China’s Investment in Africa: Exploring the Human Rights Dimensions

Introduction

Over the past decade, the African continent has risen through the shackles of oppression, socioeconomic challenges, and political instability to forge strong alliances that would enhance its development, economy, and political agenda. However, challenges remain as the quest for social development and economic growth has been accompanied by uneven international financial relationships and indebtedness. Previous encounters with Europeans led to the draining of Africa’s riches for the benefit of others. The end of colonialism, however, was too often not the liberation so courageously fought for and desired by Africans. Predatory lending practices, huge debt from multilateral institutions, countries, and private creditors, unsustainable loans with onerous default conditions, and investments that serve to foster political authority, treaties, and trading relations with unequal partners have set the continent on a course that could invariably threaten its development prospects.

Specifically, China’s development finance in Africa has become a subject of deep examination in recent years. Debates on the long-term impact of China’s economic relations in Africa typically focus on the potential positive economic benefits for both China and partner countries, along with the possible negative consequences for sustainability, governance, and human rights.¹ Proponents focus on the economic development and infrastructure projects that China has brought to the African continent.² It has been counter-argued that Chinese investments are demand-driven and produce tangible outcomes in African countries.³ The rapid and noticeable results delivered by Chinese loans and investments, such as the construction of roads and modern government buildings, along with the transfer of new technologies and knowledge, all within a relatively short timeframe have been a prominent argument put forth by scholars and supporters.⁴ Furthermore, Chinese aid is seen to complement the efforts of Western aid agencies by targeting sectors that often lack funding from Western sources. One study highlights the heavy investment by Chinese companies and banks in physical infrastructure, a sector that has been neglected by many other donors in favor of education, humanitarian, and health initiatives.⁵ Indeed, Chinese firms, with support from institutions like Exim Bank, have also ventured into markets considered risky or lacking in information, where Western private sector involvement has been limited due to concerns about corruption.⁶ These, accordingly, make the country a worthy investment partner with African countries.

Despite these strides, China’s involvement in Africa has garnered attention from critics who accuse Beijing of pursuing its own self-interested motives.⁷ These motives include securing access to Africa’s abundant natural resources, providing subsidies to Chinese firms and exports, solidifying and expanding political alliances.⁸ Besides, China is believed to be aiming for global economic hegemony.⁹ Others agree that while the multilateral relations, treaties, loans, and investments from countries like China represent major opportunities for African countries to boost growth, reduce poverty, build infrastructures, and broaden economically, they could also constrain human and economic development. Alongside, it could generally undermine the capacity of African countries to create the conditions for the realization of human rights. At the core of China’s foreign policy is a noninterference approach to matters of national interest in a partner’s country. Scholars point that China’s noninterference policy allows for the support of notorious leaders, undermining good governance and human rights efforts. Adaora Osondu-Oti notes in this respect that this policy invariably hampers good governance and human rights efforts.¹⁰ Others argue that China typically provides funds for projects with a weak link to growth.¹¹ Although not an African country, Sri Lanka is perhaps the highest-profile example of a loan-facilitated project that has little growth impact.¹² The Chinese-funded strategic Hambantota port was handed over to China on a 99-year lease in 2017 after the Sri-Lankan was unable to pay off its debts to Chinese firms.¹³ The port was reported to have very low utilization and no container traffic. This lack of utilization resulted in Sri Lanka’s inability to repay the loans and the lease was subsequently granted to China in exchange for debt relief. This case highlights the importance of conducting thorough feasibility studies before obtaining loans for infrastructural projects, and ensuring sustainable utilization of the infrastructure. Mattala Rajapaksa International Airport in Sri Lanka serves as another stark example of the consequences of loans with poor economic planning.¹⁴ Despite being designed to accommodate one million travelers per year, the airport currently experiences a daily average of only 10–20 passengers.¹⁵ This tremendous underutilization undoubtedly affects the airport’s profitability and sustainability. Valuable lessons can be learned about the importance of effective market demand, the necessity of careful cost analysis and budgeting before incurring a debt liability. These two incidences have also been used to highlight how China’s growing investments and external economic engagements can negatively impact a country in the long run, by leaving them heavily in debt.¹⁶

Particularly, China’s engagement with Africa continues to raise issues about the erosion of certain human rights on the continent. There are examples of China’s negligence in matters of civil and political rights, such as its support for governments with authoritarian tendencies in Africa. China’s economic activities in Africa also give rise to concerns that Chinese businesses often prioritize their own economic interests over the well-being of local communities and workers. Furthermore, their operations often lack regard for sustainable development and environmental concerns. Within the context of debt and financial investment, this study adds to the body of literature seeking to understand the nature, extent, causes, and consequences of Chinese investment and debt relations with African countries. In this respect, it provides an overview of China’s loans to African countries and discusses the factors that have impacted human rights flowing from these debts. It also explores the impact of the debts on African economies. Most importantly, it examines the human rights significance of these debt liabilities. Through case studies of affected African countries, this paper examines the debt burden, socioeconomic and development consequences, challenges to political and civil rights, and environmental degradation that flow from these loans.

The first section of this study provides a background and outlines the issues that are relevant to the forgoing analysis. This background explores the complex issue of African countries accumulating substantial debt from China. Furthermore, the section provides a comprehensive understanding of the background and context surrounding the Africa–China debt relations and lays the foundation for the analysis of its implications for development and human rights. The next sections delve into the specific human rights implications of the debt liabilities and debt crises, including threats to economic and social rights, challenges to political and civil rights, and impacts on environmental and cultural rights. The final sections of the work provide policy recommendations for African countries, emphasizing the need to strengthen debt management, diversify economic partnerships, and prioritize human rights in development policies. The last part concludes with a reflection on the way forward for Africa–China relations within the context of human rights. The methodology is mixed, with a combination of theoretical and historical approaches and empirical observations using data generated from both primary and secondary sources and content analysis. A comprehensive literature review was conducted to gather relevant information and insights from a range of academic and nonacademic sources. This included scholarly articles, books, reports, and websites. The data collected were then analyzed using a qualitative approach, which involved identifying common themes, patterns, and trends in the literature. Alongside this, case studies and empirical evidence were utilized to provide specific examples and support the analysis. It is important to note that this study focused on analyzing existing research and does not involve primary data collection.

