An Insider’s View of the China-Africa “Debt Trap” Debate

The issue of whether African countries are taking on too much Chinese debt is often positioned in the West as some kind of choice as if Africa policymakers prefer to take loans from the Chinese rather than Western governments or international organizations like the World Bank and the IMF. The reality is that for more African states there is no choice. It’s either borrow from the Chinese or nothing.

The fact is that few in the West or Japan are willing to lend highly impoverished countries like Djibouti and Liberia millions, even billions of dollars that they need to build essential infrastructure. The overwhelming majority of international lenders either view most of Africa as being too risky or, even if they do want to extend loans, the amounts are not even close to what the region needs to close the continent’s estimated one trillion dollar infrastructure deficit.

So when the Chinese come to the table with below-market-rate loans, multi-year interest holidays, much longer repayment terms and a willingness to spend the big money to build railways, airports and other basic infrastructure that are so desperately needed, then it shouldn’t really come as a huge surprise that African leaders see this as a once-in-a-generation risk worth taking.

W. Gyude Moore, Liberia’s former Minister of Public Works, recognizes that African countries are taking a huge risk by piling on ever-larger amounts of Chinese debt, but he thinks it’s worth it if the new roads, bridges and industrial parks can help spark economic growth needed to employ the continent’s bulging population of young people.

Gyude joins Eric & Cobus to provide an insider’s perspective on the ongoing debate dangers of too much Chinese debt in Africa. Listen below:

Join the discussion. Do you agree with the IMF and the United States government that African countries should be wary of becoming too indebted to the Chinese or do you think African policymakers like Gyude Moore are right in their assessment that this is a risk worth taking? Let us know what you think.

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Twitter: @eolander | @stadenesque | @gyude_moore

Email: eric@chinaafricaproject.com

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