Congo's China hiccup
Font size:
ap of Democratic Republic of Congo
Democratic Republic of Congo finds itself in a piquant situation with Chinese aid. In fact, Congo is not alone. Several other African countries, which have welcomed Chinese investment with open arms, are on horns of a dilemma these days.
Congo signed an agreement with China in 2008. Under it, Beijing agreed to pump in huge investments to tap the vast natural resources of the country. Now, as it readies for a US dollar 10 billion debt relief from IMF, the investment accord has become a liability of sorts.
In a communication last week, the IMF held that the accord would add to Congo’s national debt. ‘Because the government had stood as guarantor of the full amount, it would be held responsible in case China did not fulfill its contractual obligations’.
An IMF representative further indicated that Congo would not be able to avail a debt relief worth US $ 10 billion and a further financial support of US $ 500 million unless the accord with China is suitably amended to make it fully responsible for implementation of the agreement.
China maintains that the accord is proceeding well and has refused to consider any amendments to meet the IMF objections.
To overcome the hiccup, Congo has now decided to put a part of the US $ 9 billion agreement on hold to resolve the IMF objections. An amount of US $ 3 billion meant for infrastructure investment would be put on “back burner” to satisfy objections raised by the IMF.
The Congo experience is symptomatic of what is being seen in country after country in Africa which have welcomed Chinese investments. These African countries are also apprehensive of exploitation of the continent’s natural resources, a reminder of past centuries of colonial subjugation.
China, for instance, has acquired mining rights in Congo to exploit rich minerals like Uranium, Cobalt and Gold.
It is building roads, air ports and other infrastructure to facilitate transportation of these minerals to China.
There are already signs of serious disgruntlement against the concessions granted to the Chinese and their misuse.
What is adding to the disquiet of African government is the poor quality Chinese products including shoes, ready-made garments, cosmetics, crockery and food items, which are flooding the local markets.
Most of these Chinese products enjoying tax exemption and are therefore a tad cheaper than local products.
This has created heart burning to the indigenous industry.
Nigeria last year suspended a controversial US$ 8.3 billion contract (awarded in 2006) to China Civil Engineering Construction Corporation (CCECC) to upgrade its railway system.
The decision was a sequel to slow pace of work which led to cost escalation.
The Chinese contractor had also overshot the deadline.
Congo signed an agreement with China in 2008. Under it, Beijing agreed to pump in huge investments to tap the vast natural resources of the country. Now, as it readies for a US dollar 10 billion debt relief from IMF, the investment accord has become a liability of sorts.
In a communication last week, the IMF held that the accord would add to Congo’s national debt. ‘Because the government had stood as guarantor of the full amount, it would be held responsible in case China did not fulfill its contractual obligations’.An IMF representative further indicated that Congo would not be able to avail a debt relief worth US $ 10 billion and a further financial support of US $ 500 million unless the accord with China is suitably amended to make it fully responsible for implementation of the agreement.
China maintains that the accord is proceeding well and has refused to consider any amendments to meet the IMF objections.
To overcome the hiccup, Congo has now decided to put a part of the US $ 9 billion agreement on hold to resolve the IMF objections. An amount of US $ 3 billion meant for infrastructure investment would be put on “back burner” to satisfy objections raised by the IMF.
The Congo experience is symptomatic of what is being seen in country after country in Africa which have welcomed Chinese investments. These African countries are also apprehensive of exploitation of the continent’s natural resources, a reminder of past centuries of colonial subjugation.
China, for instance, has acquired mining rights in Congo to exploit rich minerals like Uranium, Cobalt and Gold.
It is building roads, air ports and other infrastructure to facilitate transportation of these minerals to China.
There are already signs of serious disgruntlement against the concessions granted to the Chinese and their misuse. What is adding to the disquiet of African government is the poor quality Chinese products including shoes, ready-made garments, cosmetics, crockery and food items, which are flooding the local markets.
Most of these Chinese products enjoying tax exemption and are therefore a tad cheaper than local products.
This has created heart burning to the indigenous industry.
Nigeria last year suspended a controversial US$ 8.3 billion contract (awarded in 2006) to China Civil Engineering Construction Corporation (CCECC) to upgrade its railway system. The decision was a sequel to slow pace of work which led to cost escalation.
The Chinese contractor had also overshot the deadline.
Add to:
del.icio.us |
Digg
del.icio.us |
Digg
Email to a friend
Print version
Plain textRate this article
Comments (0 posted):
Post your comment