Characteristics of China’s Engagement with African Countries

China’s engagement with Africa goes back several decades. Initially, China provided support to African liberation movements and later became actively involved in trade and investment. The motivations for China’s engagement in Africa are multifaceted. On the one hand, China seeks to secure access to Africa’s vast natural resources to sustain its growing economy.¹⁷ On top of that, China aims to expand its geopolitical influence and enhance its global standing by cultivating strong ties with African nations.¹⁸ Accordingly, “Beijing is using its economic muscle to rally developing countries and reduce the West’s influence over the UN.”¹⁹ Currently, China’s presence in Africa is extensive, with significant investments in infrastructure development, such as roads, railways, and ports.²⁰ China’s investment in African countries intensified following the launch of the Belt and Road Initiative (BRI) in 2013.²¹ Chinese companies are also involved in various sectors including mining, manufacturing, and telecommunications.²² This growing presence is seen to lead to both positive and negative impacts on African economies and societies, making China a significant player on the African continent.

Scholars are divided on whether, to what degree, and how Chinese development investments and financing schemes influence social, economic, environmental, and government outcomes. The discussion largely centers on whether China’s approach will ultimately contribute to sustainable development and long-term prosperity in Africa, or if it risks perpetuating inequalities and hindering democratic and socioeconomic progress. The implication of its financial aid and debt arrangement with African countries is a sharp pointer to this concern. In 2020, for instance, the World Bank identified several African countries that are in debt distress or at risk of debt distress in relation to the scale of Chinese lending.²³ Looking at the pattern and nature of the financial relationship between China and African countries, it is easy to establish that China’s influence through financing state banks extends beyond maximizing commercial advantage. The lending terms established by these banks have a significant impact on the debtor’s economic policies. A study that analyzed 100 loan agreements between Chinese-state-owned entities and government lenders in 24 developing countries in Africa, Asia, Eastern Europe, Latin America, and Oceania revealed the presence of unusual confidentiality clauses and other onerous conditions. These clauses restrict borrowers from disclosing the terms or even the existence of the debt. Such hidden conditions potentially inhibit other lenders from reliably assessing a country’s creditworthiness. The study concludes that “citizens in lending and borrowing countries alike cannot hold their governments accountable for secret debts.” Chinese lenders also seek advantages over other creditors by implementing collateral arrangements and promising to keep the debt out of collective restructuring (known as No Paris Club clause). Moreover, the contracts include cancellation, acceleration, and stabilization clauses that potentially allow lenders to influence debtors’ policies both domestically and internationally. While the enforceability of these terms may be questionable, the mix of confidentiality, seniority, and policy influence could ultimately limit the debtor’s crisis management options and complicate debt renegotiation. The research report identified various examples of such lending terms. One notable finding is that over 90 percent of Chinese contracts reviewed include a clause that enables the creditor to terminate the contract and demand repayment in the event of substantial changes in law or policy within the borrowing country. While policy change clauses are common in commercial contracts, the inclusion of such clauses by state entities raises distinct concerns due to the absence of standard financial regulation governing their actions. Some contracts also give Chinese state banks priority over other creditors.²⁴ Through creative contract design, China has established itself as a powerful and commercially savvy lender and influencer in the developing world. This practice also leads to the conclusion that the country is intentionally or inadvertently creating a debt dependency situation where creditor countries gain political influence and control over debtor countries through exploitative lending practices.²⁵

The Benefit of China’s Financial Investment in Africa: Competing Claims

China’s loans to African countries have become a contentious issue due to the consequential effect of the debt burden on their partner countries. On the one hand, as earlier mentioned, these loans ostensibly play crucial roles in infrastructural and economic development, and promote sustainable growth.²⁶ With China’s aid, loans, and grants, countries can facilitate the overall development of their economies, create jobs, provide education and healthcare, alleviate poverty, and generally improve their capacity to cater to the social wellbeing of their citizens. On the other hand, however, these loans, often given for infrastructure projects, come with strict repayment terms and high-interest rates, which many African countries struggle to meet. China’s approach to lending also does not often attach conditions for transparency or anticorruption which raises issues for accountability and effective utilization of the resources for the purpose it was sought.²⁷ This has led to concerns about the ability of these countries to protect and guarantee the enjoyment of human rights. Chinese investments and business operations with loans obtained for mining, agricultural development, oil prospecting, and manufacturing are also linked to human rights violations and abuses.²⁸

Particularly, Chinese lending in African countries has become a cause for concern to countries at risk of debt distress. Recent data from the World Bank in June 2020 reveal that Chinese lending accounts for over 25 percent of the debt stock in several African nations.²⁹ Figures reveal the debt burden of some African countries as follows: Djibouti (57 percent), Angola (49 percent), Democratic Republic of Congo (DRC) (45 percent), Cameroon (32 percent), Ethiopia (32 percent), Kenya (27 percent), and Zambia (26 percent).³⁰ Equatorial Guinea, Venezuela, and Zimbabwe are also highly indebted to China. In December 2019, the IMF identified seven countries are in debt distress (Eritrea, The Gambia, Mozambique, DRC, Sao Tomé and Principe, South Sudan, and Zimbabwe) and nine are at high risk of debt distress (Burundi, Cabo Verde, Cameroon, Central African Republic, Chad, Ethiopia, Ghana, Sierra Leone, and Zambia). Sudan, Djibouti, Kenya, and Mauritania have since been added to the list.³¹ According to the World Bank’s International Debt Statistics, in 2017, official bilateral credits from China accounted for 62 percent of bilateral official credits or about 23 percent of all public and publicly guaranteed (PPG) debt in sub-Saharan Africa.³² In 2018, for the 40 low-income African countries, Chinese debt came to 60 percent of bilateral lending, and 17 percent of PPG debt in this subset of countries.³³ This heavy reliance on Chinese loans raises concerns about debt impact and the potential human rights challenges and risks associated with managing these debts.³⁴

