African countries not being led into debt trap

Oct 28, 2019

South African President Cyril Ramaphosa on Monday refuted allegations that a number of countries in Africa are being led into a debt trap as they take up loans to fund a number of projects.

Ramaphosa said in his weekly address from the Desk of the President in Cape Town, after returning from the Russia-Africa Summit held in Sochi last week.

“One need only look at initiatives such as the Forum on China-Africa Cooperation, which was last held in Beijing in 2018, to see that the focus is now on partnership for mutual benefit, on development, trade and investment cooperation and integration,” Ramaphosa said.

He lambasted remarks which label initiatives like the recent Russia-Africa Summit as an attempt by world powers to expand their geopolitical influence.

African countries had taken part in the summit to discuss ways of how to increase trade and cooperation between Russia and Africa.

He said the summit was a sign of the growing economic importance of Africa on the world stage.

“What we are witnessing is a dramatic rebalancing of the relationship between the world’s advanced economies and the African continent,” he said.

African countries have consistently affirmed that Africa no longer wants to be passive recipients of foreign aid, said Ramaphosa.

The president said African countries are developing and their economies are increasingly in need of foreign direct investment.

“We are ever mindful of our colonial history, where the economies of Europe were able to industrialise and develop by extracting resources from Africa, all the while leaving the colonies underdeveloped,” said Ramaphosa.

Even now, African countries are still trying to stop the extraction of its resources, this time in the form of illicit financial flows through commercial transactions, tax evasion, transfer pricing and illegal activities that cost the continent more than 50 billion dollars a year, according to Ramaphosa.

The age where “development” was imposed from outside without taking into account the material conditions and respective requirements of our countries is now past, the president said.

“China, Russia, Organisation for Economic Cooperation and Development (OECD) countries and other large economies are eager to forge greater economic ties with African countries.

“This is because they want to harness the current climate of reform, the deepening of good governance, macro-economic stability and the opening up of economies across the continent for mutual benefit,” the president said.

With the International Monetary Fund 2019 World Economic Outlook placing six of the fastest-growing economies in Africa.

These advanced economies want to take advantage of the many investment opportunities on offer, be they in infrastructure, energy, natural resource extraction, manufacturing or agriculture, and agribusiness, according to Ramaphosa.

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