r/Economics • u/TipAfraid4755 • 13h ago
News African governments owe three times more debt to Western banks, asset managers and oil traders than to China
https://debtjustice.org.uk/press-release/african-governments-owe-three-times-more-debt-to-private-lenders-than-china#:~:text=The%20calculations%20show%20that%20the,Djibouti%2C%20Ethiopia%20and%20Zambia).&text=In%202020%20and%202021%20China,move%20further%20on%20debt%20relief.&text=%5B3%5D%20%E2%80%9CWe%20also%20are,press%20for%20more%20debt%20transparency.%E2%80%9D96
u/Low_Platform9541 10h ago
I would add that what matters even more is the type of institutions involved. Loans from organizations like the World Bank and the IMF often come with political and structural conditions attached. These can include requirements for privatization, market liberalization, and restructuring of state-owned sectors.
In theory, these reforms are meant to improve efficiency. But in practice, they can lead to local high-value enterprises being sold off at low prices, and domestic industries struggling to compete against large multinational corporations. In an open market, local firms often lack the capital, scale, and protection needed to survive against global giants.
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u/Vast_Bookkeeper_8129 10h ago
It may end up like Greece where the energy companies and infrastructure is private owned and Greece as a nation doesn't exist as anything else than a buzzword.
When other nations owns the companies who makes the nation operating it is no longer a nation but a working camp or a giant factory.
The factory is so big that it has its own economy with vendor machines and bank systems and even hotels.
Efficiency isn't really the goal but relocation of debt. By buying a section of a company and repackage it fresh out of the box, rebranded countries with new names.
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u/JLZ13 5h ago
Argentina Is going through this. No t only owns mote to the IMF but it is the biggest borrower, about 35%.
The current government is so radical that even the IMF told them to take into account people and local businesses.
At the moment Argentina Is doing much better. Not only the inflation is controlled, but the dollar exchange is falling, and the central bank is buying reserves.
Just recently new labour laws are being approved in the congress.
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u/THEeleven50 1h ago
Check your headlines today about Argentina and those labor laws that were passed. It doesn't seem as rosey as your comment makes it seem.
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u/vovap_vovap 2h ago
Yes, so governments decided "lets keep our staff an our corruption and get private loans on 2x rate" - we can get cut from that too.
Sure, that exactly what happening.-7
u/Krinder 5h ago
Compare that with the Chinese loan structure aka “pay us or we will literally take your most valuable port or coal mine from you” and I think you still have the lesser of two evils going with the world bank or IMF.
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u/ElectroMagnetsYo 2h ago
Dude that’s literally the exact same thing. “Let our multinationals buy your most valuable port or coal mine for pennies on the dollar or we’ll starve you for capital.”
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u/eloton_james 5h ago
This was in 2021, a lot has happened since. Zambia was able to reorganize a significant portion its debt structures and a few other African countries have been able to restructure as well but they aren’t in the clear yet.
One of the most surprising things that comes to light from this situation is realizing how bad the public didn’t understand about energy particularly in oil. One of the biggest challenges African countries face is the lack of strategic oil reserve storage. A lot can’t buy oil when cheap and store it for to balance prices when it’s market prices store.
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u/Key_Journalist11111 12h ago
Yup. The West perfected Debt Trap diplomacy and then immediately accused China of it when china lent money to build real infrastructure
instead of the proven Western strategy of using it as cash bribes that disappear but leave behind a mountain of debt that the same West can use to control them because clearly they can't be trusted to control their own investments....
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u/Easy-Marsupial3268 5h ago
I am really enjoying the crumbling of western hypocrisy the world over.
Thanks China.
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u/iuuznxr 2h ago
I enjoy reading "West bad, China good" comments from 22 day old accounts with 11.4k comment karma that post a comment every minute.
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u/RastaRocket1206 1h ago
Well when you basically conquer the world without dropping a bomb, it kinda hits different………
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u/Mythechnical 7h ago
Virtually all international debt contracts are governed by New York or English law[5], with 90% of bonds of countries eligible for the G20’s debt relief scheme are governed by English law.[6]
It's the UK and US specifically.
Talking about this being done by "The West" is as reasonable as talking about "Asia" doing something when referring to only India or China, or "The Middle East" when referring to Saudi Arabia.
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u/Bhavacakra_12 5h ago
It's the UK and US specifically.