Accusations that China has been creating a development quagmire for African countries, however, have been countered that the country’s intentions are purely economic and developmental.³⁵ It has been argued that China has proactively provided these loans to African countries to support infrastructure projects and improve economic growth.³⁶ Accordingly, its loans are mutually beneficial, enabling African countries to develop infrastructure and boost economic growth. Others maintain that debt sustainability is a shared responsibility³⁷ and emphasize the importance of African governments implementing effective debt management practices.³⁸ Others have also made the observation that China is not the leading cause of the debt distress in some of African, although the country is a key figure in bringing about a solution.³⁹ It has also been asserted that China’s investments positively contribute to job creation and poverty reduction in Africa. The perception is that China offers the African continent a new source of capital and investments, a partner other than the former colonial powers, especially France, the United Kingdom, and the United States.⁴⁰ In the words of the former Nigerian Finance Minister, Ngozi Okonjo-Iweala, “China has evolved a successful wealth creation formula that it is willing to share with African countries.”⁴¹ Perhaps, many Africans are disenchanted with Western neoliberalism and plausibly regard China as a better alternative based on the huge capital investment in Africa.⁴² Nevertheless, opponents insist that China’s lending practices lack transparency and accountability, potentially exacerbating debt burdens and hindering economic development.⁴³

What is clear in these analyses is that Chinese lending features prominently in the debt picture in Africa. Whether or not China is the leading cause of debt distress or debt burden in African countries, the human rights concerns or implications of these loan agreements are worth noting. Chinese lending in African countries has become a significant factor in the continent’s debt landscape that cannot be ignored. Data have consistently revealed that the large scale of Chinese lending accounts for more than a quarter of the debt stock in several African countries facing or already experiencing debt distress.⁴⁴ The high percentages of Chinese lending in these countries highlight the importance of understanding the implications and prospects of this form of financing, especially within the context of human rights. It is important not to underestimate the role they play in contributing to human rights violations or addressing human rights concerns through debt arrangements. Without a doubt, China can positively contribute to infrastructure and economic development. However, overestimating the positive impacts of economic and infrastructural projects can lead to potential high exploitation, inadequate use of the infrastructure and the disregard of its consequences.

Human Rights in the Middle of China’s Debts in African Countries

The human rights implication of financial investment in Africa, especially the detrimental impact it has on well-being has gathered momentum in recent times.⁴⁵ Recognizing and addressing these human rights implications is crucial in mitigating the negative effects of debt liabilities on vulnerable populations and ensuring a more equitable and sustainable future. The ways in which China’s debt and financial investments in African countries jeopardize various dimensions of human rights are identified through a focus on specific African countries that are significantly affected.

Democratic Republic of Congo’s Debt Situation and Human Rights Impact

The DRC is one of the countries in Africa that is facing a noteworthy debt situation.⁴⁶ Chinese lending has played a significant role in the DRC, accounting for 45 percent of the country’s external debt stock.⁴⁷ Chinese loans have primarily been used to finance infrastructure development projects, with the largest loans being directed toward the construction of highways. The most notable project is National Route 1, which connects Brazzaville to Pointe Noire, with a loan amounting to 1.8 billion dollars.⁴⁸ Another important project is National Route 2, which was financed by a loan of 537 million dollars.⁴⁹ In 2019, China Exim Bank agreed to restructure 1.6 billion of the DRC’s outstanding debt, extending the loan maturities by 15 years and reducing the interest rates.⁵⁰ These developments have had a significant impact on the country’s economy and present both benefits and challenges for its future prospects. This high level of debt raises concerns about the DRC’s ability to manage its financial obligations. It also highlights the dependency on Chinese loans and the potential risks associated with such reliance. This debt situation adds to the broader discussion about the impact of Chinese lending in African countries and the risks it poses for debt sustainability and human rights.

The heavy debt burden could lead to economic instability, hinder development, and increase poverty rates, thereby impacting the enjoyment of economic and social rights. Political and civil rights are also compromised, as the debtor country becomes vulnerable to Chinese influence and control. Environmental degradation and cultural rights infringement occur due to unsustainable resource extraction and infrastructure projects financed by Chinese loans.⁵¹ There are reports to indicate that Chinese mining operations in DRC strip away rainforests, pollute water sources and, ultimately drive out local populations.⁵² One notable case is that of Xiang Jiang Mining, which has been accused of polluting the Aruwimi River and operating without conducting an environmental impact assessment or securing work permits for its employees.⁵³ This case is concerning, as it highlights a pattern of Chinese mining companies disregarding mining and environmental regulations in the DRC.⁵⁴ In 2022, six other mining companies in the neighboring South Kivu province were suspended for similar offenses.⁵⁵ This disregard for regulations has serious implications for the environment and local communities, and it is crucial that the issue is addressed.

