Concern around China’s R370 billion ‘gift’ to South Africa’s President Cyril

South Africa's president Cyril ramaphosa
South Africa’s President Cyril ramaphosa

South African President Cyril Ramaphosa has managed to secure yet another multi-billion rand investment from China.

But opposition parties, economic analysts and members of the public are concerned that Ramaphosa may be over-indebting South Africa for short-term gains.

Ramaphosa gets China to help SA out of recession

Recent reports indicate that Ramaphosa, while on a state visit to China as part of an African trade conference, managed to secure a R370 billion loan from president Xi Jinping. The timing of this ‘gift’ has come under the spotlight; at the time, it was announced that South Africa’s economy had entered into a technical recession, the first of its kind since 2009.

President Ramaphosa has since teased at releasing an economic stimulus package, aimed at revitalising the South African economy and weathering the recession’s storm.

On the surface, this is good news. China’s R370 billion has been earmarked for use in these stimulus packages. South Africa could definitely do with the extra dough right now, but is the long-term cost of this ‘gift’ unaffordable?

The payback

The Democratic Alliance (DA) seems to think so. Speaking to Sowetan Live, the party’s shadow deputy minister of finance Alf Lees, said that China’s wholesale investment in South Africa needs to be regulated and transparent.

The worry, Lees says, is that these loans, which are made behind closed doors, have terms and conditions which may be detrimental to the country’s sovereignty in years to come.

Lees argued that China’s ‘debt-trap diplomacy’ is well documented; that once a country inevitably defaults on its repayment, China moves in to take ports, industries, resources and infrastructure as collateral.

Lees confirmed that the DA would submit parliamentary questions to the Presidency, as well as Finance Minister Nhlanhla Nene, on details relating to this R370 billion ‘gift’. Lees said:

“It would be naive in the extreme to think that this ‘gift’ from the Chinese comes with no strings attached. The Chinese have a history of getting more than their pound of flesh is worth out of African and other countries that they make funds available to.

Once it cannot pay China what is due‚ the debt-ridden country is forced to give up assets and sovereignty that were included as the terms and conditions got more and more strenuous.”