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Debt gulps 8 percent of East Africa revenues

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East African countries are now spending almost eight per cent of their revenues to service $29.42 billion loans borrowed in the past 10 years.



They borrowed the money largely from China to grow their transport, communication, manufacturing and energy sectors.

Analysts said the loans are becoming a burden, especially given that their impact is yet to be seen on the growth.

The latest data from the China-Africa Research Initiative (Cari) at John Hopkins University shows that Ethiopia owes Beijing $13.73 billion, followed by Kenya at $9.8 billion. Uganda owes $2.96 billion and Tanzania $2.34 billion.

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Rwanda, South Sudan and Burundi owe China the least amounts — $289 million, $182 million and $99 million respectively.

Cari director Deborah Brautigam said that the risk for the African borrowers relates to the projects’ profitability.

“It is always important to look at whether these projects will generate enough economic activity to repay these loans, as opposed to being seen as merely ribbon-cutting opportunities,” Ms Brautigam said.

The bulk of the monies, according to research by The EastAfrican, went into the transport sector, followed by power, communications and manufacturing.

Ethiopia’s biggest intake of the Beijing loans was in 2013, coinciding with the launch of its joint standard gauge railway project with Djibouti.

Addis took up more than $6.62 billion from Beijing for its mega projects, which also included the setting up of manufacturing zones.

The data also shows Kenya’s new railways line accounted for the highest debt intake from Beijing at $3.7 billion in 2014.

China Exim Bank has been the go-to financier for the region’s governments, giving out more than $16.3 billion.

The China Development Bank advanced East African economies more than $6.9 billion, while other Chinese lenders are currently owed $6.1 billion, data shows.

In terms of sector funding, Ethiopia invested the bulk of its funds in the transport sector ($4.37 billion), which was used for both the Addis Ababa light railway project and the Addis-Djibouti 700km railway.

This was followed by communications at $3.16 billion and power projects at $2.54 billion.

Its manufacturing sector, which supports its fledging special industrial zones, including the Eastern Industry Zone and Huajian International Shoe City, received $2.02 billion.

“China gave priority to infrastructure and has promoted Africa’s sustainable development through these loans, which have been used for infrastructure construction, energy and the manufacturing industry,” said Liu Qinghai, a visiting researcher at Cari and head of the Center for African Economic Studies at the Institute of African Studies at Zhejiang Normal University.

Kenya’s transport sector took in $5.55 billion, largely driven by the new railway line from Mombasa to Naivasha.

Nairobi also took a $597 million loan for its power projects, including the $135 million for the 55 MW solar power plant in Garissa funded by the China Exim Bank.

South Sudan has received $158 million for its transport sector to date, and a further $24 million for its energy projects.

Tanzania’s energy sector remains the top financed sector funded by Chinese money, at $1.16 billion.

Dar es Salaam, which has not taken up any Chinese debt under President John Magufuli, has received $552 million for its communications sector.

Uganda, on the other hand, has seen its energy sector receive the highest funding from Beijing, at $1.92 billion, while its transport sector has absorbed $762 million.

Rwanda’s China debt for transport amounts to $151 million.

But the region’s countries seem to have slowed down bingeing on Chinese debt, with only Kenya and Ethiopia going to Beijing for loans.

Ethiopia borrowed $652 million last year, down from $926 million in 2016, while Kenya took $64 million, down from $1.09billion in 2016.

In 2016, Kigali took $70 million and Kampala $85 million.

Last month, Ethiopia became the first country to get its Chinese debt rolled over announcing that Beijing had agreed to restructure its $4 billion loan on the railway linking its capital Addis with neighbouring Djibouti.

Ethiopia’s Prime Minister Abiy Ahmed said that the country’s loans will now receive a further 20-year extension, which will see its annual repayments narrow to an affordable level.

“In conversations with our Chinese partners, we had the opportunity to enact limited restructuring of some of our loans.

“In particular, the loan for the Addis Ababa-Djibouti railway, which was meant to be paid over 10 years, has now been extended to 30 years. Its maturity period has also been extended,” Dr Abiy said.

Kenya also sought to get a grant as part of the package for its $3.8 billion loan for its continuing railway projects, as it seeks to manage its debt burden.

“The Naivasha-Kisumu phase of the SGR will cost $3.8 billion. And owing to its regional significance, I would request that 50 per cent of its cost be provided as part of grant financing,” President Uhuru Kenyatta said at the Forum on China-Africa Co-operation in Beijing in August. This request was not granted.

Tim Jones, an economist at the Jubilee Debt Campaign, said that the continent debt problem could worsen, especially given the opaque nature in which they are signed.

