The Chinese loans to Africa tend to decline during times of crisis and the loan commitment dipped in 2020 due to the COVID-19 pandemic.
The pandemic and its economic aftershocks have adversely impacted projects under China’s Belt and Road Initiative (BRI), both in terms of implementation and funding, reported European Times.
Chinese loan commitments to the African nations hit a historic low of USD 1.9 billion in 2020 and the total number of projects decreased with only 11 projects funded compared to a total average of around 60 projects a year during 2015 – 2019.
Among the top ten loan recipients, only Ghana received new loans in 2020. In contrast, historically heavy borrowers such as Angola and Ethiopia did not receive any loans.
The trend raises the question of whether Chinese loans to Africa are drying up. This is against the backdrop of Chinese financiers signing 1,188 loan commitments worth USD 160 billion with 49 African governments during 2000-2020, reported European Times.
But there are other larger issues pertaining to Chinese investment in African countries.
Apart from the impact of the pandemic, BRI projects are losing credibility due to violations of labour and human rights besides causing severe environmental damage.
Chinese unethical ways of doing business in African countries is fast becoming a new normal than exception. A Chinese national was recently arrested in Uganda for allegedly blocking the Gender, Labour and Social Development Minister, Betty Amongi Akena from inspecting the working conditions of employees at Sunbelt Industries Ltd.
Apparently, at least 80 per cent of the 100 women working in the plant lack access to even basic amenities like clean sanitary facilities. The minister also found that none of the factory workers were wearing headgear despite operating heavy machinery.
Further, workers alleged rampant assault and intimidation by Chinese owners to workers besides their poor working conditions. Cases of exploitation of workers and sexual harassment by Chinese nationals had also been reported earlier.
The police in Bukwo district, Uganda, arrested (April, 2022) two Chinese nationals from China State Construction Engineering and Cooperation for alleged sexual harassment of female workers of the company
Similar instances of torturing locals were also reported from neighbouring Rwanda. A Chinese national was sentenced to 20 years for torturing local mine workers after a video showing him whipping a man tied to a post went viral on social media.
Chinese companies are also notorious for signing highly skewed contract agreements with host countries in Africa. Beijing has often been criticized for signing stringent agreements and further prohibiting their publication. It also stipulates conditions like repayment being undertaken in Chinese currency or it’s conversion at the prevailing rates, making the settlement a difficult task.