Tuesday, December 3, 2019

A Quick Look at the Footprint of Chinese Private Security Companies (PSC) in Africa

This guest post by CARI Fellow Dr. Alessandro ARDUINO, from the Shanghai Academy of Social Sciences, is the second of our series "Notes from the Field." We are publishing a selection of posts from our current group of research fellows, with a focus on reflections, research notes and preliminary findings. For his CARI-funded research project, Dr. ARDUINO traveled to Djibouti; this note is partly based on the results of this fieldwork trip and summarizes the initial phase of research into the role of China’s Private Security Companies (PSC) in Africa. 

Photo credit: Alessandro ARDUINO
Since the launch of its Belt & Road Initiative (BRI), China’s engagement with the African continent has been scrutinized through the state-to-state economic and military lens. However, the China-Africa economic and security dimension requires a more complex equation that has to take into account the private security sector variable. While the mainstream narrative focuses on the effective return on investments in the African BRI infrastructure projects, or the opening of new Chinese military bases, there is a growing role for China’s Private Security Companies (PSCs) that are operating on the continent.

In light of China’s “going out’’ policy, the need to support China’s State-Owned Enterprises (SOEs) that are investing in high risk areas has expanded the Chinese market for security services. Risk assessment and mitigation in the African countries participating in the BRI requires a wide range of security services along both the maritime and land routes.

Compared to other areas where Chinese PSCs are operating, the African private security dimension is characterized by several peculiarities. First, the African continent still carries the stigma of mercenaries’ behavior during post-colonial conflicts. Second, well before the launch of the BRI and Beijing’s endorsement for PSCs going abroad, several Chinese companies in Africa, operating in a range of sectors from natural resources extraction to small businesses, organized private armed “militia” to protect their interests against criminal or political violence. Third, while the footprint of the Chinese PSCs is still limited, Africa is witnessing a return of the global soldier of fortune in support of local government and international interests, the most recent example of which is the growth of Russian para-military contractors.

There was a clear historical division of roles between the United States’ support for Africa on military and counterterrorism efforts versus China’s promotion of economic development and trade. Now the division is progressively blurring.

The first Chinese military base abroad was established in East Africa, which was not by chance. The opening of the PLAN Naval base in Djibouti in 2017 was China’s concrete response to a changing security environment. Also, during the China-Africa Defense and Security Forum in 2018, Beijing promoted the discussion of Africa's security capacity-building, increasing defense cooperation and deepening China-Africa military ties.

Recent speeches on Africa by both President Xi Jinping and Premier Li Keqiang clearly illustrate how the Chinese perspective on security is closely intertwined with economic development. Thus, in the African development-security nexus it is compelling to consider the interactions between China’s military and maritime engagement on the continent, peacekeeping missions, and the expanding presence of the Chinese PSCs from Kenya to Sudan. The process of integrating security, conflict resolution, and economic development is still riddled with major shortcomings and unintended consequences.

Nevertheless, an interesting example of integration was observed during the early phase of my research that derived from the maritime security perspective. During a visit to Djibouti, it was clear how the Chinese military base was standing alone in direct proximity and almost as a deliberate challenge to the status quo of older military bases of the US, France, and even Japan. At the same time the Chinese private security sector was already extending feelers in the region from Ethiopia to Djibouti, in order to establish profitable partnerships. For example, during a recent increase in piracy activity from East to West Africa, one company has successfully entered a public-private partnership in the security sector. A Chinese PSC, Hua Xin Zhong An (HXZA), has found a niche market in providing armed guard services aboard Chinese commercial vessels transiting through waters where there is a high risk for hijacking (e.g. Somalia).

The role of HXZA is quite peculiar as it offers a peek into the future of the Chinese PSCs. HXZA is one of the first Chinese security companies that has been able to obtain a permit from the Chinese government to legally carry weapons abroad and to employ foreign consultants. Most importantly, it has proven its ability to work to internationally-recognized standards and to improve efficiency while simultaneously looking at the wellbeing of the local stakeholders.

A literature review reveals many references to the field of private military organizations in Africa, but the recent growth of Chinese PSCs raises significant questions about previous assumptions. I expected to find China’s PSCs acting under a sort of supervision from the the Chinese military or perhaps even closer connections to the Chinese government.  Instead, it appears that China’s PSCs are acting in a semi-autonomous manner and are focused on providing niche services such as the resolution of kidnappings and piracy prevention.

