Culled From Google News
Reply with quote #1
One month after attending the China-Africa Cooperation (FOCAC) in Beijing, Sierra Leone’s president wants the country to turn its back on a piece of China’s largesse.
President Julius Maada Bio, who
took office in April, has cancelled a loan deal signed by his predecessor for China to build a new $400 million international airport at Mamamah. The government now says the project is “uneconomical” given its only existing international airport is “ grossly under-utilized.” The new airport was supposed to be completed by 2022.
Sierra Leone’s aviation minister says the country’s sole international airport will be renovated instead. The government is also considering building a bridge to connect Freetown, its capital city, to Lungi, the town where its only international airport is located. Travelers currently have to travel by boat from Freetown to Lungi.
GOVERNMENT OF SIERRA LEONOE
Rendering of proposed Mamamah airport in Sierra Leone
Sierra Leone’s decision to cancel the project tails earlier warnings by the World Bank that the airport loan would increase its debt burden. It also comes at a time when China’s so called “debt-trap diplomacy” in Africa is increasingly under scrutiny. In March, Rex Tillerson, former US secretary of state,
criticized China’s economic model in Africa saying it “endangers Africa’s natural resources and its long-term economic political stability.”
It’s a sentiment China has been keen to rail against. During the FOCAC summit last month—while pledging an additional $60 billion funding to African nations—president Xi Jinping claimed China’s
“win-win” co-operation policy with Africa ”follows the principle of giving more and taking less, giving before taking and giving without asking for return.”
But platitudes aside, data shows China’s millions might leave some African nations in the red. For instance, China accounts for
over 21%of Kenya’s external debt after increased borrowing and Zambia’s government has been forced to deny reports China could take over its national electricity company if it defaults on its mounting loans.
Sierra Leone is
one of the world’s poorest countries and was ranked 184 out of 189 countries in the 2017 Human Development Index. It has been trying to stabilize its beleaguered economy over the last decade after coming out of a civil war and combatting with a deadly Ebola epidemic in 2014.
News of the plan to cancel the Chinese airport loan comes a few days after a team from the International Monetary Fund wrapped up a three-week long mission to the country. The IMF said the country’s economic environment remains challenging, with output growth expected to be under 4 % amid high inflation as it’s still recovering from a recent loss in iron ore mining and reduced activity in the non-mining sectors. The fund also welcomed the country’s attempts to stabilize its public debt and improve economic management.
Reply with quote #2
Cancelling the $300,000,000 Mammamah airport deal is only a short term financial reprieve for Sierra Leone. The bottom line Sierra Leone, has to improve the airport facility and access to Freetown.
They can earn $billion annually from tourism , if they build the infrastructure. The Chinese government know Sierra Leone and the other African countries are never going to pay back these loans. The loans are written off. The funds are going to Chinese companies and workers to keep them happy. The main aim of the Chinese is to keep the Western nations ,Russians and Indians jittery so it can drive a hard bargain during trade discussion. $300 million is nothing for China. You can see this by the number of Leaders that have visited Africa recently. Hope the government does not plan of building a bridge to Lungi. It will create more financial difficulties.
Reply with quote #3
@Kamara you wrote “The Chinese government know Sierra Leone and the other African countries are never going to pay back these loans. The loans are written off. “ Do you have examples where the Chinese have written of loans? I hear the opposite is the case. They will sieze assets, land, and so on as these are considered collateral in agreements signed. Check out what’s happening in Zambia.
Reply with quote #4
In lending world when all attempts to collect a loan has been unsuccessful , the loan gets written if there is no equitable collateral of value. In Zambia , there may be valuable copper reserves and assets.
I cannot tell you which Chinese loans have been written off reclassified as grants. I am sure loans have been written off. I am sure the information is available with the Chinese government which is not accommodating to the free press. That will be a good statistic to obtain. The default rate of African countries on Chinese loans. We hear about the inability pay loans from Western nation and financial institutions
Reply with quote #5
The Chinese hardly write their loans off. Besides, writing off a loan negatively impacts the debtor country's credit. As Spectator has suggested, assets are seized if the debtor nation defaults on its loan to China. Reliable sources intimate that China has already taken over the Zambian National Broadcasting Corporation (ZNBC) and a port in Sri Lanka. Thus, canceling the Mamamah airport contract was the right thing to do. Burying Sierra Leone in debt for the sake of a new airport makes no sense. Fact is, there are less than 100,000 visitors to Sierra Leone yearly. So why do we need a new airport. Let the government renovate and rehabilitate Lungi airport, and replace the old port authority ferries with new ones. We also do need a bridge that we cannot maintain.
