Why China loans have no impact on economy

China’s opaque contracts, rapacious loan agreements and sheer disregard for native labor laws reached a crescendo in 2005 when an explosion in a Chinese explosive plant killed 51 Zambian workers.

This accident happened due to direct negligence of basic safety precautions required by the Zambian labor laws.

Interestingly, it happened a few months after the anti-Chinese populist Michael Sata had been elected to power. China had earlier vowed to renounce trade with Zambia, should Sata be elected.

How they quickly reneged on their own vow is another story. They were quick to offer ‘cheap loans’ while keenly eyeing the rich Zambia’s copper deposits.

Here in Kenya, there is a resurgence of Chinese economic influence with unrestricted loans for road and infrastructure development, with China holding more than 70% of Kenya’s public debt.

It is suspect, how the Chinese are dishing out loans without a clear, repayment plan mechanism, considering that Kenya is borrowing to offset other loans as well as finance infrastructures that have to be maintained by tax-payer’s money.

Zimbabwe’s case should be a reminder. After defaulting payment on the unrestricted loans, China did not blacklist them, instead they demanded to be exempted totally from local labor laws, and ended up acquiring huge chunk of mineral rights to repay the loan.

Last year, Sri Lanka had to hand over its port to Chinese companies, for a defaulted 1$ billion dollars’ loan. Pakistani has now turned down Chinese infrastructure laws, in favor of other sources.

China has been accused by Western countries of encouraging dependency through corrupt deals which denies Africans self-sustaining growth. They do not follow other International lenders guidelines.

They finance projects which are constructed by their own firms, with their own workers. Africans only get the low-end jobs, which are marred with unfavorable working conditions.

Experts have warned that servicing of the loans depend on actual economic performance. Which means the infrastructure and projects have to spur new business, and generate income.

The biggest infrastructure beneficiary of these loans, SGR has yet to register a single profit, and it is upon tax-payers to pay dearly to offset the huge debt.