Given the potential security requirements of hundreds of Chinese companies operating in Africa, the interaction between the Chinese PSCs and the local stakeholders requires greater study and accurate analysis. Perhaps most importantly, local stakeholder interests must be actively safeguarded.

Tuesday, October 22, 2019

US-China Cooperation in Africa? Perhaps not in French Africa

This guest post by CARI Fellow Dr. Afa’anwi Ma’abo CHE, from Kampala International University, is the first of our series "Notes from the Field." Over the coming weeks and months, we will publish a selection of posts from our current group of research fellows, with a focus on reflections, research notes and preliminary findings. For his CARI-funded research project, Dr. CHE traveled to Cameroon, which prompted the below thoughts.

Photo credit: Afa'anwi Ma'abo CHE
Following China’s resolve to ‘go global’ at the end of the 20th century, Africa has witnessed a surge in Chinese trade, finance, and investments. China has risen and surpassed the US to become Africa’s leading economic partner. Cooperation, relative to competition, between the superpowers has a greater potential to induce optimal positive-sum gains for the superpowers and for Africa. But the scholarly and policy worlds are shrouded in pessimism about chances of the US cooperating with China in Africa. Three major reasons are often averred for the pessimism: i) the current US administration views Chinese engagements in Africa as imperialistic, debt-trap predatory, threatening to the autonomy of African states, inhibitive to US foreign investment opportunities, and inimical to US national security interests; ii) the US government's aversion to China’s ‘non-interference’ policy, which underpins its engagements in Africa; and iii) several African state leaders' seeming preference for unconditional bilateral partnerships (mainly with China), which are oblivious to liberal democracy, human rights, and public accountability performance profiles of African states, as opposed to trilateral partnerships involving the US and intrusive conditionality constraints.

However, by focusing on the inimical perceptions and preferences of the US, China, and Africa tripod alone, the motivation and capacity of other major players, particularly France, to thwart sustained joint and solo US-China involvement in (French) Africa is overlooked. This blog post avails the opportunity to elaborate.

Roman Serman, a former French presidential adviser, has rhetorically, albeit unconvincingly, asserted that it would be ridiculous to think that France could invoke its long standing Françafrique defense agreements – which, in part, provide France privileged access to natural resources and markets in some French African countries such as Togo – to, for instance, order Togo to tell China, ‘quitter le pays’ (leave the country). But, in March 2019, during his visit to Djibouti, President Macron of France implicitly asked China to steer clear of French Africa.

And Paris has formidable influence it can utilise to serve its interests in Francophone Africa to the detriment of China, principally including: i) the French language, which remains either the sole official or one of the official languages in all Franc Zone countries and almost all former French colonies in Africa (excluding Algeria, Mauritania, Morocco, and Tunisia); ii) the colonial CFA franc currency in the Franc Zone, and perhaps most importantly iii) the aforementioned French secret neo-colonial defense agreements with at least 8 French African countries, which essentially guarantee the concerned African countries, particularly their old ruling elite, France’s protection against internal and external foes in exchange for priority access to natural resources and markets (although some of those agreements have since been revised). Elaborate analysis of how France is using these soft and hard power tools to keep an extractive imperial grip on French African countries has been carried out elsewhere.

How will China respond to France’s anti-Chinese campaign in Francophone Africa? Well, this is a hypothetical question, but given China’s marginal presence in French Africa within the bigger picture of China in Africa, France’s disgruntlement with China’s ‘encroachment’ in Françafrique could lead Beijing to keep only a limited strategic presence in the French African countries that China consider critical to the ‘Belt and Road’ plan, notably Djibouti, Cameroon, and Senegal, while focusing on growing its already relatively greater investment presence in Anglophone Africa. Unfortunately for the people of Francophone Africa, any curtailment to China’s ambitions would only dent any prospects they may have of benefitting from China’s unmatched commitment to the continent.

Tuesday, August 27, 2019

China’s new debt sustainability framework for the BRI

This is a guest post by Dr. Johanna Malm, independent researcher. She was previously researcher at Stellenbosch University’s Centre for Chinese Studies and PhD Fellow at Roskilde University’s Department of Society and Business. Read more about her research here; she can also be found on Twitter as @drjmalm.

