East African countries are now spending almost eight per cent of their revenues to service $29.42 billion loans borrowed in the past 10 years.
They borrowed the money largely from China to grow their transport, communication, manufacturing and energy sectors.
Analysts say the loans are becoming a burden, especially given that their impact is yet to be seen on the growth.
The latest data from the China-Africa Research Initiative (Cari) at John Hopkins University shows that Ethiopia owes Beijing $13.73 billion, followed by Kenya at $9.8 billion. Uganda owes $2.96 billion and Tanzania $2.34 billion.
Rwanda, South Sudan and Burundi owe China the least amounts — $289 million, $182 million and $99 million respectively.
Cari director Deborah Brautigam said that the risk for the African borrowers relates to the projects’ profitability.
“It is always important to look at whether these projects will generate enough economic activity to repay these loans, as opposed to being seen as merely ribbon-cutting opportunities,” Ms Brautigam said.
The bulk of the monies, according to research by The EastAfrican, went into the transport sector, followed by power, communications and manufacturing.
Ethiopia’s biggest intake of the Beijing loans was in 2013, coinciding with the launch of its joint standard gauge railway project with Djibouti.
Addis took up more than $6.62 billion from Beijing for its mega projects, which also included the setting up of manufacturing zones.
The data also shows Kenya’s new railways line accounted for the highest debt intake from Beijing at $3.7 billion in 2014.
China Exim Bank has been the go-to financier for the region’s governments, giving out more than $16.3 billion.
The China Development Bank advanced East African economies more than $6.9 billion, while other Chinese lenders are currently owed $6.1 billion, data shows.
In terms of sector funding, Ethiopia invested the bulk of its funds in the transport sector ($4.37 billion), which was used for both the Addis Ababa light railway project and the Addis-Djibouti 700km railway.
This was followed by communications at $3.16 billion and power projects at $2.54 billion.
Its manufacturing sector, which supports its fledging special industrial zones, including the Eastern Industry Zone and Huajian International Shoe City, received $2.02 billion.
“China gave priority to infrastructure and has promoted Africa’s sustainable development through these loans, which have been used for infrastructure construction, energy and the manufacturing industry,” said Liu Qinghai, a visiting researcher at Cari and head of the Centre for African Economic Studies at the Institute of African Studies at Zhejiang Normal University.
Kenya’s transport sector took in $5.55 billion, largely driven by the new railway line from Mombasa to Naivasha.
Nairobi also took a $597 million loan for its power projects, including the $135 million for the 55 MW solar power plant in Garissa funded by the China Exim Bank.
South Sudan has received $158 million for its transport sector to date, and a further $24 million for its energy projects.
Tanzania’s energy sector remains the top financed sector funded by Chinese money, at $1.16 billion.
Dar es Salaam, which has not taken up any Chinese debt under President John Magufuli, has received $552 million for its communications sector.
Uganda, on the other hand, has seen its energy sector receive the highest funding from Beijing, at $1.92 billion, while its transport sector has absorbed $762 million.
Rwanda’s China debt for transport amounts to $151 million.
But the region’s countries seem to have slowed down bingeing on Chinese debt, with only Kenya and Ethiopia going to Beijing for loans.
Ethiopia borrowed $652 million last year, down from $926 million in 2016, while Kenya took $64 million, down from $1.09 billion in 2016.
In 2016, Kigali took $70 million and Kampala $85 million.
Last month, Ethiopia became the first country to get its Chinese debt rolled over announcing that Beijing had agreed to restructure its $4 billion loan on the railway linking its capital Addis with neighbouring Djibouti.
Ethiopia’s Prime Minister Abiy Ahmed said that the country’s loans will now receive a further 20-year extension, which will see its annual repayments narrow to an affordable level.
“In conversations with our Chinese partners, we had the opportunity to enact limited restructuring of some of our loans.
“In particular, the loan for the Addis Ababa-Djibouti railway, which was meant to be paid over 10 years, has now been extended to 30 years. Its maturity period has also been extended,” Dr Abiy said.
Kenya also sought to get a grant as part of the package for its $3.8 billion loan for its continuing railway projects, as it seeks to manage its debt burden.
“The Naivasha-Kisumu phase of the SGR will cost $3.8 billion. And owing to its regional significance, I would request that 50 per cent of its cost be provided as part of grant financing,” President Uhuru Kenyatta said at the Forum on China-Africa Co-operation in Beijing in August. This request was not granted.
Tim Jones, an economist at the Jubilee Debt Campaign, said that the continent debt problem could worsen, especially given the opaque nature in which they are signed.
“Debt problems are worsening and many lenders bear responsibility, not just China. We need new rules to make all lenders publicly disclose loans to governments at the time they are given. We also need to see these lenders made to restructure and reduce debts,” Mr Jones said.
Last month, China’ s special envoy to Africa, Xu Jinghu, denied claims that Beijing was burdening Africa with debt, noting that China was Africa’s main creditor.
Indeed, data shows that the continent owes more to private lenders than to China.
“It is baseless to shift the blame onto China for these African countries debt problems. Their debt position has ‘been built over time even before we came in.
