The African Development Bank, AfDB, which is a major lender to Cameroon, has raised an alarm about the crushing debts the country is owing China with possibilities of Yaounde being entangled in what is known in diplomatic circles as “Chinese Debt trap”.
In its current report, the Bank notes that 61.3 of Cameroon’s debts are owed to China,representing 27.4% of the country’s overall debt estimated to be 10,164billion FCFA as at September 30, 2020, or 45.8% of Gross Domestic Product, GDP, according to the national autonomous sinking fund, CAA.
As Cameroon and many African countries shift from former colonial masters towards China for financing and technical support to boost infrastructural development, there have been loud musings about the scale of China’s lending to African countries. Motives have in some circles been classified as “debt trap diplomacy”, which is said to be a long-term goal to entrap African nations in debt commitments they cannot pay. In default, they ultimately leverage that pretext to obtain natural resources, commodities or key assets like ports.
The huge debts to China, AfDB warns, put Cameroon “at high riskof debt distress. Like Djibouti, Angola, the Republic of Congo,Ethiopia, Kenya, and Zambia, it is highly exposed to Chinese loans”.
It explains that the country’s heavy dependence on Chinese loans started in early 2010, with the launch in 2012 of major infrastructure projects including hydroelectric dams, bridges, roads, the port of Kribi among others, partly or wholly funded by China, through state-owned bank Exim bank China.
The country was already caught in the trap in 2019 when it failed to pay some of the loans due a year earlier but the debt was restructured. In the restructuring process, China wrote off almost $78million from Cameroon’s debt as part of measures to ease economic hardship. It was after President Biya flew to China for the third Summit of the China-Africa Cooperation and pleaded with Chinese authorities to ease Cameroon’s debt burden.
Reacting to the restructuring in an interview with the BBC at the time, Cameroonian economist, Ariel Gnitedem, said the amount cancelled was paltry in comparison with the total debt and that it could actually be for China’s long-term benefit.
“China wants to control the sub-regional market and Cameroon is the gateway,” he told the BBC. It is possible they (the Chinese) also want a greater share in the enormous natural resources in Cameroon which are essential to feed China’s home industries,”Gnitedem said.
Cameroon has been contracting loans from China to build dams, roads, hospitals and other infrastructure while the Chinese are involved in the country’s extractive industries, agriculture, construction et al.
Over the years, France, like other former colonisers, and the United States, have increasingly lost ground to China on the continent. This has been fostering fear that China’s motives have become a reflex reaction.
When Rex Tillerson, then US Secretary of State, embarked on a five-country visit to Africa in March 2018, the dangers of China’s growing influence on the continent, particularly the risk of a debttrap, featured prominently. And two years later when Mike Pompeo,Tillerson’s successor visited Senegal, Angola and Ethiopia on his first African trip, China’s influence on the continent once again came under focus.
China has a number of military, diplomatic and economic cooperation accords with Cameroon given that the human rights records and democratic practices in both countries often come under criticism by the West and United States. At the international fora, both countries have exhibited direct support of each other’s positions.
Cameroon backed China’s position regarding its crackdown on the Muslim Uyghur minority in Xinjiang, going as far as co-hosting an event with China at the United Nations on the matter. Likewise, China opposed discussions about the conflict in the North West and South West Regions at the United Nations, saying at an informal briefing on the subject in 2019. It said the crisis was an aspect of Cameroon’s internal affairs and not a threat to international security and therefore should not be discussed at the forum.
Diplomats are almost unanimous that Chino-Cameroon relations have grown from focusing mainly on infrastructure and symbolism to one that has seen deep cooperation on matters of defense and international politics. Given the international scrutiny that Cameroon continuously faces from the West regarding its domestic human rights abuses, it is likely that defense and political ties between Beijing and Yaoundé will continue to deepen in the coming years. The current trajectory will likely continue with the loans. The problem is that the current generation of octogenarian leaders are unlikely going to be in power to face the debt crunch when it comes, especially given that some of the debts such as the 75billion FCFA for the Biya laptops generate no income to pay back.
Saddled with such long-term debts, the real motives of the “generous” loans would be seen when no further restructuring is made. No country, no matter how indebted, becomes bankrupt, but being ensnarled in a debt trap compromises economic sovereignty.
That is why the AfDB alert is relevant.