In this piece, she analyzes China’s new debt sustainability framework, launched at this past spring’s Belt and Road Forum. She argues that while China has been responsive to some of the recent criticisms of its lending policies, its approach to development finance still differs significantly from that of the IMF.

IMF Managing Director Christine Lagarde and China Vice Premier Ma Kai.
Photo credit: International Monetary Fund (2016)
China’s second Belt and Road Forum was held in Beijing in April 2019. In response to growing international critiques against Chinese lending abroad, China has acknowledged these concerns and adapted some of its practices.

As such, debt sustainability was a significant feature of the Belt and Road Forum. The Chinese leadership sought to address debt issues in several ways. In its official communication during the Forum, Beijing stated that China is committed to preventing and resolving debt risks. China’s Ministry of Finance also published a new document, the Debt Sustainability Framework for Participating Countries of the Belt and Road Initiative. China’s Finance minister Liu Kun encouraged China’s financial institutions, Belt and Road signatories, and international agencies alike to use the framework to improve debt management.

China and the IMF: Three Major Differences

Debt sustainability frameworks are often seen as technical documents that stipulate the recommended terms and amounts of public debt a country can sustainably acquire. However, such frameworks are also inherently political, embodying norms around debt sustainability, such as different conceptions of the relation between public debt and development. China’s approach to this matter differs from that of the International Monetary Fund (IMF).

China’s new debt sustainability framework marks the first time the country’s approach to debt and development has been articulated in an official document with an English translation, thus signaling that it is targeted for a Western audience. Previously, China’s approach had mostly been articulated by representatives from its financial institutions, most vocally by Li Ruogu during his tenure as President for China Exim Bank. As demonstrated by the new debt sustainability framework, China’s approach is still significantly different from the IMF’s approach to debt.

First, the framework makes no mention of Chinese lending terms. In other words, China has not articulated any commitment to provide financing exclusively on concessional terms (Note: a concessional loan has lower interest rates, longer grace period and longer reimbursement period). Although Chinese policy banks still extend loans to developing countries on concessional terms, loans extended at commercial rates are an important part of its lending portfolio. By not mentioning the lending terms in its debt sustainability framework, China leaves space for its banks to lend on commercial rates as they see fit. This can be compared to the IMF’s debt limits policy, which advocates for financing on fully concessional terms to low-income countries.

Second, the framework makes it clear that China does not see debt distress as an obstacle to continued borrowing. The framework states:
“[I]t should be noted that an assessment for a country as “high risk” of debt distress, or even “in debt distress”, does not automatically mean that debt is unsustainable in a forward-looking sense. In general, when a country is likely to meet its current and future repayment obligations, its [public and publicly guaranteed] external debt and overall public debt are sustainable.”
In other words, a country in debt distress can still take up loans from China if the individual loan-backed project is commercially viable and if the borrower is able to service its debts. This statement represents a sharp contrast to the approach of the IMF, which states that non-concessional borrowing to countries in debt distress “would be allowed only under exceptional circumstances” (p. 2 of PDF).

Third, China considers the relationship between debt and growth explicitly in its debt sustainability framework. It states: “Productive investment, while increasing debt ratios in the short run, can generate higher economic growth […] leading to lower debt ratios over time”. This indicates that China sees lending as a catalyst for economic growth, as opposed to the IMF’s debt limit policy, for which growth is enhanced if the loans are concessional.

Implications Moving Forward

Since the end of World War II, the IMF has been the most influential institution in setting public debt management norms for developing countries. China began to challenge the IMF’s position when it started to increase its overseas lending at the turn of the 21st century. As I have shown in previous research (see here and here), the IMF had no choice but to adapt its own debt sustainability framework in 2013 to allow for developing countries to take up loans on commercial terms from China. This policy change was born of the political impossibility of the IMF to prevent developing countries from taking up Chinese loans.

However, this shift in the IMF’s position was not widely publicized, and the Fund still hopes to get China to conform to its own ideas of debt sustainability. As the IMF notes, the effectiveness of its debt sustainability framework “hinges on its broad use by borrowers and creditors”. For instance, in April 2018, the IMF opened a China-IMF Capacity Development Center in Beijing, which organizes courses directed at Chinese officials working on BRI-related issues. The courses offered include a workshop on debt sustainability frameworks in low-income countries.

