US: China’s loan rates terrible for Africa

The US has criticised the rate at which China offers loans to African countries, saying the practice is not for the betterment of the continent.

NAN reports that the US department of state made this statement during a background briefing on the visit of Rex Tillerson, secretary of state, to Africa.

Tillerson is scheduled to visit the leaders of Nigeria, Chad, Djibouti, Ethiopia and Kenya between March 6 and 13.

“In the Africa region, we are going to have a heart-to-heart discussion with the Chinese. We’ve invited the Chinese to come to Washington to talk about their programs in Africa,” the US said in the background briefing.

“And so on the one hand, the unhelpful role is the providing low-interest but really concessionary loans which really indebts the country.

“One area that’s not to the betterment is these loan rates, which is terrible.

“A lot of countries in Southern Africa and parts of the east and west are having anywhere from 50 percent to in one case 200 percent of GDP debt.

“And 80 percent and 50 percent are probably Chinese loans, and that’s really not acceptable, and that’s an area that we really need to address and focus on.

The US said it has no intention of countering China as far as Africa is concerned but that its objective is resolving tensions and problems in the continent.

In 2005, the Heavily Indebted Poor Countries (HIPC) Initiative together with Multilateral Debt Relief Initiative (MDRI) allowed for 100 percent relief on eligible debts from the International Monetary Fund, the World Bank, and the African Development Fund – for countries completing the HIPC Initiative process.

“I mean, we spent so much time getting them out of debt, and to see them go back into debt is just terrible,” the US department of state said.

“And it goes back to not only corruption in some of these states, but also the ease in which not only China – and you’re talking Russia, Iran, and other countries providing low-interest loans.

“And this is really kind of another forum of impoverishment and poverty because unlike HIPC, we can’t really kind of repay loans back to banks.”

Nigeria is a party to such agreements as China recently agreed to cover the cost of constructing two satellites without any financial contribution from the country.