Wednesday, December 19, 2018

CARI Revisits China, Djibouti, and the New York Times: How Much Debt?

We are reposting our analysis of Djibouti's debt to China, in view of the launch of the Trump administration's new Africa strategy last week.

Once again, the administration described Chinese lending as predatory: "the strategic use of debt to hold states in Africa captive to Beijing’s wishes and demands." No evidence was provided for this characterization of Chinese lending.

As with the administration's overblown estimates of Chinese lending in Djibouti (discussed below), we urge reporters to do their own reporting on China-Africa debt issues, and not to simply report the administration's "facts" at face value.

Our post from 2017 follows:

The New York Times had a front page article on China and Djibouti this past weekend: "U.S. Wary of its New Neighbor in Djibouti -- a Chinese Naval Base." Like many observers, the NYT seems to have been misled about the scale of Chinese engagement, and Chinese lending to Djibouti in particular. Here's what they said:
Beyond surveillance concerns, United States officials, citing the billions of dollars in Chinese loans to Djibouti’s heavily indebted government, wonder about the long-term durability of an alliance that has served Washington well in its global fight against Islamic extremism.
Here at the China Africa Research Initiative we specialize in tracking and confirming Chinese loans in Africa. We have not been contacted by the US government, and we wonder where they are getting their "data"? In this instance, we were able to interview top ranking officials in Djibouti's Ministry of Finance to confirm Chinese loan financing.

Signed Loans/Debts Owed by Djibouti to Chinese Government (past decade). All in US$

1. Goubet/Ghoubet Salt Port Expansion:                                    64 million
2. Addis-Djibouti Railway (Djibouti share):                             492 million
3. Djibouti-Ethiopia Water Pipeline:                                         322 million
4. Doraleh Container Terminal/Multipurpose
Port Expansion (the endpoint of the Ethiopia-Djibouti Railway)
and Damerjog Livestock Export Port:                                        405 million

TOTAL                                                                                      $1283 million, or $1.3 billion

We also have a confirmed report of $596 million in Chinese finance for two new airports, but this appears to be either a Chinese company suppliers' credit or a public-private partnership investment, not a Chinese government loan. However, even if we add this, the total comes to $1.9 billion. While several other projects--most prominently a toll road highway to the border--have been in the news, we confirmed that they are all still under discussion. Yes, $1.3 billion or even $1.9 billion is a large figure, but it seems inaccurate to call it "billions of dollars in Chinese loans".

Undue alarmism? Another case of "alternative facts"? More reason to support an increase of $58 billion in the US defense budget? From what we can see, China's main rival in Djibouti has not been the US, but Dubai Ports World, which had a number of public-private partnership (PPP) port contracts in Djibouti, and had also arranged financing to build and operate ports in this important gateway to land-locked Ethiopia, one of Africa's most populous and dynamic countries.

As always, if someone has better information, please comment here or contact us directly at SAIS-CARI at Johns Hopkins University.

Friday, December 14, 2018

CARI Update: "Angolan Ghost Town Wakes Up"

Kilamba: credit Voice of America
Time for an update? Over the holidays CARI will be re-posting some of the most-visited stories from our blog: China in Africa: The Real Story. Below is our April 2, 2014 "real story" about Angola's Chinese-built Kilamba Kiaxi, or Kilamba New City.

Kilamba is an enormous Chinese-financed satellite city that is, surprisingly still today being derided as an example of a Chinese-built "ghost city".  

Several excellent field research-based studies by the intrepid team of David Benazeraf and Ana Alves, as well as Chloé Buire, Anne Pitcher, and others have debunked this myth, providing ample evidence that Kilamba was slow to take off but can hardly be called empty.  By the time of her fieldwork in 2015, as Dr. Buire notes, there were 80,000 people living in the apartments of Kilamba, a mid-sized city had materialized on less than a thousand hectares. Today, it has become a popular spot for AirBnB rentals. And Phase II of the project appears to have been funded.

So when you hear the one about the Chinese "ghost town" in Angola on the VOA, the BBC, or CNN: think again. What's the real story?

The original 2014 post follows:

Anyone who has been to Luanda knows that the city lacks housing. The hotels are extremely expensive, and researchers have been known to rent a room in someone's house for $100 a day. Angolan president Jose dos Santos pledged to build a million new homes, between 2008 and 2012. Kilamba City was part of that promise. The idea of constructing a new town, Kilamba City, 20 km outside Luanda, where flats would be available for purchase, seemed like a good one.

A Frenchman, Pierre Falcon, the famous architect of the "Angola-gate" arms trade and corruption scandal, owns the company that oversaw the project: Pierson Capital GroupThe complex was financed by ICBC, Industrial and Commercial Bank of China, allegedly backed by oil-revenues. CITIC built the flats. The state-owned oil Angola was in charge of marketing the apartments (they would use those revenues to repay the loan). Chinese firms built Kilamba. And then the apartments seemed to stand empty. Visiting Western journalists photographed the long, lonely expanses of buildings. Kilamba City was filled, it seemed, by ghosts.

Until recently. Or so it seems. According to the official Angolan news agency, some 40,000 people moved into Kilamba after their families took advantage of long-term, low-cost mortgages to buy flats with prices ranging from US$70,000 to US$140,000. One account said people are standing in line for days to buy one (photo left).

The news stories on Kilamba, the "ghost town" mainly date from 2012. If it is actually now becoming a thriving town, why hasn't anyone gone back to report on it?

Readers: have you seen Kilamba? Your comments and stories are very welcome. 

Update May 6, 2014: New SAIIA analysis exactly on this topic, by David Benazeraf and Ana Alves, "Oil for Housing: Chinese-Built New Towns in Angola." Highly recommended. 

To visit the original post and the 21 comments, click here.