“Debt problems are worsening and many lenders bear responsibility, not just China. We need new rules to make all lenders publicly disclose loans to governments at the time they are given. We also need to see these lenders made to restructure and reduce debts,” Mr Jones said.

Last month, China’ s special envoy to Africa, Xu Jinghu, denied claims that Beijing was burdening Africa with debt, noting that China was Africa’s main creditor.

Indeed, data shows that the continent owes more to private lenders than to China.

“It is baseless to shift the blame onto China for these African countries debt problems. Their debt position has ‘been built over time even before we came in.

“We have to look at the fluctuations in the international economic situation vis-a-vis the price of minerals, their key exports. This is where the problem is, and not Chinese loans,” Mr Xu said.

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24 Hours Across Africa

Nigeria: Woman arrested over Outrageous Viral video of her abusing a child

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Police in Nigeria’s commercial hub of Lagos have arrested a woman filmed abusing a child and then locking him in a caged kennel with dogs.

It is not clear when the footage was shot, but it went viral on Twitter earlier this month.

In the video clip, a woman is seen beating a boy, stripped to his waist, with a belt. She then drags him into an empty kennel and locks it before walking away. Two dogs can be seen in other neighbouring kennels.

The video caused outrage on social media, where shocked users offered rewards to anyone that could track down the woman.

On Thursday, a police spokesperson, Dolapo Badmos, tweeted that the woman in the video had been arrested.

“The suspect is in custody and will be charged to court… The boy, who happens to be an orphan, has been rescued and kept in a shelter provided by Lagos state government,” she said.

Her tweet links to a video filmed by police showing the dog kennels where the boy was locked up:

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24 Hours Across Africa

Nigeria: Imo recovery team storms Okorocha’s premises, recover alleged looted state property

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Okorocha Faults Action
Imo State Recovery of Moveable Assets Committee, yesterday, stormed a premises belonging to the immediate past governor of the state, Rochas Okorocha, where it discovered properties suspected to be that of the State Government, but allegedly parked in the premises known as All In Warehouse, located on Aba Road, Owerri.

But the Commissioner of Police, Rabiu Ladodo, who arrived the scene laced with crowd, directed that the property should be put in custody of the police. Some of the items included furniture, clothing materials and others.

The chairman of the committee, Ndubuaku, said the committee received credible intelligence information that led to them to storm the premises. He pronounced sealing of the place, directing that nobody, including the Okorochas, should enter the premises till further notice. Ndubuaku said the committee would ensure that all the State Government property illegally stolen were recovered.

But Okorocha, in a statement signed by his Special Adviser (Media), Sam Onwueneodo, described the action of the State Government as unjustifiable.

“This is to inform all men and women of goodwill, that barely two days after the agents of the Economic & Financial Crime Commission, EFCC, had marked the ALL – IN SHOP owned by the wife of the former governor, Dr. Mrs. Nneoma Nkechi Okorocha, located at Naze near Owerri, for investigation also following flood of petitions written to the Commission by PDP government in the State, the leader and members of the government’s Committee on the Recovery of Government Property invaded the shop today (yesterday) July 26, 2019, and looted the goods there, including the ones inside the containers inside the premises.

“We had told all those, who cared to hear us, that the PDP government in the State is out for witch-hunting just to intimidate Opponents, otherwise why invading and looting a Shop with furniture and baby goods, already marked for investigation by the EFCC.

“And the Containers they looted have been in the premises of the shop before the EFCC agents came and marked the Shop for investigation last Tuesday; they are still there before the Jasper Ndubuaku-led gang invaded the place. The question now is, what if at the end of the day, the EFCC’s investigation establishes that this shop has no relationship with the last administration?

“Obviously, Jasper Ndubuka and his gang are not recovering any property but are on looting spree. They were the ones, who petitioned to EFCC and they came and marked the investments they had mentioned in their petitions for investigation. Then, why going to loot the same establishments marked by EFCC for investigation? If Governor Ihedioha had asked question and if he meant well, he would not have entrusted such sensitive task into the hands of a man like Jasper Ndubuaku.

“Nigerians should watch  closely the brigandage going on in Imo. Leaders and members of the so-called Government’s Property Recovery Committee are just having the licence to loot with the protection of the State Government. Otherwise, why won’t they allow the EFCC to conclude their investigation?”

“We have been shouting for the world to hear our voice. Aside their inviting the EFCC, we have asked them to publish whatever they have against Rochas Okorocha and the family or anybody that served in the Rescue Mission government, but they have not been forthcoming. The implication of all these is that, where restraint is not applied and the governor cannot control the recklessness, self-help may be the last resort; nobody should be blamed.”

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