The false narrative that China’s lending practices to developing countries risks plunging them into a “debt trap” is a calculated move to stifle their economic progress, a Kenyan expert said on Wednesday.
Bernard Ayieko, a Nairobi-based economist, said in a commentary published by the Standard newspaper that loans advanced to developing countries by China have facilitated infrastructure modernization as opposed to worsening their debt burden.
“The ‘debt colonialism’ fallacy has been backed by claims that China is leveraging massive loans it holds over small countries globally to snatch assets and increase its footprint, either as a superpower or superpower-to-be,” said Ayieko.
“These loans have largely been used to build infrastructure in transport, communication, manufacturing and energy sectors,” he added.
Ayieko hailed China-proposed Belt and Road Initiative (BRI) noting that it has advanced development of capital intensive infrastructure projects while elevating Beijing’s diplomatic clout globally.
According to Ayieko, implementation of the Belt and Road projects that involve huge financial lending to low income countries, has won accolades while reaffirming China’s commitment to the global development agenda.
The economist said that critics of the Belt and Road Initiative have failed to recognize Beijing’s lending practices that are sensitive to local economic conditions.
“What critics of BRI have failed to understand is that China offers some of the best loan terms-including ample grace period and flexible repayment plans,” said Ayieko.
He singled out Africa where Chinese loans are a small part of total external debts in the continent.
Ayieko justified Chinese lending to African countries while citing the 2018 African Economic Outlook report published by the African Development Bank which indicated that the continent requires massive capital injection to develop its infrastructure and achieve 4.1 percent GDP growth in 2019.
“This is one of the compelling reasons Africa needs Chinese funding for its economic prosperity,” said Ayieko, adding that Chinese loans have facilitated technology and skills transfer to developing countries. Enditem