“We have to look at the fluctuations in the international economic situation vis-a-vis the price of minerals, their key exports. This is where the problem is, and not Chinese loans,” Mr Xu said.
Source: East African
Nigeria’s migration paradox
Nigeria’s middle-class is increasingly opting to emigrate, with mixed fortunes for the country. Murtala Muhammed Airport in Lagos is the nation’s busiest airport.Credit: Federal Airport Authority of Nigeria (FAAN)/Ventures Africa.
Although Nigeria’s economy is causing its professionals to literally think on their feet, their efforts are propping it
Ahmed had every reason to feel euphoric about Lagos, Nigeria’s bustling commercial centre, in 2014. He had landed his dream job heading the legal department at a multinational, a position that carried a plum salary with perks—and conferred a foothold in Nigeria’s professional elite. He promptly married his longtime girlfriend and nestled into, by most standards, a comfortable middle-class life.
Yet 5 years later, he chose to quit his job and country to start over in Alberta, Canada, nudged by a sense of foreboding. “No matter how much you earn, it won’t guarantee some things for you. In fact, the more you earn, the more you will become fearful,” said Ahmed (not his real name). After weighing his economic and security prospects (armed men burgled his home thrice last year despite living 3 houses from a police station and repeatedly reporting suspicious neighbourhood activity), he relocated with his young family in April. “Leaving Nigeria is the best decision I’ve ever made,” he said.
Ahmed’s story reflects a growing pessimism about the future within Africa’s largest workforce. One in three Nigerians has considered emigrating, estimates research network, Afrobarometer, citing lingering socio-economic frustration. They are increasingly flocking to Australia and Canada, attracted by skilled worker programmes, living standards and relatively migrant-friendly cultures. Canada’s Express Entry report in 2018 recorded a 900% surge in Nigerian migrants over 3 years. Nigerians currently account for more refugee protection claims in Canada than any nationality; and incidences of overstaying visas, from North America to Europe, are on the upswing.
It’s noteworthy that around 247 million people live outside their country of birth — 90% of whom are voluntary economic migrants. At least half of them moved from developing to developed countries, and a sizeable portion are educated to university level. Skills-based emigration is neither new, nor has it ever been chiefly a Nigerian — or African — preserve.
The talent flight could further erode a country already grappling with a human capital problem it shouldn’t have in the first place. As Africa’s most populous country and largest economy, Nigeria constitutes one-fifth of sub-Saharan Africa’s workers. The UN predicts it will become the world’s third most populous nation—surpassing the United States—by 2050. Its 85 million-strong labour force is distinctive for its youthfulness (74% is under 44 years) in an aging world, with towering rates of urbanisation and entrepreneurship.
Amid strong demographics, Nigeria captures approximately half of its human capital potential, lagging 6 and 16 percentage points behind the sub-Saharan African and global averages respectively. A mixture of shortfalls in education, employment and skill entails that the nation is not optimising its population dividend.
The government, now in its 2nd term, has had scant success in substantively rebooting a hamstrung economy compounded by seismic gaps in infrastructure and public services.Unemployment has risen through 15 straight quarters, percapita income is at a 4-year low and still falling; while inflation is in double-digits. Consequently, Nigeria now harbours most of the world’s extreme poor people, according to the World Poverty Clock.
But the country has always retained a flair for contradictions. If brain drain highlights Nigeria’s deficiencies, it also hints at its possibilities. PwC reckonsNigeria makes up a third of all migrant remittance flows to Sub-Saharan Africa, with last year’s figures up to 11 times greater than the country’s foreign direct investment proceeds in the same period. Inbound remittances for 2019 are projected to reach $25bn. And that’s from official channels alone. The African Development Bank thinks unofficial remittances.
are about 50% of the official total. That would peg total migrant remittance inflows at around $40bn — roughly 10% of Nigeria’s GDP and over 3 times its oil-generated revenue.
“[Nigeria’s] biggest export is not oil, our biggest export is Nigerians,” writes Dr. Andrew Nevin, Chief Economist at PwC Nigeria. “People with skills are saying their skills cannot be monetised here…but we cannot deny that the only thing holding up the economy is the incredible Nigerian diaspora.”
If the government does not enact reforms to stem the outflow, or tap into its diaspora capacity, Nigeria could ultimately concedea chunk of its most promising generation yet—and possibly their children— to this wave.
When was the last time you checked your EGO?
Ahmadou DIALLO – Storyteller and Coach
A couple of weeks ago, I was invited by the Airbus Leadership University team, Nelida Al Husseini and Paul Conway, to participate in their yearly event: “Partners’ days” in the Toulouse campus. It’s a two days yearly event where they invite all the partners (coaches, connectors, facilitators) to thank them for their support. They are helping add values to our journey as Airbus employees via coaching, trainings, workshops and team events.
It was a thrilling experience for me to be part of these two days and I could feel the positive energy in the room for those two days. What was even more exciting for me was the possibility to meet coaches that provided me with some trainings that were life changing for me.
One of those coaches was Olivier LASSERRE, who provided me with a training on how people can make the difference in project management. It was almost 10 years ago since I attended that training and as of today, I have a vivid memory of those 5 days we spent together.
