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Loans from China are no Faustian bargain, says President Cyril Ramaphosa

Aug 23 2018 07:58
Khulekani Magubane

President Cyril Ramaphosa insisted that South Africa did not make a Faustian bargain with China when it secured loans from the fellow-BRICS nation for state owned companies Eskom and Transnet.

Ramaphosa said this following supplementary questions in the National Assembly on Wednesday afternoon. The also come in the context of growing ties between South Africa and the other countries in BRICS; namely Brazil, Russia, India and China.

The parliamentary question that got the conversation going came from African National Congress MP Amos Mahlalela, who asked how BRICS could protect SA’s interests in the midst of what is threatening to become a fully-fledged trade war between China and the United States of America.

Government announced that Eskom secured a $2.5bn (over R33bn) loan during the recent BRICS summit in Johannesburg from the China Development Bank. Transnet also got R4bn from the Industrial and Commercial Bank of China.

Critics have urged government to be transparent about the terms of the loans, as many are wary of China’s track record of supporting smaller and less wealthy nations, often at a steep price. Ikatha Freedom Party MP Mkhuleko Hlengwa said these loans were not a simple case of goodwill.

“He who pays the piper calls the tune. Chine will invest R14bn, given Eskom money. These are not blank cheques. What are we doing to insulate and protect South Africa from the expanding influence of China?” Hlengwa asked in a supplementary question.

Ramaphosa responded by saying in its dealings with SA, China had not displayed any “imperialist tendencies”. He said South Africa was are wide awake could see an imperialist coming from far away.

“I am not as cynical or as skeptical as you. But we always act to promote South Africa’s interest first and foremost. When we meet and negotiate, it is for nothing else, but protecting our own interests. We speak to China we cross the t’s and dot the i’s,” said Ramapohosa.

Congress of the People MP Diedre Carter insisted that if South Africa was not careful about its ties with China, it could suffer consequences such as local industries being destroyed by an influx of cheap imports.

“We have a trade surplus with the US, but where it comes to China our trade deficit has become progressively worse. We warned that our cotton industry would be destroyed by cheap imports. What will government do to protect local industry from cheap imports?” asked Carter.

Ramaphosa said China was just as concerned about the trade deficit South Africa had with China and that Chinese President Xi Jinping was willing to look into products that China could buy from South Africa.

“China has asked what it is they can buy from us to ease the deficit. This will also be discussed when we go to China in a few days’ time. We want a regime with balance and where it gets out of balance we seek a win-win situation,” Ramaphosa said.

Democratic Alliance leader Mmusi Maimane said the fact that Eskom and Transnet have secured loans from China meant South Africa could ill-afford not to be vigilant. He likens China to loan sharks and asked Ramaphosa what the terms and conditions of the loans were.

Ramaphosa pushed back against the pressure to reveal the terms and conditions. However he maintained that the loans were negotiated and secured in South Africa’s best interest.

“If I gave you the conditions of every loan the entities get from the World Bank or DBSA (Development Bank of SA), we would never stop interrogating every little loan. Nothing is being done under a veil of secrecy. The fact that we announce the loans shows that we are as transparent as you can get,” he said.

In his response to Mahlalela’s initial question, Ramaphosa said BRICS countries were global voice on rules-based trade environment and countries and that development must be integral to ensuring that developing countries be allowed to continue benefiting from global trade.

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