Cheap loans to Africa could do more harm than good, says church agency

By staff writers
February 9, 2007

UK-based international development and advocacy agency Christian Aid is backing British international development secretary Hilary Benn’s criticism of the new Chinese loans policy to Africa.

Mr Benn has warned that China’s offer of cheap loans to African governments risks driving back into debt countries that have only just benefited from debt relief.

Christian Aid Africa policy manager Babatunde Olugboji said Zimbabwe was a case in point. “As the country’s economy deteriorates under the autocratic rule of Robert Mugabe, campaigners look forward to the day when this potentially rich southern African country embraces democracy and the rule of law,” he commented.

The UK government development secretary’s warning came as Chinese president Hu Jintao completed a 12-day tour of African countries in which he handed out hundreds of millions of dollars in investment, loans and aid.

Beijing promised the equivalent of £2.6 billion in soft loans and grants to African states in the coming years as China seeks to increase its trade and overall economic relations with the continent.

Mr Benn said that the Chinese money could do more harm than good. "If countries are borrowing to the extent that their debt becomes unsustainable then that undermines all the work that has been done in trying to tackle unsustainable debt. The issue for debt is not debt per se, it's can you afford it?" he declared.

He continued: "The other issue is governance because in the end China, with all its increasing stake in Africa, has just the same interest as the rest of the world - and the people of Africa - have in good governance. We need to talk more to China about how we can work together because we both have the same interests, which are the development of Africa as a continent."

Added Mr Olugboji: “When that day comes, Christian Aid believes the citizens of the new Zimbabwe should not be crushed by debt repayments invoked by Mugabe to prop up his regime.”

Christian Aid says it also agrees with Mr Benn when, in the same interview, he criticised the World Bank for tying financial support to African countries to ideologically driven economic policies such as privatisation.

Mr Olugboji commented: “In many of these countries, elected legislators and independent monitoring bodies have no say in the amount of money being borrowed, the terms of the loans, or the purposes for which they are being sought.”

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