The IMF’s Managing Director Christine Lagarde reacted to China’s new debt sustainability framework by stating that the framework represents ‘positive steps’ by Chinese authorities. However, she also said that infrastructure financing through the Belt and Road should only go where it is needed and where the debt it generates can be sustained.

In sum, recent events show that, while China has grown more sensitive to international pressure around its role as a development finance provider – especially when the critiques emanate from other developing countries – its new debt sustainability framework also demonstrates that it is willing to challenge to the IMF’s approach. China’s approach to development finance reflects the country’s own experience as a borrowing country. State-led development finance worked well for China’s own development and it is this model that China replicates in its lending to developing countries today.

This also highlights that, beyond notions of ‘good’ and ‘bad’ lending, China’s and the IMF’s different approaches have different benefits and drawbacks. While China’s approach can spur growth by providing significant amounts of development finance to countries in dire need of investment, the IMF’s more cautious approach prioritizes lower debt burdens for developing countries. While respective definitions of “sustainable debt burdens” might differ depending on developing countries’ priorities both approaches might prove beneficial for borrowing countries.

Monday, July 1, 2019

Did China "Seize" Sri Lanka's Hambantota Port for Unpaid Debt?

Photo credit: Deneth17 (Wikimedia Commons)
Africans have been leery about Chinese loans ever since an Indian polemicist coined the term "debt trap diplomacy" to describe the sale of 70% of the shares of Sri Lanka's Hambantota port to a Chinese company-- a highly politicized Sri Lankan investment seen by some as a white elephant, and by others as an important future commercial asset that was developed prematurely, given its original feasibility timeline.

Now The Economist has mis-characterized my analysis of Hambantota in a June 29, 2019 story, "China is Thinking Twice About Lending to Africa," by suggesting that I examined 3000 projects and found that Hambantota "was the only example of such an asset being seized to cover a debt."

This is not what I argued. I wrote in The American Interest that Hambantota is the only example "that has ever been used as evidence" for this accusation. But even this example does not support the claim.

Some recent reports, including one by the Rhodium Group, described Hambantota as an "asset seizure" by China in response to debt problems related to the port. This is not how I and other researchers who have examined this case closely see Hambantota.

The port was clearly troubled, although much of this can be attributed to Sri Lanka's domestic politics. But the important point is that it was not Hambantota's loans that were pressing on the Sri Lanka government. It was international sovereign bond payments. Two thirds of the Hambantota loans were at a fixed rate of 2 percent, with a five year grace period, while one early loan for the first phase, at $307 million, was at a fixed rate of 6.3%. These rates were far lower than Sri Lanka's commercial borrowings from bond markets.

As one analyst notes:
Although Hambantota port was leased to CM Port, the loans obtained to construct Hambanota port were not written off and the government is still committed to loan repayments as per the original agreements. The money obtained through leasing Hambantota port was used to strengthen Sri Lanka’s dollar reserves in 2017-18, particularly in light of the huge external debt servicing due to the maturity of international sovereign bonds in early 2019. 
Privatizing 70% of Hambantota to CM Ports for $1.1 billion was one way in which foreign exchange could be brought into the country, allowing a balance of payments crisis to be staved off. It was not an asset seizure.

Thursday, June 13, 2019

Ethiopia is struggling to manage debt for its Chinese-built railways

This post by SAIS PhD Candidate and CARI Research Assistant Yunnan CHEN is an excerpt of a piece originally published in Quartz Africa: read the full article here.

Photo credit: Yunnan CHEN
In the wake of the Belt and Road Initiative (BRI) Forum in Beijing last month, Ethiopia gained another Chinese debt-concession. China’s second-largest African borrower and prominent BRI partner in infrastructure finance also received a cancellation on all interest-free loans up to the end of 2018. This was on top of previous renegotiated extensions of major commercial railway loans agreed earlier in 2018.

These concessions highlight the continuing debt-struggles that governments have in taking on Chinese large infrastructure projects. But they also demonstrate the advantages and flexibility, that African governments can gain in working with China—if they can leverage it.