In 2008, a consortium of Chinese companies formed a mining venture agreement under the name Sino-Congolais des Mines (Sicomines).⁵⁶ The initial agreement included a 9 billion dollar loan from China for mining investment, development assistance and national infrastructure. This assistance demonstrates China’s commitment to fostering economic development and cooperation with the DRC. However, the project was later scaled back to 6 billion with 3 billion allocated for national infrastructure and 3 billion for mining investment in response to concerns raised by the Paris Club donors and the International Monetary Fund regarding the DRC’s debt sustainability.⁵⁷ As a result of the Sicomines project, a significant number of local residents have been forcibly displaced from their homes, with no proper compensation provided to them.⁵⁸ More than 200 individuals were uprooted from their communities, leaving them without a place to call home and without any form of financial reparation. This displacement has had a profound impact on the affected individuals and their families, as they have been displaced from their familiar surroundings and forced to start anew. Furthermore, the lack of compensation has exacerbated their difficulties in rebuilding their lives and finding alternative sources of income. The repercussions of this displacement on the local communities have been substantial, as families have been shattered and the social fabric of the affected areas has been destabilized. Moreover, the disruption caused by Sicomines has severely affected local farming activities. The company’s activities have led to the destruction of numerous agricultural fields, resulting in a significant setback for the local farming industry.⁵⁹ Farmers have witnessed their hard work and livelihoods vanish as their cultivated lands were demolished during the early stages of prospecting. This destruction has not only caused immediate losses but also long-term consequences, as it takes years for the soil to recover its fertility. The noise, pollution, and constant movement of heavy machinery have made it incredibly challenging for farmers to carry out their daily tasks with ease. They struggle to focus on their crops and livestock, leading to decreased productivity and compromised yields.

Kenya’s Debt Landscape and Human Rights Issues

Kenya’s debt to China has been a topic of concern due to its potential impact on the country’s economy. With its increasing debt levels, there is a risk that Kenya could fall into debt distress, joining other African countries in a precarious financial situation. Chinese lending currently comprises about 27 percent of Kenya’s total outstanding debt, amounting to about 7.5 billion dollars.⁶⁰ Notably, the debt service on Chinese loans was projected to consume 38 percent of all debt service in 2020, indicating a significant impact on Kenya’s budget.⁶¹

Chinese loans have played a significant role in funding infrastructure projects in Kenya, but they have also led to a growing debt burden. For instance, China is Kenya’s biggest bilateral creditor with a total debt of 7 billion dollars by June 2022 according to the Central Bank of Kenya.⁶² Kenya’s debt situation is principally attributed to the 5.3 billion dollar Standard Gauge Railway project.⁶³ The project, which involves linking Nairobi to Mombasa, is largely financed by loans from Chinese financial institutions, notably the Export-Import Bank of China. There have been concerns that China could potentially seize Mombasa Port as collateral for the debt repayments.⁶⁴ The Standard Gauge Railway project has also faced criticism due to its high commercial interest rates, contributing to a substantial portion of Kenya’s debt service. Other examples of large projects financed by Chinese lenders in Kenya include the development of geothermal wells at Olkaria worth 867 million dollars, the Karimenu Dam Water Supply Project valued at 229 million dollars, and the construction of the Nairobi southern bypass highway costing 156 million dollars.⁶⁵ These projects highlight the significant investment by Chinese lenders in Kenya’s infrastructure development.

The argument in some quarters is that Kenya’s debt distress is not solely due to Chinese lending behavior but also stems from governance challenges.⁶⁶ Accordingly, the Kenyan government’s misjudgment of the project’s commercial value, plus the accumulation of debt from the private sector, have contributed to the country’s financial difficulties. One cannot, however, ignore the scale of Chinese loans to China and the consequential effect on socioeconomic, civil, and political rights. As Kenya staggers under its excessive external debt burdens, the realization of human rights and development suffers this impact.

Ethiopia–China Economic and Debt Relations

The Ethiopia–China relationship provides a significant background, which is essential to understanding the current debt burden in African countries. Ethiopia is one of the countries facing debt distress. Ethiopia’s debt situation is attributed to high levels of borrowing from China as loans from the country to have been sourced to fund various projects in Ethiopia.⁶⁷ The country has heavily relied on Chinese loans to finance various infrastructure projects, resulting in a significant accumulation of debt.⁶⁸ Between 2000 and 2018, Ethiopia signed loan agreements with Chinese lenders worth almost 14 billion dollars.⁶⁹ These loans have been utilized for projects such as telecom expansion, wind farms, hydropower plants, transmission lines, the Addis Ababa light rail system, the Addis-Djibouti railway, and sugar complexes including mills.⁷⁰ China holds one of the largest shares of Ethiopia’s outstanding debt, with a total of 8.7 billion dollars, accounting for 32 percent of all public debt.⁷¹ To an increasing extent, 42 percent of the debt service due in 2020 is attributed to Chinese loans.⁷² In 2018, China’s Exim bank granted a restructuring for the loan related to the Ethiopian section of the Addis-Djibouti railway, extending the maturity by 20 years.⁷³

The state of indebtedness in Ethiopia–China economic relations is further characterized by high levels of borrowing from China, lack of transparency in loan agreements, and the inability to repay the loans. The Addis Ababa-Djibouti railway line is believed to have cost Ethiopia approximately 25 percent of its 2016 budget.⁷⁴ This has resulted in economic consequences for Ethiopia along with increased Chinese influence and control over Ethiopian assets, thereby impacting Ethiopia’s sovereignty. This debt liability has serious implications for Ethiopia, leading to economic consequences and potentially compromising its autonomy including challenges in achieving sustainable development. In this respect, the heavy debt burdens lead to reduced public spending on social welfare programs, food, social insurance, healthcare, and education, thereby depriving citizens of their basic rights to a decent standard of living.

China’s Role in Zambia’s Debt Crisis and Human Rights Impact

China’s role in Zambia’s debt crisis is significant, as China is Zambia’s largest creditor.⁷⁵ Holding approximately one-third of the Zambian government’s total external debt, China’s influence on Zambia’s debt cannot be underestimated.⁷⁶ This significant financial dependency on China has important implications for Zambia’s economy and political decisions. It has been observed that “Zambia has been hovering on the precipice of debt distress for several years.”⁷⁷ The debt servicing challenges faced by Zambia and the potential loss of sovereignty due to debt dependency are key concerns that could also impact on human rights.

