African ‘debt issue’ needs sound solution

By Song Wei Source:Global Times Published: 2020/5/25 22:07:49

Illustration: Luo Xuan/GT

The world economy is under great pressure from the deadly pandemic, with some relatively vulnerable economies in Africa facing the risk of losing the ability to pay their debts on time. As a debtors for African countries, China vows to actively promote the implementation of the debt service suspension initiative from G20 countries in a bid to relieve pressure on African countries.

China and Africa maintain long-term and solid cooperation, and have been joining hands to combat COVID-19. It is the 20th anniversary of the Forum on China-Africa Cooperation. China's Foreign Minister Wang Yi on Sunday stressed at a press conference that China will continue to stand by Africa as it fights the virus. Also, China will continue to work with Africa on development capacity-building. Wang said that China will work with other G20 members to implement the debt service suspension initiative to ease Africa's debt burden, and is also considering further bilateral support for African countries under the greatest strain to help Africa.

The coronavirus has brought different levels of damage to African countries. Those in East Africa with relatively better economic backgrounds are more resilient to the attack, with debt repayment abilities less impacted. Some less-developed economies in West Africa will inevitability encounter difficulties repaying their debts on time, including Mali and Sierra Leone, which have vulnerable economic structures.

For countries facing extreme challenges, China may increase grants which do not need to be paid back, among other supportive measures. China's support of projects concerning people's livelihoods, like constructing schools and hospitals, may be enhanced so as to speed up the resumption of production. From a long-term perspective, China will continue to support infrastructure construction in African countries to help their industrialization and modernization, the essential direction of China-Africa cooperation.

In the meantime, the possibility exists that China will offer write-offs for interest-free loans due and unpaid by some of the most impoverished countries on the continent in accordance with international standards and after comprehensive evaluation. China is willing to hold talks on the basis of equality and mutual benefit.

There are essential differences in the foreign assistance from China and Western countries. China adopts flexible capital approaches including grants, preferential loans and blended methods. More efforts focus on supporting the development of Africa's production capacity - this is a vital characteristic of China's work with Africa.

China has helped build factories in the Republic of Guinea and Tanzania, among other countries. Projects aiming to boost production capacity require long-term assistance since training in production capacities and management expertise need to be carried out after a physical facility is completed. Western countries do not have the same level of interest in such areas.

Instead, Western countries tend to adopt relatively single capital approaches with budget support - and with political strings attached - for governance improvement projects, based on the development experience of Western countries themselves. And if projects do not meet the reform targets set by Western countries, their aid will be suspended or stopped.

The African Union's 2063 Agenda has marked industrialization as a critical development strategy. Based on decades of cooperation with Africa, China has proposed the promotion of China-Africa production capacity cooperation. It intends to explore deepened cooperation between the two sides based on China's pervious support of African production, and it is in line with the African Union's strategy.

The pandemic continues to rip through the world. Western countries, under such circumstances, should join cooperation in every possible aspect with an open and inclusive attitude, rather than doggedly sticking to geo-political schemes and ideological prejudices.

Wang has noted that China will accelerate construction of the Africa CDC headquarters, which was an important item in the Memorandum of Understanding signed by China and the US in 2015 following the Ebola epidemic. 

The two countries committed to jointly support the construction of the African CDC through trilateral development cooperation. China will continue to hold an open and inclusive attitude to support the project with the US, as well as with any other parties interest in supporting Africa.

As for the debt issue promoted and misrepresented by certain Western media, China will actively promote the G20 debt service suspension initiative. The purpose of the loans was to facilitate African development, and China aims to solve debt problems through development. Simply offering write-offs would not be in accordance with African countries' long-term development interests.

The author is an associate research fellow at the Chinese Academy of International Trade and Economic Cooperation under the Ministry of Commerce.


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