Last month, the South African Institute of International Affairs published my policy insight on the Chinese Debt Trap.
In short, Africa’s growing public debt has sparked a renewed global debate about debt sustainability on the continent. This is largely due to the emergence of China as a major financier of African infrastructure, resulting in a narrative that China is using debt to gain geopolitical leverage by trapping poor countries in unsustainable loans.
It essentially argues that African governments are being deliberately lured into debt by the Chinese government through debt trap diplomacy and that China has an ominous plan to mire the continent in debt in order to gain economic and geopolitical control of Africa.
My counter-argument is simple: The debt trap narrative undermines the decision-making power and agency of African governments.
Even worse, the debt trap narrative ‘infantalises’ African governments, painting them as little more than overgrown children who have to be constantly supervised by other powers if there is any hope of them getting anything right.
More seriously, the debt trap narrative is deeply worrying because it is deeply dangerous. Arguing that African governments are being lured or tricked by China actually begins the process of preventing sovereign African governments from being held accountable for the financial commitments made on behalf of the African people.
The narrative gives wiggle room for some governments to become intellectually dishonest and say that they did not know what they were getting into as they signed multi-billion dollar deals with China, rather than stand up and be counted.
The narrative, in its determination to paint China as the ‘bad guy’, actually begins to absolve African governments of their fiscal responsibility and obligations. It creates space for some African governments to avoid hard questions from their publics about how debt is used, accounted for and whether the debt has led to economic gains and development.
Last week, the Financial Times (FT) took this argument further, pointing out that the heaviest cost for African countries comes from private lenders, not the Chinese.
Nearly a third of African governments’ debt is owed to private creditors, but they account for 55 percent of interest payments. By contrast China, is owed about 20 percent of African nations’ external government debt and receives just 17 percent of interest payments.
And to be honest even if that number was higher and Africa owed China far more, the responsibility for that rests squarely on the shoulders of the ministries of Finance/ Treasuries of African governments, not China.
African governments have demonstrated tremendous appetite for debt and have not only gone to China looking for it, they have floated sovereign bonds and continue to borrow from their traditional partners.
Frankly, the debt trap narrative seems motivated more by frantic Sino-phobia than any genuine concern for the economic and fiscal health of African countries.
Africans are worried about growing public debt, period. After all, it is the African people alone who will have to pay back all the debt in question.
Thus, let the concerns of the African people about the fiscal accountability of their governments take centre stage in the conversation about public debt on the continent.