Ethiopia’s railway projects have been an instructive case of both the benefits and pitfalls of Chinese finance. It has been over a year since the Chinese-built and financed Addis-Djibouti standard gauge railway (SGR) opened to commercial service in January 2018. A flagship project of China’s Belt and Road Initiative in the Horn of Africa, and constructed in parallel with Kenya’s showy Chinese-built SGR, the project was Ethiopia’s first railway since a century ago (another urban-rail project, the Addis light-rail transit (LRT) was completed earlier in 2015), as well as being the first fully-electrified line in Africa.

Costing nearly $4.5 billion, the SGR was partly financed through $2.5 billion in commercial loans from China Eximbank, according to figures from SAIS-CARI, with further loan packages dedicated to transmission lines and the procurement of rolling stock and locomotives. Part of China’s wider ‘export-supply chain’ strategy, the railway uses a package of Chinese trains, Chinese construction companies, Chinese standards and specifications—and is currently operated under a six-year contract by a joint venture of the two Chinese contractors, CREC and CCECC, who built it.

As part of a wider nine-line railway network plan under the Ethiopian Railway Corporation (ERC), the line cuts travel time from the capital Addis Ababa to Djibouti from two days by road to 12 hours.
On an economic front, however, actual uptake of the railway by the industrial zones it was intended to serve remains low—even after a year, the vast majority of the railway’s freight cargo is made up of imports, not exports. Integration with export and industrial zones is low, as the main trunk line does not connect to individual industrial zones, creating significant last-mile shipping and logistics for firms, particularly at port connections. Most exporters continue to use road transport, despite the higher time and financial cost, due to its greater flexibility and reliability compared to the train’s twice-daily schedule.

This is a major problem for the railway’s economic prospects. Few passenger-based rail systems in the world are profitable; in developing countries, most railways connect to mines: one of the few bulk goods that can generate returns for such capital-intensive transport.

China also bears these costs. State insurer Sinosure publicly commented on $1 billion in losses written off for the project, and Eximbank has halted previously-discussed funding for the country’s second line, the section from Weldiya to Mekele. Though contracted to another Chinese SOE, CCCC, Ethiopia faces little prospect of further loan finance from China, until the first railway can show demonstrable success.

Further financial challenges afflict the projects, along with Ethiopia’s growing debt burden. A long-term foreign exchange shortage, worsened by poor export performance, has challenged Ethiopia’s ability to repay many of the loans that financed these projects. Repayments on the principal for the Chinese railway loan began in 2017, before the line was even operational. As of the beginning of 2019, the ERC was not only behind in its loan repayments to China, but also unable to front the remainder of the management fees for the Chinese companies operating the railway.

In late 2018, Ethiopia negotiated with Beijing to restructure of the Eximbank loan terms, extending the repayment period from 15 to 30 years.

In this, China’s deep and strategically-tied pocketbook has been a big advantage, allowing Ethiopia to juggle its external obligations and leverage Chinese flexibility where it can. Ethiopia’s renegotiation and rollover of debt indicates that this BRI project is unlikely to have a Hambantota-esque Chinese takeover. But both sides have been burned: while the strategic discourse of the Belt and Road mean that the SGR will not be abandoned, both lender and borrower now show greater caution in the infrastructure they pour money into.

Wednesday, April 24, 2019

Neither Tightening Nor Loosening the Belt: Chinese Lending to African BRI Signatories

Author: Jordan Link, Research Manager at SAIS China-Africa Research Initiative
As representatives from more than 100 countries assemble this week in Beijing for the second Belt and Road Cooperation Forum, questions remain as the Belt and Road Initiative (BRI) nears its sixth year of existence.  Is the BRI a top-down plot for building China’s  road to global dominance? Or is it simply a means to “promote world peace and development” as offered by Chinese President Xi Jinping?
The BRI’s amorphous definition has complicated the issue – with projects ranging from port development and hydropower plants to facial recognition technology and a “Polar Silk Road,” Xi’s vision has simultaneously become omniscient and blurry.  If the BRI can encapsulate so many disparate projects, does the label matter?
Rather than getting bogged down in this debate, it can be helpful to think of the BRI as a new policy environment that encourages Chinese policy banks, firms, and contractors to engage with developing countries with more impetus than before.  While there certainly is a security dimension to this engagement, it is important to establish a strong understanding of how the BRI actually incentivizes Chinese entities abroad.
To that end, how successful has Xi Jinping been in creating a BRI-inspired policy environment that encourages Chinese international economic engagement?  Analyzing Chinese loans to Africa provides rich data on the subject.
Since the BRI’s announcement in 2013, 37 African countries have signed BRI Memorandums of Understanding (谅解备忘录).  Of them, 28 were signed during the 2018 Forum on China-Africa Cooperation (FOCAC).