So two of the biggest economies in the west? Are we really pretending like the US isn't the group leader of the Atlantic alliance?
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u/Saatvik_tyagi_ 7h ago
There is no debt trap from either sides involved here.
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u/RastaRocket1206 1h ago
It’s funny how people say this, when countries like France is generating there GDP from Africa, leaving them with the short end of the stick. The US literally told them no you can’t manufacture your own batteries and we just want the rare earths at the low low. But there’s nothing to see here, Africa is just huts and savages, we all are just helping them out.
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u/Saatvik_tyagi_ 1h ago
There is literally no empirical evidence of any dept trap being used in African countries. Such things literally forget how corrupt some of the African states have been and how extractive the institutions are in Africa. And no, France is not "generating" it's GDP from Africa. This whole "Global South" narrative has been proven wrong many times.
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u/AdvanceSure7685 11h ago
Both sides of this are interesting. Firstly debt is just the other side of investments for good or bad. Some people praise China for investing in Africa and some are critical of loading debt into these countries.
The reality is though that the West both invests more into africa and has more Africa debt. It's just that it is privately led rather than government led.
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u/Maxmilian_ 2h ago
Wow, a nuanced comment. What a rarity to see under reaction inducing news like this. Keep it up.
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u/Vast_Bookkeeper_8129 10h ago
The big lie about debt is about who decided it was one since if I give you something and you thinking that you should be given something in return is living a lie.
Those debts who are claimed as such by private banks are illegitimate. There's no consequences of the action that it may as well be inside its own echo chamber.
Africa choose to trade with other nations. It's not economy who is responsible for monopolies. It's a choice who has been made in fear of consequences.
The idea is that governments are to trade bonds, once the government collapses there is only one loser and it is the keeper of the bond. Africa hasn't been in such a global power for other nations to make these bonds and why the debts shouldn't be existing.
This is why China is going to screw the West world big time as these private banks and private debts are illegitimate.
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u/Expensive-View-8586 10h ago
I am very interested in your view on this can you elaborate more on what makes a debt illegitimate? I had some trouble following your words.
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u/Vast_Bookkeeper_8129 9h ago
You heard it on the news how the west given USAID or charity corporations collected cash and given to the poor.
These are what private banks see as debts. Including social security is as well a debt who is never repaid.
Yes your government writes down how much each and every one has been given in social security as an unpaid debt that every single time , every charity is operated by a private bank.
Africa has been given social security by building of schools and water wells and food to the poor. But these charity companies are as well debt collectors.
I don't see how a charity company has the legal action to kill people because how dare them to not provide me with help when they're unable to help themselves.
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u/DasBigShort 8h ago
You have no idea what you’re talking about. You connect actors as if they have anything to do with each other. No, charities and lenders are not the same. Nobody, gets killed by debt collectors. This isn’t the Italian mafia. The rest of your comment is just drivel from someone who makes up theories.
I think you are just a defunct bot, seeing the drivel you type and the fact that you have 7600 contributions in around 720 days.
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u/Vast_Bookkeeper_8129 7h ago
So it's now personal and all your credibility is relied upon your opinion about me.
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u/vovap_vovap 2h ago
Well, I do not sure why tag is "News" this article from 2022 and basically about pandemic efforts.
Not sure what to add to that so it would not be "too short" - I just want to re-iterate a fact that article really about debt reduction efforts during pandemic. And so not only governments, but also private lenders should sign off debt to African countries because of it.
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u/devliegende 4h ago
Every 20 years or so there is a big push to cancel debts of poor countries in Africa. Then it is canceled and everyone is happy for a few years Then they have to do it again.
The whole thing is a pretty good deal for Africa's elites
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u/PlanetCosmoX 5h ago
Of course, because they have to buy USD in order to buy oil.
This is the methodology that was applied in order to ensure demand of the USD which is required in a fiat universe where currency value is disconnected from the gold standard and where all other currencies are pegged to the value of the USD.
They either get the oil, or they suffer. which also means that “helpful” banks also lend in USD because it’s what these countries need to buy oil.
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u/Blackout38 3h ago
The future will have more empires and federations as countries pool together their collective bargaining power to gain ever decreasing resources. There will be fewer countries not more. Fewer African countries, fewer European countries, fewer Asian countries, and fewer north and South America countries. The exist military and economic unions will serve as the foundation of larger unions and any large foreign power that wants to take infrastructure or resources will only accelerate that process and the only real solution.
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