third-largest recipient of Chinese loans, Kenya's ailing economic woes - compounded by the COVID-19 pandemic and a historically unprecedented locust swarm - places it in a precarious position that could force it into debt repayment schemes towards China that trap it in a state of financial serfdom.
“There is little risk for Beijing. Chinese influence is still near its high-water mark […] and BRI recipients may be even more dependent on Beijing as they grapple with post-pandemic economic recovery,” Dezenski, author of the FDD report, writes. “The eventual exposure of systemic corruption, paired with a lack of accountability, is bound to generate a stronger public backlash."
As more African leaders call for debt relief, China's ambivalence on providing full debt forgiveness for its African partners seems to validate Dezenski's analysis. On its end, Chinese authorities have rejected accusations that it has created "debt traps" for African nations, and has warned against using Africa's sovereign debt to China as a political cudgel.