Tuesday, April 9, 2019

Chinese Lending to Africa for Military and Domestic Security Purposes

This blog post by SAIS-CARI's Research Manager Jordan Link is the first in a series that will explore security and military matters as they relate to China/Africa issues, a theme also being explored by our 2019 CARI Fellows.

China’s engagement with the African continent has until recently been interpreted primarily through an economic lens. However, China-Africa military ties are also deepening and becoming more complex. China’s first international military base opened in 2017 in Djibouti. The first China-Africa Defense and Security Forum was held in June of 2018 as representatives of 50 different African countries and the African Union met in Beijing to discuss defense and security cooperation efforts. Against this background, what role does Chinese lending play as the China-Africa security relationship evolves?

For purposes of this post, we have separated our data into “military,” “domestic security,” and “dual use” borrowing.

Between 2003 and 2017, China has loaned USD 2.53 billion to 8 African countries explicitly for military and national defense purposes. An additional USD 1.36 billion was loaned for African policing and law and order purposes, while USD 67 million was lent for dual-use purposes. In sum, African countries signed USD 3.56 billion for military, domestic security, and dual use purposes. Over this same time period, China lent African countries a total of USD 147.77 billion. Therefore, lending for explicit defense and/or domestic security purposes has accounted for just over 2% of all Chinese loans to Africa.

The data used in this report is drawn from the loans database curated by the China-Africa Research Initiative at Johns Hopkins University. Only signed, implemented, and completed loans were used for the analysis – all unconfirmed loans were excluded. While the CARI database includes all loan data from 2000, we found no loans specifically for defense and/or domestic security purposes from before 2003.

A loan with defense and/or domestic security purposes includes the following types of projects: aircraft procurement, the construction of military facilities, national security telecoms, patrol ships, CCTV systems and military/security wares. We have no loans in our system specifically for the purchase of arms. In keeping with China’s comparative advantage in African construction projects, African governments borrowed over one billion dollars for the construction of defense and/or security facilities such as barracks. The second largest amount of money went to national security telecoms networks.  Third was the procurement of aircrafts.

We exclude projects such the construction of government buildings outside of the military, broadband networks, or other telecommunications systems. While there are potential defense and security implications for these types of projects, this analysis only includes loans that finance projects signed by the country’s ministry of defense (or equivalent) for explicit defense and/or domestic security purposes.

The USD 3.56 billion amount is distributed through 35 different loans. Zambia stands out, with both the largest number of loans (8) and the highest military and/or domestic security-related borrowing (USD 1.42 billion). The Republic of the Congo (ROC) and Ghana each borrowed six times for military and/or domestic security purposes. The ROC borrowed a relatively small total at USD 147 million. Cameroon signed loans totaling USD 414 million, Nigeria borrowed USD 400 million, and Ghana borrowed USD 357 million.

The Chinese Eximbank was the top lender, supplying more than 2 billion dollars worth of loans to African countries. This is not surprising as the Chinese Eximbank has lent more money to African countries since 2000 than any other lending source. The second largest source of defense and/or domestic security lending, at USD 440 million, was China National Aero-Technology Import & Export Corporation (CATIC), a Chinese state-owned defense company that imports and exports aviation products and technology. The third highest amount – USD 364 million – was lent by Poly Technologies, a Chinese SOE that imports and exports defense equipment. 


The ROC, Ghana, Namibia, Tanzania, Zambia, and Zimbabwe all have signed loans for facilities with defense and/or domestic security purposes. For example, nearly all of the loans that fall under this category were for the construction of barracks or housing units for military and security personnel. Zimbabwe has borrowed USD 107 million to build a National Defense College. Zambia borrowed USD 640 million, the highest dollar amount across the Continent. 

