African media buzzed with reports this week that China plans to take over Zambia’s national power company, ZESCO, and has already taken control of national broadcaster ZNBC.
In essence, Beijing is repossessing chunks of the Zambian state because it cannot repay the gigantic loans it took out from China.
The takeovers were described in a report by Africa Confidential, which warned Zambians would be alarmed to discover just how far their country has gone into debt with China:
Zambia is a good example of what the International Monetary Fund and the United States Senate are calling a crisis of accelerating developing-country indebtedness to China
A major worry of the IMF and U.S. 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.
The comments about the United States and International Monetary Fund (IMF) refer to warnings issued by the U.S. Treasury and State Departments that the IMF should not provide financial assistance to countries that took loans from China as part of its Belt and Road infrastructure program, criticized as a “debt colonialism” or “debt-trap diplomacy” scheme in which China takes control of Third World countries by inducing them to take out loans they cannot repay.
American warnings along these lines have been given most urgently with respect to Pakistan, which is already $5 billion in the red to China and looking for another billion in loans while simultaneously anticipating IMF support to stabilize its currency. The IMF has been criticized for giving a billion-dollar loan to Sri Lanka after that country went so far in debt to China that it was forced to give China control of a strategic port.
Another rumor holds that China plans to take control of Zambia’s Kenneth Kaunda International Airport, a story the Zambian government strongly disputed on Monday. Government officials have generally denied everything Africa Confidential reports about China’s intentions.
It is more difficult for the Zambian government to deny it faces a profound economic crisis, although ministers are giving it their best shot.
“The economy is going at four percent. But that is not to say there is no economic problem. There are economic problems, but you can’t call them a crisis,” said presidential spokesman Amos Chanda on Tuesday.
Chanda also disputed reports of Chinese companies preparing to take control of Zambian national assets. “There is no single Chinese company taking over,” he insisted.
Voice of America News dug into the ZNBC story and found the situation “complicated,” but in essence, ZNBC is involved in a joint venture with a Chinese firm that owns a 60 percent majority of the project. Whether the Chinese company has taken operational or financial control of ZNBC itself is less clear, although knowledgeable observers pointed out to VOA that very little government transparency exists in Zambia, and it’s quite plausible that public assets could be sold off to China while ministers insisted no such plans were in progress.