China wins majority of mega projects in Africa despite fear of debt-trap diplomacy

Chinese construction and engineering contractors "have attained a dominant position in the African market" and were winning larger-scale or technically more demanding projects, which domestic contractors could not do, said Hong Zhang, a researcher at the Schar School of Policy and Government at George Mason University in West Virginia, as quoted by the South China Morning Post (SCMP).

In some countries, such as Tanzania, Chinese companies' market share is more than 80 per cent, SCMP reported. According to a construction industry publication based in the US, China is home to more contractors operating in Africa than any other country. By 2019, Chinese companies accounted for 60 per cent of the revenue of all the major international contractors in Africa and "nowhere else is China's share in this sector so dominant," Zhang said.

Despite the market dominance, experts believe that Beijing's investment in infrastructure projects in Africa has led to debt-trap diplomacy in which countries are forced to hand over key assets to service loans they can't repay. African nations are beginning to closely scrutinize the cost-benefit analysis of Chinese investments and the conditions attached to such funds. Last year, Tanzania had joined the bandwagon of growing ranks of African nations, which have put Chinese investments under scanner.

Tanzanian President John Magufuli had cancelled the USD 10 billion Chinese loan agreement signed by his predecessor Jakaya Kikwete. According to local media reports, the loan agreement was to build the port on unreasonable financial terms. The International Monetary Fund (IMF) persistently warns African and other third-world countries that mounting debts to China are dangerous. It stresses that Chinese creditors create some instability or vulnerabilities.

Economists have been urging African governments to ensure that they read the small print of the "conditionalities" defined by the Chinese. In their views, it would avoid Beijing lay claim to some of their assets, as they are doing in Madagascar, Kenya, Zambia and Zimbabwe.