Chinese loans have become significant with a large portion of the contracted PPG loans being from China.⁷⁸ For instance, between 2016 and 2018, ZESCO, the national power utility, signed off on Chinese loan commitments totaling 5.6 billion dollars for power projects.⁷⁹ However, Zambia’s debt problems and its inability to contribute to project costs have led to disruptions in disbursement for existing projects.⁸⁰ This includes difficulties in providing compensation for land acquisition. Zambia is home to a significant number of Chinese construction firms that are actively involved in executing projects funded through Chinese loans.⁸¹ The number of Chinese construction firms in Zambia makes it the second-largest host of these firms in Africa.⁸² These firms have secured contracts to work on and manage projects financed by Chinese loans. Although these firms contribute to the country’s robust infrastructure development, they raised issues of economic rights, particularly the right to work of the citizens.⁸³ Again, Zambia has established lines of credit with 18 different Chinese lenders.⁸⁴ The presence of numerous stakeholders has resulted in a lack of top-down coordination and strategic oversight regarding these debts.⁸⁵

The lack of publicly available information in Zambia’s economic decision-making process has created opportunities for corruption.⁸⁶ With centralized decision-making in the presidency, the lack of transparency surrounding loans and projects has allowed officials to manipulate project budgets and receive kickbacks.⁸⁷ This absence of rigorous management systems has weakened government accountability measures and hindered economic growth. At the end of 2021, Zambia’s total public debt stood at approximately 34 billion dollars, equivalent to 133 percent of GDP and out of this total, foreign holdings amount to 16.8 billion dollars.⁸⁸ The high levels of debt raise concerns about Zambia’s ability to manage its financial obligations effectively and to meet its human rights obligations to its citizens as the country is forced to divert resources toward debt repayment instead of investing in social welfare programs. On the environmental side, Chinese owned business entities, backed by loans from China, have invested heavily in mining projects in many African countries including Zambia, South Africa, Guinea, and Gabon.⁸⁹ The mines are often situated in ecologically fragile areas, making them highly prone to environmental degradation. These sites, which are chosen for their mineral-rich deposits, often coincide with important ecosystems, such as forests, wetlands, or biodiversity hotspots. The extraction of minerals through mining activities often disrupts the delicate balance of these ecosystems, leading to irreversible damage. Deforestation, soil erosion, water pollution, and loss of habitat are also some of the environmental consequences that can result from their mining activities. The profound impact on the environment is due to the extensive excavation, use of heavy machinery, and the release of harmful substances into the air, soil, and water. These also harm the mining communities and negatively affect persons living near mines.⁹⁰

Zimbabwe’s Loan Commitment and Human Rights

Chinese loan commitments in Zimbabwe have had a significant impact on the country’s economic and infrastructural development. These commitments, totaling 3 billion dollars since 2000, have financed major projects such as the expansion of the Hwange coal-fired power plant, the Kariba South Bank hydropower project, and an upgrade to the state-owned telecoms company, NetOne.⁹¹ The Hwange coal-fired power plant expansion, with a commitment of 998 million dollars, is currently underway and is expected to contribute to Zimbabwe’s energy capacity.⁹² Similarly, the Kariba South Bank hydropower project, supported by a loan of 360 million dollars, aims to increase power generation capacity.⁹³ The upgrade to NetOne, funded with a commitment of 219 million dollars, seeks to improve the country’s telecommunications infrastructure.⁹⁴ Zimbabwe has defaulted on multiple loans to China Exim bank, and each time was granted extensions of the repayment period. A 35 million dollar loan for ZISCOSteel was granted maturity extensions in 2003.⁹⁵ Although these projects have the potential to bring economic and infrastructural benefits to Zimbabwe, they have not been without challenges and criticisms. Challenges and disapprovals of Chinese loans in Zimbabwe stem from several key issues.⁹⁶ First, there are concerns about the high level of debt that Zimbabwe is accumulating through these loans, which may result in future financial burdens and hinder the country’s economic development.⁹⁷ On top of that, there are criticisms regarding the lack of transparency and accountability in the loan agreements, with some questioning the terms and conditions under which these loans are granted. Furthermore, there are concerns about the impact of these loans on Zimbabwe’s sovereignty and political influence, with suggestions that China may be exerting undue influence over the country’s decision-making processes.⁹⁸ Finally, there are challenges related to the implementation and management of projects financed by Chinese loans, including issues of quality control, delays, and the use of Chinese labor instead of local workers. These challenges and criticisms highlight the need for careful evaluation, transparency, and diversification of funding sources for future development projects in Zimbabwe.

Zimbabwe’s ongoing struggle with debt sustainability issues dates back to over two decades ago.⁹⁹ Zimbabwe’s debt has become a longstanding issue, with the country grappling to break free from its financial burden.¹⁰⁰ Despite efforts to break free from its debt burden, the country remains firmly entrenched in its financial predicament. In recent years, the Chinese loans received by Zimbabwe, particularly during President Mnangagwa’s tenure, have further exacerbated the country’s debt sustainability challenges.¹⁰¹ Accordingly, rather than contributing to social and economic development, these loans have contributed to the deepening of its debt liability.¹⁰² This detrimental impact raises concerns about the long-term implications for Zimbabwe’s economy and the ability to uphold and fund vital social welfare programs.¹⁰³ Overcoming this debt peonage poses significant challenges for Zimbabwe, as it strives to find strategies for debt relief while also promoting sustainable development and economic diversification.