Aircrafts and the Dual-Use Conundrum

China has provided several loans for the purchase of aircrafts. Aircraft loans present the tricky issue of dual-use technology and equipment. It is difficult to ascertain whether the African countries listed are using these aircraft explicitly for defense and/or domestic security purposes. For example, the MA60 plane is generally used for commercial cargo and passenger flights. However, MA60s have also been used by China for maritime surveillance. These planes can also be used to transport military cargo or personnel. 

We checked whether the MA60 aircraft financed by Chinese loans were later used by the national airline or by the national air force. Zambia’s total includes a USD 56 million loan for two MA60 airliners and twelve Y-12 cargo planes. According to SAIS-CARI research, both the Chinese Ambassador to Zambia and Zambia’s Secretary of Defense were present as witnesses to the loan signing. This implies that the procured aircrafts were for defense and/or domestic security purposes. 

In other countries, the national airlines have been flying the MA60 planes. Three other African countries, the ROC, Cameroon, and Zimbabwe have signed loans for MA60 cargo planes that appear to be associated with commercial airline operators.

National Security Telecoms

Ghana, Nigeria, Sierra Leone, Senegal, Uganda, and Zambia have signed loans for the creation of national security communication systems. Of the seven loans, six are confirmed to be using ZTE as the contractor to carry out these projects. The one exception was a loan to Uganda, which was put towards acquiring a TETRA Communications System. This system was reported to be used by the police, army, and intelligence agencies in Uganda. Nigeria signed loans worth the most in this category, at nearly USD 400 million.

Patrol ships

Cameroon and Ghana both signed loans to procure patrol ships. In 2008, Ghana signed a loan to acquire two patrol vessels worth almost USD 40 million. Cameroon signed a loan in 2012 for two patrol vessels worth USD 330 million.

Loans for policing: Countering smuggling, improving law and order, and anti-terrorism

In 2003, Mauritius signed a loan for a CCTV Surveillance System and airport X-Ray scanning equipment worth USD two million. Details of the loan did not specify the amount that went towards either the surveillance system or the scanning equipment. In 2016, Côte d’Ivoire signed a USD 53 million loan for the Abidjan Video Surveillance Platform. This platform aimed to reduce crime levels by placing video cameras on dangerous streets and crowded public areas. Cameroon signed a USD 84 million loan in 2017 for an urban video surveillance system.

Ghana, Sudan, and Zambia signed loans for the procurement of military and/or domestic security wares. Ghana signed two loans in 2008 for equipment for its own armed forces and peacekeeping operations for a total of USD 160 million. Sudan signed a loan worth USD 106 million in 2003 for unspecified military equipment. In 2016, Zambia signed a USD164 million loan for equipment for its domestic police force, the Department of Immigration, the Drug Enforcement Commission, and prisons. 

Year-by-Year and Looking Forward

Looking at the total dollar amount lent per year, there were large jumps in both 2010 and 2016. In 2010, Nigeria signed a USD 400 million loan for its police force’s national public communication system. Zambia also signed two loans in 2010: a USD 365.5 million loan for residential housing units for its Air Force and a USD 105 million loan for Z-9 helicopters. Zambia was also a major player in 2016, signing the following loans: a USD 275 million for police and security force housing, a USD 179 million loan for its public security network, and a USD 164 million loan for security equipment. 

China’s lending to Africa for defense and/or domestic security purposes fits the tenor of its Second Africa Policy paper, an official government white paper published in 2015 that outlines China’s foreign policy strategy in Africa.

Namely, the paper states “[China] will support the efforts by African countries…to build capabilities in safeguarding peace and stability in Africa. [China] will continue to help African countries enhance their capacity building in national defense and peacekeeping to safeguard their own security and regional peace.” 

Moving forward, it is reasonable to expect security ties between China and African countries to grow. The Belt and Road Initiative, marshaled by CCP General Secretary Xi Jinping, is likely to make inroads across the continent due to local infrastructure needs. As such, Chinese economic and strategic interests will continue to coalesce. Chinese lending to African countries since 2003 for explicit defense and/or domestic security purposes has accounted for just over 2% of all Chinese loans to Africa. At present, this total does not seem to be growing. The construction of military facilities such as barracks and housing units is so far the major focus of military-related loans in Africa as China continues to play towards its comparative advantage in infrastructure.