Chinese tech has been critical in bridging Africa’s digital divide, but the support often comes with high and hidden costs

Several African countries depend on China as their main technology provider and sponsor of large digital infrastructural projects.

Under the so-called “EPC+F” (Engineer, Procure, Construct + Fund/Finance) scheme, Chinese companies like Huawei and ZTE oversee the engineering, procurement and construction while Chinese banks provide state-backed finance. Angola, Uganda and Zambia are just some of the countries which seem to have benefited from this type of deal.

The Chinese government’s expectation is that mobile applications and startups in Africa will increasingly reflect Beijing’s technological and ideological principles. That includes China’s interpretation of human rights, data privacy and freedom of speech.

Researchers like Arthur Gwagwa from the Ethics Institute at Utrecht University (Netherlands) believe that China’s export of critical infrastructure components will enable military and industrial espionage. These claims assert that Chinese-made equipment is designed in a way that could facilitate cyber attacks.

Human Rights Watch, an international NGO that conducts research and advocacy on human rights, has raised concerns that Chinese infrastructure increases the risk of technology-enabled authoritarianism. In particular, Huawei has been accused of colluding with governments to spy on political opponents in Uganda and Zambia. Huawei has denied the allegations.

In the long term African countries should produce their own infrastructure and become less dependent.

pop,

They most likely bribe the politicians into contracts they know they can’t pay in time or will fail. Then the politicians leave and live the life of luxury but the country still owes them money and the next guy in power does the same to avoid paying the last guys debt. Now the chinese has the country by the balls.

0x815,

Last year, researchers at AidData, the World Bank, the Harvard Kennedy School, and the Kiel Institute for the World Economy in Germany found that Beijing has dramatically expanded emergency rescue lending to sovereign borrowers in financial distress—or outright default.

Essentially, however, China has been bailing out its own banks, the study found. You can download the study here.

TLDR:

China had undertaken 128 rescue loan operations across 22 debtor countries worth $240 billion [by March 2023 when the study was published]. These include many so-called “rollovers,” in which the same short-term loans are extended again and again to refinance maturing debts.

Less than 5 percent of Beijing’s overseas lending portfolio supported borrower countries in distress in 2010, but that figure soared to 60 percent by 2022. Therefore, China’s new funding schemes pivoted away from infrastructure project lending to ramping up liquidity support operations. Nearly 80% of its emergency rescue lending was issued between 2016 and 2021.

China does not offer bailouts to all BRI borrowers: low-income countries are typically offered a debt restructuring that involves a grace period or final repayment date extension but no new money, while middle-income countries tend to receive new money to avoid default. The reason is that these middle-income countries represent 80% or more than $500 billion of China’s total overseas lending, thus posing major balance sheet risks, so Chinese banks have incentives to keep them afloat via bailouts.

Borrowing from Beijing in emergency situations comes at a high price. Rescue loans from the International Monetary Fund (IMF) carries a 2% interest rate, while the average interest rate attached to a Chinese rescue loan is 5% in comparable situations.

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