Djibouti Debt Burden and Its Human Rights Effect

As of 2010 Djibouti was identified as the country with the highest debt burden and placed in the debt distress category (about 57 percent).¹⁰⁴ Djibouti’s public external debt has experienced a significant increase, rising from 50 percent of GDP in 2016 to over 70 percent by 2020.¹⁰⁵ More than half of this debt burden is attributed to Chinese lending, with Djibouti owing a total of 1.2 billion dollars to Beijing or over 45 percent of Djibouti’s GDP as of 2021.¹⁰⁶ This amount surpasses the country’s debt to multilateral creditors, which stands at 600 million dollars.¹⁰⁷ This situation highlights the tension between lending to countries that may struggle with future repayments and the importance of building and maintaining influence. Despite Djibouti’s debt distress, China considers the country too strategically important to allow it to default, as evidenced by the Exim Bank’s renegotiation of its credit line for the Ethiopia-Djibouti railway project. This indicates that China prioritizes capitalizing on Djibouti’s geostrategic significance over minimizing future financial liabilities. The potential consequences of Djibouti defaulting on its debt are significant. Defaulting would not only damage Djibouti’s reputation in international markets, but it could also lead to a loss of investor confidence and make it difficult for the country to access financing in the future. Equivalently, defaulting could result in financial sanctions and restrictions from international creditors, further exacerbating Djibouti’s economic challenges.

China’s interest in Djibouti is primarily driven by its strategic location and deep-water port complex. Djibouti serves as a crucial transshipment point for 95 percent of neighboring Ethiopia’s import and export trade, making it an important hub for economic activity in the region.¹⁰⁸ However, Djibouti faces a significant shortfall in critical infrastructure, which has prompted the country to seek assistance from China. Between 2012 and 2020, China provided 1.4 billion dollars in investments and loans for infrastructure projects in Djibouti.¹⁰⁹ This has deepened the economic and political ties between the two countries. Furthermore, China’s establishment of its first overseas military base in late January 2016 in Djibouti has significant implications for regional and global security, especially given its proximity to a US military installation.¹¹⁰ This installation also raises issues of concern over military domination and political control which could, in turn, put a dent in civil and political rights.

Notably, China’s influence in Djibouti extends beyond economic investments, infrastructure development, and mere military presence. The Chinese government’s assistance in building critical infrastructure has given them a significant influence on Djibouti’s political decisions as the reliance on Chinese funding has caused Djibouti to align its policies with China’s interests. This has been demonstrated through the signing of agreements and the establishment of a legal framework for Chinese banks to operate in Djibouti. The close relationship between Djibouti and China raises questions about the potential challenges and benefits of China’s involvement in the country’s political landscape.

It can be said that China’s growing influence in Djibouti has both economic benefits and potential challenges for the country. On the one hand, China’s significant investments and loans have helped address Djibouti’s critical infrastructure shortfall, which traditional donors have been reluctant to finance. This has strengthened China’s role as a major player in Djibouti’s economy. Significantly, the deepening relations between Djibouti and China have led to the establishment of a free-trade zone, creating economic opportunities and a legal framework for Chinese banks to operate in Djibouti, presaging a steady flow of credit.¹¹¹ However, China’s military presence in Djibouti, with the establishment of its first overseas military base, raises implications for regional and global security.¹¹² Especially since the country is already grappling with several major political-security crises and fierce competition in the region. The spillover effects of conflict in Ethiopia have already affected food production and access to produce from Ethiopian markets. The proximity of China’s base to a US military installation adds a layer of complexity to the situation and raises concerns for civil and political rights. Soaring global oil and food prices have pushed up inflation which has a rollover effect on the ability to pay back this debt without impacting severely on the rights of the people. These challenges need to be carefully managed to ensure a stable and mutually beneficial relationship between China and Djibouti.

Balancing Interests and Securing Human Rights

It is clear from the forgoing that China’s loans, aid, and investments to Africa comes with its fair share of potential benefits for growth and development. At the same time, large lending flows can result in adverse consequences for socioeconomic development, political freedom, and the environment. Thus, there is a need to balance the competing gains and losses. Through the identification of these implications, policymakers, stakeholders, and international actors can work toward addressing human rights issues and ensuring that development projects align with principles of transparency, accountability, and respect for human rights. It is worth emphasizing that the protection of human rights lies within the responsibilities of African states and their governments. To mitigate the human rights associated with the risk of debts, the following approaches can be adopted. These policy recommendations could empower African countries to navigate the challenges posed by their external debts while safeguarding their human rights and ensuring sustainable development.

Enhancing Debt Management and Promoting Transparency

To mitigate the effect of debt burden on human rights, African countries must focus on strengthening debt management while also ensuring that there is transparency. This involves implementing effective debt monitoring mechanisms and improving transparency in loan agreements. African countries should also prioritize building capacity in debt management and negotiation to ensure sustainable development and avoid falling into debt traps. By promoting transparency, accountability, and good governance in debt management, African countries can safeguard their human rights and prevent potential violations. African countries should also establish clear procedures for borrowing and monitoring debt levels in loan agreements. This will help prevent excessive debt accumulation and mitigate the risk of falling into debt distress that would, in turn, limit its capability to cater to the human rights of its citizens.

Additionally, it is essential to enhance cooperation and collaboration between African countries and international financial institutions to develop comprehensive debt management strategies and policies. African countries should collaboratively also support and seek alternatives that make debt repayment more manageable. The UN has called for increased support and technical assistance to African countries in order to strengthen their debt management capabilities and mitigate the negative effects of the debts and financial investments. Along with this, the UN has advocated for greater transparency in lending agreements emphasizing the importance of proper risk assessment and debt sustainability.¹¹³

The UN has also recognized that irresponsible lending and borrowing can lead to economic instability, hinder development efforts, and perpetuate poverty. The United Nations has therefore taken steps to address this issue around debt burdens by creating guidelines for responsible lending and borrowing.¹¹⁴ One notable Guideline is the 2012 United Nations Conference on Trade and Development (UNCTAD) Principles on Promoting Responsible Sovereign Lending and Borrowing.¹¹⁵ These principles establish the essential responsibilities of both lenders and borrowers of sovereign debt. They aim to promote growth and development by outlining legal norms and standards for responsible lending. Notably, these guidelines were developed in close consultation with over 70 countries, including major international organizations such as the IMF, the World Bank, the OECD, and many leading NGOs.¹¹⁶

