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Johannesburg - South Africans should insist on the publication of the terms of the loans granted to Eskom and Transnet this week by Chinese state banks, according to Mills Soko.
Soko, associate professor of International Political Economy at the UCT Graduate School of Business, admits he is a fan of the Asian superpower but criticised its lack of transparency.
Ahead of the 10th annual Brics summit this week, cash-strapped power utility Eskom signed a commercial loan agreement for R33bn with the China Development Bank, while Transnet received R4bn from the Industrial and Commercial Bank of China.
Both loans are guaranteed by the state but interest rates and the requirements attached to the debt have not been disclosed.
Transnet’s communication unit said in response to a query that no conditions were attached to the loan which is intended to assist the state-owned company with its liquidity in the near term. The period of repayment is five and a half years.
The loan granted to Eskom will go towards the completion of Kusile and Medupi power stations and the power utility will have 15 years to repay the debt.
“There is no secrecy about it, the only thing we had said that we were not in a position to disclose is the interest charge on the debt and this is purely for commercial reasons,” Eskom spokesperson Khulu Phasiwe said in a WhatsApp message to Fin24.
China not in the business of charity
Soko, who praised China in a post on his Facebook page, said that the world’s second largest economy is “not in the business of charity”.
“They know what they want from Africa, African countries need money… the thing they don’t do well is to manage their relationship with China.”
“China has fundamental interests in Africa, including securing and locking in African natural resources, providing capital to African countries, accessing African markets for Chinese exports, cancelling African debt in exchange for Africa's diplomatic support of China in international councils etc,” Soko said.
He foresees conditions attached to Chinese financial support becoming increasingly political, pointing to the toppling of Zimbabwean President Robert Mugabe in November 2017 as an example.
A visit by Zimbabwe’s military chief, General Constantino Chiwenga, a week before a military intervention to remove the Zimbabwean statesman fuelled suspicions that China may have given the action its blessing.
“China a boon for Africa”
Soko said the while the world’s wealthiest nations in the G-7 bloc have previously pledged to give money to African countries only to renege on their promises, China has followed through on its commitments.
He added that China is a “boon for Africa" but African countries don't have clear strategies on how they want manage the engagements.
“China is in Africa for the long haul and Africa represents a great opportunity for China to test its 'soft power' idea.” Soko said
According to Soko, China overtook the US as Africa's largest trade partner in 2009 but the continent constitutes a very small percentage of China's global trade. Its two most important trading partners are the US and the European Union.
