Why Africa Borrowed Billions of Dollars From China

Tracy Alloway (0:10)

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Tracy Alloway.

Joe Weisenthal (0:16)

And I'm Joe Weisenthal.

Tracy Alloway (0:18)

Joe, I feel like 2020 has been such an unusual and crazy year with a lot of things going on that there's actually some pretty important news that hasn't gotten as much attention as it would normally. If it was any other year, I think a lot of people would be reading about this and talking about this, at least in this sort of investment industry.

Joe Weisenthal (0:43)

Yeah, it's kind of like how news you might put out on a Friday and no one really notices it. It's like all of 2020 is like the Friday news dump because you could put, there's so much other stuff to pay attention to, the virus obviously, the economic shock and the election that no one really has had the bandwidth for anything else.

Tracy Alloway (1:05)

Yeah, that's a really good way of putting it. So the event that I'm talking about that I don't think has gotten as much attention as it normally would is basically a debt crisis in Africa.

And this month, let's see, we're recording in November. So this month, Zambia actually defaulted on some bonds and it's the first sort of COVID related default by an African nation. And a lot of people expect there will be more, even though we've seen some countries, some creditors, the G20 agree a few efforts to try to help indebted countries in Africa. There's a G20 debt service suspension initiative, but even with that aid, people are expecting distress in Africa's debt market to get probably worse before it gets better.

Joe Weisenthal (2:00)

I think you're right. Like if a Zambian debt default would have been the kind of thing that like, oh, let's do an episode on that much earlier.

But in 2020, yes, it's certainly gotten less attention than I think it was.

Tracy Alloway (2:15)

It gets lost.

Joe Weisenthal (2:16)

You know, it's one of those things where I'm sure I even saw headlines on it and I meant to ask more questions in a meeting one day and meant to click on it and learn more. And I didn't because again, I probably had like, you know, some question about what's going on with the presidential transition or something that took over my mind for the day.

Tracy Alloway (2:34)

You mean you weren't thinking purely of Zambia?

Joe Weisenthal (2:36)

Believe it or not.

Tracy Alloway (2:37)

In a meeting in New York.

So in the midst of all this debt distress in Africa, there's also a lot of attention being paid to China and its role in building up that excess debt, but also what China is going to do now that Africa is, you know, economically stressed. Is China going to let up on some of those debt payments in the same way that maybe multilateral organizations or other creditors are thinking about doing? So we're going to get into that side of the African debt crisis quite a bit as well. But more than that, we're going to talk about how that debt buildup actually happened. And we're going to do it in a slightly different way. We have someone who obviously comes from Africa, from Liberia, and who had an official role in the Liberian government.

And a lot of that role involved, being involved in infrastructure projects for which you would incur debt. You take out a loan so you could build a bridge or a road or a railway or something like that. And so we're going to get a different perspective on Africa's debt problem.

Joe Weisenthal (3:50)

Excellent, really looking forward to this.

Tracy Alloway (3:52)

Okay, great. So without further ado, then, I want to bring in our guest, Gyude Moore. He's a Senior Policy Fellow at the Center for Global Development.

He previously served as Liberia's Minister for Public Works and was also Deputy Chief of Staff to the President. So like I said, a lot of experience in a government position within Africa, and it's going to be fascinating to hear his perspective. Gyude, thanks so much for coming on.

Gyude Moore (4:22)

Hi, morning, guys, and thanks for having me. It's a pleasure to be here.

Tracy Alloway (4:26)

So I remember the first time I ever went to Africa, I went to Mozambique back in 2010 And one of the things that really struck me and that I found quite weird at the time was, if you were in Maputo, the capital, everything was Chinese. The cars were Chinese, the trucks were Chinese, the stadium was built by the Chinese, there were Chinese characters all over the place.