Business
Western debt crises may tempt Africa to backslide
“We do not rejoice at the debt crisis hitting Europe and the United States, you can never rejoice at the woes of a partner,” Information Minister Lambert Mende said.
“But I note that we were right to diversify our partners,” he told reporters.
Others are less sure, noting the impressive headline figures of China’s funding deals in Africa often mask more modest agreements and that any actual borrowing comes at the cost of sharing project proceeds with Chinese firms.
While full details have not been released, Chinese firms are to share the profits and operation of mine and infrastructure projects financed by a $5 billion loan by China’s Eximbank.
A $13 billion pact signed between China and Ghana last September later emerged as the theoretical limit of a credit line allowing Accra could draw funds for specific projects. As of April it had drawn less than $3 billion for roadbuilding.
“The Western debt crisis will reinforce South-South engagement,” said Razia Khan of Standard Chartered. “But there isn’t going to be any free money in this capital-scarce world.”
Source: Reuters