Similarly, the introduction of the UNCTAD Debt Management and Financial Analysis System has proven to be crucial in assisting African countries in effectively managing and analyzing their debt.¹¹⁷ This system provides valuable tools and resources to governments, enabling them to enhance their debt management capacities and make informed decisions regarding their debt burden.¹¹⁸ By providing reliable and comprehensive financial analysis, the system empowers governments to develop effective strategies for debt repayment and to mitigate the risks associated with unsustainable debt levels. This system plays a crucial role in promoting financial stability and sustainable economic growth in African countries, ensuring that they can effectively manage their debt and achieve long-term development objectives.

The UNCTAD Roadmap and Guide to Sovereign Debt Workout Mechanisms (2015) also serves as a comprehensive resource to enhance the coherence, fairness, and efficiency of sovereign debt workouts.¹¹⁹ It provides a framework that emphasizes core international legal norms and principles, including Good Faith, Transparency, Impartiality, Legitimacy, and Sustainability in the restructuring processes. By promoting these principles, the Roadmap and Guide aims to ensure that debt workouts are conducted in a just and equitable manner. It also recognizes the importance of reasonable and fair lending practices, as highlighted in the UN Resolution on Sovereign Debt Restructuring Processes.

The UN Resolution on Sovereign Debt Restructuring Processes, adopted by the United Nations General Assembly in September 2015, likewise holds significant importance in promoting reasonable and fair lending practices among nations.¹²⁰ This resolution highlights the need for adherence to core international legal norms and lending principles in sovereign debt restructuring processes. Importantly, the resolution aims to ensure that debt workouts are conducted in a coherent, fair, and efficient manner. This resolution and the guidelines serve as powerful instruments for creating a more equitable and sustainable financial system, where countries can effectively manage their debt burdens and work toward economic stability and growth. The measures in the resolutions and guidelines present ample opportunities for African countries to be mindful of their debt-related dealings.

Imposing a debt limit management system, where governments can only borrow within an approved debt limit, is another way of managing debt burdens from the outset. In China, for example, the Budget Law stipulates that subnational governments are only allowed to borrow through government bonds within the approved debt limit.¹²¹ The law also prohibits any other channels of borrowing by subnational governments. The law puts in place means of controlling debt by stipulating detailed and specific provisions on the issuer, the means, the procedure, the purpose, and the responsibilities of subnational government borrowing. Perhaps, African governments can take a cue by having a legal process that places a statutory ceiling on borrowing to hold the nation’s finances in check.

Diversifying Economic Partnerships and Reducing Dependence

African countries should actively seek to diversify their economic partnerships beyond China, engaging with other countries and regions to reduce their reliance on Chinese loans and investments. By expanding their economic partnerships with other countries and regions, African nations can lessen their reliance on China and mitigate the risks associated with debts. This diversification can lead to increased competition among lenders, resulting in better loan terms and reduced vulnerability to unilateral influence. Even more so, African countries should prioritize attracting foreign investments that align with their development goals and respect for human rights. By actively seeking economic partnerships that promote sustainable development and protect human rights, African countries can create a more balanced and equitable economic landscape that safeguards their citizens’ rights and well-being. Furthermore, technical assistance and training provided by organizations such as the United Nations, regional development banks, and international monitoring bodies can greatly contribute to building the capacity of African countries to manage their debts effectively.

Prioritizing Human Rights in Development Policies

African countries should integrate human rights considerations into their development policies and prioritize the protection of economic, social, civil, political, environmental, and cultural rights. This can be done through robust legal frameworks, effective monitoring mechanisms, and inclusive policymaking processes that involve civil society organizations and affected communities. By prioritizing human rights, governments can ensure that the pursuit of economic growth and development does not come at the expense of the rights of their citizens. This includes safeguarding social and economic rights by ensuring access to basic services such as food, health, education, social security, and fair labor practices, in tandem with political and civil rights like freedom of expression, right to dignity, and the right to peaceful assembly. Furthermore, governments must address environmental and cultural rights by requiring strict environmental impact assessment before, during, and after the execution of projects to prevent degradation and infringement on indigenous communities’ rights.

The human rights impact assessment of every loan agreement, especially its implications on specific rights is vital. This assessment should typically aim to analyze the potential impacts that loan agreements may have on human rights, with a focus on ensuring the protection and promotion of these rights. The assessment should consider the legal framework, potential impacts, mitigation measures, monitoring mechanisms, evaluation of effectiveness, and reporting and accountability mechanisms. Such assessment must be done through a rigorous and systematic approach that combines document analysis, stakeholder consultations, and impact assessment tools. The document analysis includes reviewing relevant loan agreements, ensuring that they comply with international human rights standards, national laws, and regulations. Stakeholder consultations would provide valuable insights from experts, civil society organizations, and affected communities. The impact assessment tools enable the identification and evaluation of potential Human Rights impacts. Incorporating human rights into development policies will help mitigate the negative impacts of debt liabilities and protect the well-being and dignity of African populations.

These steps, along with the active involvement of international institutions, organizations, and civil society, hold the potential to mitigate the negative impact of the debt liabilities and safeguard human rights in Africa.