Reply with quote #6
No lender wants to have to write off loans. They will try their utmost to collect every penny they lend out. Yes they will try to seize every asset available as in the case in Zambia that you stated. If the borrower has no valuable asset or collateral available , borrowers may resort to write off loans.They can't draw blood from a stone. All you have to is to check google and it will show that China has written off $2billion in s loans to African countries in the past 15 Year. The Zambian government through its spokesperson, Dora Siliya has denied media report that China has taken the nations public assets due to debt. China only implemented bankruptcy law in the country in 2007. Canceling the Mammah airport is fine for the short term. The nation is going to have to invest massively in its airport , transportation system,communications and and hotels in the future if it wants to benefit from the lucrative tourist market. The nation can earn $ billion a year. Look at the tourist havens in Bahamas, Dominican Republic, Jamaica, Thailand. They invested heavily infrastructure and benefiting immensely. Even Gambia developed its airport and the road system to the hotels. The bottom line is the current government's decision process is a great improvement from APC so far.
Reply with quote #7
I support the decision to cancel the new airport, at least for now. We just cannot afford it at the moment given that state of the economy and the many competing priorities. The question is when we can afford it, what are the best options. I see a few possibilities:
1. Redevelop Lungi airport and build a bridge - the problem with this is that the shortest possible bridge would have to be around 5K long. This would have to be built as 5 or more suspension bridge spans and would cost an astronomical amount of money. Enough in fact to make this option economically unviable 2. Redevelop Lungi airport and build a tunnel - I'm no expert but I'm given to understand that a tunnel becomes cheaper than a bridge once you go past the 3K mark. However tunnels are still very, very expensive making this option another non viable one 3. Redevelop Lungi airport and invite international transportation companies to bid to provide ferry services or do a public private partnership. Whatever we do, we should not hand money over to someone to go and buy ferries, we've been there before. This option makes the most economic sense especially in the short term but does not have much of a long term economic dividend 4. Build the new airport at Mamama and build a new capital City around it. This was the APC plan. The problem was instead of inviting the private sector to lead this project and assume the economic risks associated with it, they did what we always seem to do, try to have the government do it by taking out more debt. Bad, bad, bad. In addition, they had not costed out what it would take to build this new City. The Chinese loan, as far ass I can tell, only covered the airport so another unplanned poorly laid out city would have sprung up around the new airport. 5. Redevelop Lungi airport and build a new Capital City around it. This would be a politically challenging option as this would place the new airport in the heartland of APC, something that SLPP may not want to countenance. Economically though it does make sense. The money that would have been spent on the new airport can instead be spent putting in the infrastructure for a new City. For $500M you could layout the roads and put in electricity, water and, sewage and fibreoptics into a 10K square area and then auction parcels of land to the highest bidder. The scheme would practically pay for itself I'm sure there are other options I haven't thought about.
Reply with quote #8
I am with your third option. I wonder why this option is not given some serious thought. The Staten Island ferry system in New York City has been operating successfully since 1817. Please read the following: ad the following:
The Staten Island Ferry is one of the last remaining vestiges of an entire ferry system in New York City that transported people between Manhattan and its future boroughs long before any bridges were built. In Staten Island, the northern shores were spiked in piers, competing ferry operators braved the busy waters of New York harbor. Today the Staten Island Ferry provides 22 million people a year (70,000 passengers a day not including weekend days) with ferry service between St. George on Staten Island and Whitehall Street in lower Manhattan. The ferry is the only non-vehicular mode of transportation between Staten Island and Manhattan. NYC DOT operates and maintains the nine-vessel fleet as well as the St. George Ferry Terminal on Staten Island, Whitehall Ferry Terminal in Manhattan, the City Island and Hart Island Facilities, The Battery Maritime Building and all floating dock building equipment. The Staten Island Ferry is run by the City of New York for one pragmatic reason: To transport Staten Islanders to and from Manhattan. Yet, the 5-mile, 25-minute ride also provides a majestic view of New York Harbor and a no-hassle, even romantic, boat ride, for free! One guide book calls it "One of the world's greatest (and shortest) water voyages." From the deck of the ferry you will have a perfect view of The Statue of Liberty and Ellis Island. You'll see the skyscrapers and bridges of Lower Manhattan receding as you pull away and coming into focus again as you return. A typical weekday schedule involves the use of four boats to transport approximately 70,000 passengers daily (117 daily trips). During the day, between rush hours, boats are regularly fueled, and maintenance work is performed. Terminals are cleaned around the clock and routine terminal maintenance is performed on the day shift. On weekends, three boats are used (96 trips each Saturday and 96 trips each Sunday). About 40,404 trips are made annually.
Reply with quote #9
I’m also in support of DMK’s third option.
Bridge or airport projects make little economic sense right now.