Zambia’s power company’s ZESCO is set to be among the first casualties of China’s takeover after default on loan repayment, a report indicates.
The report by Africa Confidential, titled Bills, Bonds and even Bigger Debts claims that Zambia is in talks with China over a possible takeover of the electricity company. The report also says that the national broadcaster ZNBC is already owned and run by China.
“A major worry of the IMF and US is that China’s BRI strategy is first to encourage indebtedness, and then to take over strategic national assets when debtors default on repayments. The state electricity company ZESCO is already in talks about a takeover by a Chinese company, AC has learned. The state- owned TV and radio news channel ZNBC is already Chinese-owned. The long-term outcome could be effective Chinese ownership of the commanding heights of the economy and potentially the biggest loss of national sovereignty since independence.”
More about this
Zambia is one of the African nations that was in China earlier this week for the China-Africa summit and President Edgar Lungu is reported to have gone back home after visiting a number of Chinese companies and after receiving a grant of $30m for the Lusaka East Multi-facility Economic Zone electrification project.
The Africa Confidential report also indicates that a number of projects in Zambia are financed by China even though the amount of debt has been piling over the years.
“Since President Edgar Lungu came to power, Zambia has signed off on at least US$8 billion in Chinese project finance. Over $5 bn. of this has not been added to the total because Zambia insists the money has not been disbursed, and more large loans are in the pipeline. Yet the finance ministry does not have the capacity, insiders say, to police, let alone stem, all the spending. In some cases, the financial penalties for halting disbursement on projects would outweigh the savings. Donor governments have offered technical assistance to bring the project debt mountain under control but have been rebuffed.”
However, Zambia’s minister of energy, Mathews Nkhuwa, has come out to rubbish the report, stating that such a sale would not go through because it must be vetted by the cabinet. He further added that the company is a national asset with a massive valuation and cannot be sold.
“There is no such decision by Cabinet. As you know ZESCO is such a huge company and anything to do with it will have to be decided by Cabinet and I can confirm to you that there has not been anything decided on the future of ZESCO,” Mr Nkhuwa said.
China has been considered a good partner by many African governments, however, concerns have been on the rise in regards to increasing debt and treatment of Africans by the Chinese. In Kenya, revelations of racism at the China-funded standard gauge railway not only shocked many but also uncovered a series issues that African governments need to address.
Western countries have also raised concerns over Africa’s debt to China, but it has not stopped them from presenting their own loans and projects to the countries if the recent visits by western leaders are anything to go by.