China’s Obligation to Protect Human Rights in the Context of Debt Arrangements

China’s approach to development finance in Africa requires a delicate balance between pursuing its self-interests and ensuring mutual benefits. While China does have strategic motives, such as securing access to natural resources and expanding its economic influence, it is also responsible for ensuring that its goals do not affect human rights. China needs to ensure that its economic interests do not come at the expense of fundamental human rights, such as access to basic services, labor rights, and environmental protections. This requires careful consideration and evaluation of the potential social and environmental impacts of debt-funded projects. By implementing measures such as conducting thorough human rights impact assessments and ensuring the inclusion of safeguards in debt contracts, China can better fulfill its responsibility to protect human rights while pursuing its economic interests. Correspondingly, open dialogue with debtor countries, civil society organizations, and international stakeholders are crucial to create a platform where these concerns can be addressed, and potential conflicts can be mitigated. By finding this delicate balance, China can play a significant role in promoting both economic development and respect for human rights in the context of debt arrangements.

Another key step in this regard is enhancing the transparency of China’s debt agreements and arrangements with other countries. By providing clear, open, and comprehensive information on the terms, conditions, and implications of these arrangements, China can ensure that its debt-related activities are conducted in a transparent manner. This would enable the borrowing countries and relevant stakeholders to make informed decisions and better assess the potential human rights impacts of these arrangements. Equivalently, China should establish mechanisms to enhance accountability, both domestically and internationally, for any human rights violations that may arise as a result of its debt arrangements. This could involve creating avenues for affected individuals and communities to seek redress and hold accountable those responsible for any violations. Furthermore, China should actively engage with international monitoring bodies and allow for independent assessments of the human rights implications of its debt-related activities. Strengthening transparency and accountability will not only enhance China’s credibility in protecting human rights but also contribute to sustainable and responsible debt practices globally.

To enhance its role in protecting human rights, China could actively collaborate with international organizations. This involves partnering with existing international bodies that specialize in human rights, debt relief, and sustainable development, such as the United Nations and regional development banks. By participating in joint initiatives, China can benefit from the expertise and guidance of these organizations, improving its capacity to address human rights issues in the context of debt arrangements. This collaboration would also facilitate knowledge sharing, capacity building, and the adoption of best practices, ultimately leading to more effective protection and promotion of human rights.

China can engage in capacity-building initiatives by providing technical assistance, training programs, and scholarships to African individuals and institutions. This investment in human capital can help African countries build their own expertise and capacities, leading to sustainable development and long-term mutual benefits. Through these efforts, China can create a win–win situation, where both parties reap the rewards of their collaboration and foster a stronger and more balanced relationship.

The conduct of Chinese businesses in Africa, especially the exploration, the extraction, processing of transitional energy requires close regulation to protect the environment. To impose a guideline on the business operations and activities of its nationals and provide a comprehensive framework to guide their CSR efforts, the China Chamber of Commerce of Metals, Minerals and Chemicals Importers and Exporters (CCCMC) developed the ISO 26000, a widely recognized international standard for social responsibility.¹²² In 2014, the “Guidelines for Social Responsibility in Chinese Outbound Mining Investment” was also created to serve as a regulatory framework for Chinese mining investments and operations. It also aims to enhance corporate social responsibility (CSR) and sustainability strategies, as well as management systems.¹²³ While the guidelines are mainly based on ISO 26000, certain modifications have been made to tailor them to the specific needs and challenges of the mining industry. By providing guidance and standards, the CCCMC aims to assist Chinese companies in improving their CSR practices and enhancing the overall impact of the mining sector on social and environmental aspects. The CCCMC subsequently followed up by producing “The Chinese Due Diligence Guidelines for Responsible Mineral Supply Chains” to regulate Chinese mining investments and operations.¹²⁴ These guidelines aim to guide Chinese companies in improving their CSR and sustainability strategies, as well as their management systems. The guidelines provide a comprehensive overview of responsible mineral supply chains, emphasizing the importance of due diligence throughout the process. They outline the key steps involved in the due diligence process and highlight the need for supply chain mapping and transparency. Additionally, the guidelines address the issue of conflict minerals and the importance of protecting human rights within the mineral supply chains. The Chinese government has also sought to bind its nationals to environmental CSR. In this respect, the China’s ministries of Commerce and of Environmental Protection published “Guidelines for Environmental Protection in Foreign Investment and Cooperation” in February 2013. The China Exim Bank has issued “Guidelines for Environmental and Social Impact Assessments” and the China Banking Regulatory Commission (CBRC) has produced “Green Credit Guidelines” governing China’s financiers. By adhering to these guidelines, Chinese companies can ensure responsible and ethical practices in their extractive and mineral supply chains. Sanctions must also be rigorously pursued for breaches by the regulatory bodies in charge to not only ensure compliance to regulations but also to ultimately protect the reputation of China.

Note, however, these recommendations are in no way intended to downplay the role of host countries in carrying out the duty to guarantee, respect, and protect the human rights of their citizens.

Conclusion

China’s development finance in Africa has significant economic implications for African countries. With Chinese investments and loans flowing into the continent, African nations have seen an increase in infrastructure development, particularly in sectors such as transportation, energy, and telecommunications. This has resulted in improved connectivity, enhanced trade networks, and increased economic activity. Chinese financing has also contributed to job creation and technology transfer in Africa, promoting industrialization and economic diversification. Moreover, China’s development finance has allowed African nations to diversify their economies and reduce dependency on a few key resources. However, there are concerns over the sustainability of these projects and the debt burden they may impose on African countries in the long run. One of such concern is the risk and corruption associated with Chinese investments. The debt burden and economic challenges resulting from China’s loans further pose threats to both economic and social rights, as well as challenges to political and civil rights. These human rights may be compromised as African governments become beholden to China for financial support. Coupled with this, the activities of Chinese firms through their financial investments have led to environmental degradation and infringements on cultural rights. These environmental and cultural rights may also be infringed upon as African countries may be pressured to exploit natural resources or allow cultural heritage sites to be disturbed to repay their debts. This paper has analyzed these issues and made recommendations. These include strengthening debt management and transparency, diversifying economic partnerships, and prioritizing human rights in development policies.

Notes