Olivier introduced me to three books that will go to change my life:
- Nonviolent Communication: A Language of Life: Life-Changing Tools for Healthy by Relationships (Nonviolent Communication Guides) by Marshall B. Rosenberg
- Who Moved My Cheese?: An A-Mazing Way to Deal with Change in Your Work and in Your Life by Spencer Johnson
- How Full Is Your Bucket? from Tom Rath
I cannot tell you how often I was frustrated by people and how using nonviolent communication helped me, both in the professional and personal aspects of my life.
I embraced and welcomed change in my life after reading the book “Who moved my cheese?”. This is the first time I realised that ly comfort zone is my dead zone.
While reading the third book, “How Full Is your Bucket?”, I learned a lot about myself and how it was important to fill my bucket with positive energy. Talking about energy, one of the main sources of depletion of our energy is our EGO:
- E as Energie
- G as Go
- O as Out
I found that, by checking my EGO from time to time, I was able to protect my bucket from depleting. I found myself having more willpower because I let things go more quickly and I don’t lose my energy and my time trying to bend the universe beyond my sphere of influence.
So I would like to thank you Olivier LASSERRE for the impact that you had and you are still having in my life.
“The best athletes in the day, the Gretzkys, the Michael Jordans, they all had a coach. Still to this day, the best have coaches. Because the coach can see what you can’t see.” Tony Robbins
During those partners’ days, I was surprised to see Olivier again as part of the partners. He did not recognise me. I went to him to remind him about our encounter and how he has impacted my life. He has his own coaching firm: Vert Girafe. If you happen to look for a person that can help you see the unseen, go to Olivier and say to him that “Mad sends his regards!”. And thank you to Nelida and Paul from the Airbus Leadership university for giving me the opportunity to be part of the partners’ days.
When was the last time you did an EGO check?
How full is your bucket?
Who is your life coach, and why?
By: Ahmadou DIALLO
“It is only when we get kicked down that we see what we are made of. It is easy to be positive when everything is going well, but the heart of all great endeavours is the ability to stagger back to our feet and keep moving forward, however grim it gets”. ~ Bear Grylls
This is one of the most difficult and yet necessary skills to learn and master. Resilience is defined as “an ability to recover from or adjust easily to misfortune or change”. It is through moments of adversity that our resilience is tested and gets developed. Without adversity, there is not room for resilience. The great news is that we all have the innate ability to rise up from challenges;the question is how deep within are you digging to reach this strength to overcome the difficult times?
My resilience was put to the test during the long illness and ultimate passing of both my parents. This period lasted for exactly two years. It was the most difficult time for my family and I. There were moments where I felt that I was going to break but my siblings and I stuck together and fed each other with strength in those weak moments. During this time I had to tap to the higher power, in addition to the support from my siblings, relatives and friends. I had to see the light and silver lining amidst the dark cloud that was hanging on our lives.
I had to have the courage to carry on with life when the two people who had always been there for me, carried me, fed me, sacrificed for me, loved me, cared for me and would deny themselves so that I can have – could no longer physically do that for me and my siblings. I had to trust that I can be able to do all these things myself, without them. I had to cut all dependence from them and tap into my inner strength. I had to stand firmly on my feet and keep moving forward.
In hindsight, going through this hardship was necessary for me to do that which I was born to do. I had to endure the pain, to learn how to let go of the people that I mostly treasured and to also trust the process. The irony is that as I’m writing this, I’m going through another phase of adversity in my life; a different kind of adversity. I’m reminded of this past experience and only hope that this is yet another opportunity for elevation.
Resilient people are often admired by others. People would ask questions such as, how does she/he do it? How do they manage to keep on bouncing back? Well, I’m here to tell you that it can’t happen without going through the difficult, uncomfortable process and being stretched. It is their ability to endure the process that makes people resilient. They don’t let adversity define them nor define their destiny and they have scars to show their experiences.
They don’t allow the difficulties to paralyse them. Instead, they use it as an opportunity to re-evaluate themselves and seek growth opportunities.
How can you use your scars in a positive light? How can you turn those storms into rainbows? I believe that the storms happen for a reason. Don’t let those experiences go to waste. Don’t just survive adversity and go through it in vain but transform and triumph through it. Granted, the process is not easy and it is not fun at all. But the key to this transformation is persevering.
Having tenacity during the difficult time will bring meaning to the experience and in the process you will have a sense of accomplishment. You need to commit to making an effort and to take small steps, as long as you are moving forward.
Thato’s nuggets on building resilience:
- Actively remind yourself of the strength you have and continuouslyharness this inner strength
- See the effects of adversities as temporary rather than permanent
- Build the spirit of gratitude; every day, find things to be grateful for
- Always have positive thoughts and images of the future; let this push you to do more
- Completely get rid of the victim mentality!
“It is through adversity that our resilience is tested, that we get renewed, that we grow and that we get prepared for the next phase in our lives. Adversity is necessary and cannot be avoided”. ~Thato Dineo Belang
Speaker| Coach| Writer
Johannesburg, South Africa