JOINT PRESS STATEMENT BY CIVIL SOCIETY ORGANISATIONS
We, the undersigned civil society organisations have noted the defence of Zambia’s debt to China made by the Patriotic Front Media Director in a response to concerns raised by ACA Director, Laura Miti at the levels of that indebtedness.
In responding to Mr Chanda’s sentiments, civil society would like to begin by welcoming his decision to engage us on the critical matter of debt. We welcome the PF Director’s statement because it is civil society’s considered view that Zambia’s overall indebtedness, but especially its indebtedness to China, is a national crisis that requires government to engage citizens openly and in depth.
For that reason, we do wish Mr Chanda’s statement had answered the critical questions that are repeatedly being asked by citizens about Zambia’s debt level and strategy.
However even his rather personal response provides us with an opportunity to engage.
In a paper produced for the Centre for Trade Policy and Development in May 2018, Trevor Simumba highlights the fact that Minister of Finance, Ms Margaret Mwanakatwe, stated on 21st February 2018 that China is a natural first creditor and that 28% of Zambia’s debt is owed to China.
Why is this a problem? According to Mr. Simumba, “there is a severe lack of transparency over many key questions, including repayment, contracting obligations, project feasibility, value for money and loan security. This lack of transparency makes it impossible to have a clear account of the implications of this borrowing for the public finances”. In other words, it is not clear what the impact of the debt burden will be in the short and long term. It is not even clear exactly how much Zambia owes to China and therefore what the country’s overall debt burden is.
Zambia is a participant in the Chinese “Belt and Road” initiative. This initiative aims at increasing trade with developing countries all around the world through infrastructure development.
This week, China is hosting the Forum on China-Africa Cooperation. Most, if not all, African countries have sent high-powered delegations to the summit and Zambia is no exception. China is readily dishing out loans to all the African countries present as part of the Belt and Road initiative. As one Kenyan columnist wrote in an editorial in Kenya’s Daily Nation newspaper earlier in 2018, “The Chinese will readily offer you infrastructure loans but you will only start feeling the pinch when the time for servicing the debt comes calling — and you realize that your economy is not raising enough dollars to repay it.”
With commentators across the continent and the world raising red flags about China’s damaging lending strategy, a Centre for Trade Policy and Development report estimates that 95% of all of Zambia’s external debt for export and supplier’s credit comes from China.
Why should this concern Zambian citizens? In an article dated 3rd September, Quartz reported that, “John Hopkins University’s China-Africa Research Initiative found Chinese loans to be a significant contributor to debt distress in three countries: The Republic of Congo, Zambia, and Djibouti”.
While Mr Chanda suggests in his statement that Zambia is in complete control of its debt with China and tries to allay fears that critical Zambian assets such as ZNBC and ZESCO are in danger of takeover by China if the country defaults on debt, the truth is much grimmer.
One only has to look at the impact of the Chinese debt burden in Sri Lanka to see its potentially chilling effects. The New York Times reports that Sri Lanka owes more than US$8 billion to China. Due to their failure to pay their debt, Sri Lanka gave away a 70% share of the strategic Hambantota port to Chinese state-controlled entities and gave China a 99-year lease on the port.
In other words, Sri Lanka lost a critical port to China because it defaulted on its debt.
Given the lack of transparency by the Zambian government on its borrowing, there is a real danger that Zambia too might fall into the Chinese debt trap. This is troubling as key, strategic national institutions such as Zambia National Broadcasting Corporation are now controlled by a Chinese state-controlled entity.
The new national airport is also being constructed with Chinese funding. Zambia has just contracted loans of US$ 30 million for the modernisation of Mulungushi International Conference Centre and another US$ 30 million for the expansion of the electricity supply for the Lusaka East Multi-Facility Economic Zone.
Civil society and indeed the Zambian people are not against China or the Chinese investment or aid but there is a real concern that is growing to anxiety at the unaccountable, very opaque and seemingly non-strategic manner in which the Zambian government contracts and manages debt.
Zambian citizens cannot but notice the punishing levels of tax that the government is imposing on an already overtaxed population.
Zambian citizens cannot but notice the punishing levels of tax that the government is imposing on an already overtaxed population. Civil society is convinced that a government that has over-borrowed is now bleeding citizens in an attempt to fill the gap in the fiscus that is left by huge debt repayments.
Unfortunately, even as budget is clearly in a major deficit, government refuses to have an honest conversation with citizens both on the extent of our debt and it plans for repayments. It also continues to be very non-transparent about how debt money is spent. It is that full disclosure CSOs ask government and ruling party representatives like Mr Chanda to engage implement.
The Zambian debt is like a cancer. Unfortunately, the heaviest burden of debt is placed on women and children. It cannot be denied and denying it only makes its long-term consequences calamitous. Zambians deserve to know the truth about the nation’s debt.
We therefore urge the government to stop and think of the potential consequences of continued reckless borrowing if not out of a sense of patriotism then out of a realisation that it could cost them where it hurts – at the ballot box.
NGOCC BOARD CHAIRPERSON
Signed for and on behalf of: