Zambia at highest risk of losing assets to China: Report

According to Moody's Investor Service's report, Zambia is at the highest risk among other nations of losing strategic assets to China over the pile of debt it owes Beijing.

The report states that China's response to Sub-Saharan Africa countries facing liquidity pressure has not been uniform or transparent – meaning predictability of credit implications are less clear.

"Countries rich in natural resources, like Angola, Zambia, and Republic of the Congo, or with strategically important infrastructure, like ports or railways such as Kenya, are most vulnerable to the risk of losing control over important assets in negotiations with Chinese creditors," the report noted.

The report also stated that such countries are also at risk of being offered liquidity relief at higher resource concessions that only reduce the value of future export earnings.

"Even if debt restructuring alleviates immediate liquidity pressure, the loss of natural resources revenue or other assets is credit negative," the report cleared.

China got land in exchange for some debt relief in Tajikistan and took control of the Hambantota Port in Sri Lanka.

Besides, the report further added that Chinese loans also come with relaxed conditions such as no call for structural reforms to enhance governance and competitiveness thus jeopardising the longer-term growth benefits from such loans.

Trade between China and Zambia increased to US$2.2 billion in 2010. Chinese investments in Zambia range from mining interests in Zambia's copper belt to investments in agriculture, manufacturing, and tourism. As of February 2011, a total of 25 farms in Zambia are being run by Chinese entities.

Between 2012 and 2017, Chinese lending to the African nations increased to more than $10 billion annually, from less than $1 billion in 2002. Angola (30 per cent), Ethiopia (10 per cent) and Kenya (seven percent) received almost half of all Chinese investment on the continent between 2000 and 2017.

With inputs from Lusaka Times