Guest Column

Don't trust Eskom's Chinese loan until you've seen the terms

2018-08-24 16:09
Chinese President Xi Jinping claps to applaud China's Procurator-General Cao Jianming during a plenary session of China's National People's Congress at the Great Hall of the People in Beijing. (Aijaz Rahi, AP)

Chinese President Xi Jinping claps to applaud China's Procurator-General Cao Jianming during a plenary session of China's National People's Congress at the Great Hall of the People in Beijing. (Aijaz Rahi, AP)

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Mmusi Maimane

The long-awaited state capture inquiry has finally kicked off. And I think we’ll all agree that the outcome of this inquiry should be two-fold: Firstly, to bring the perpetrators of state capture to justice, and secondly, to ensure that this never, ever happens again in our country.

When President Cyril Ramaphosa was asked earlier this year at a South African National Editors' Forum event how much he knew about state capture, he denied all knowledge. Claiming to be taken aback by the startling revelations contained in the Gupta leaks, he said he thought at the time "it was just a wheel nut that had come loose" while in fact "the wheels had come off completely".

This can’t ever happen again. We cannot have a situation where ministers and presidents claim they knew nothing about the brazen crimes that took place right under their noses. And the only way to prevent this is by putting an end to the secrecy around the deals struck between our government and other players, including other governments. Which brings me to the loan agreement between Eskom and the China Development Bank.

We all know what happens when someone is in deep financial trouble and, having nowhere else to turn, approaches a loan shark for cash. The result is never mutually beneficial. When a lender has you over a barrel and is not restricted by codes and laws that keep the terms in check, they have all the power. More often than not you’ll end up even deeper in a debt trap, and this always comes at a heavy price.

Our government, and particularly Eskom, are over a barrel. By March this year the power utility’s debt had ballooned to R400 billion, and this is forecast to increase to R600 billion over the next four years – more than our entire revenue from personal income tax. This is the position from which they "negotiated" a mega-loan from the China Development Bank to bail out the Kusile power station project.

The chances of this Chinese loan’s terms being favourable to South Africa are beyond slim, which is why no one is prepared to come out and say what these terms are. We only know that the R33.4 billion is to be paid off over 10 years, starting in 2023. The rest of it – the interest rate, the conditions and the repercussions should we default – remain a closely-guarded secret. When I asked President Ramaphosa in Parliament on Wednesday to share with us these terms, his answer was this:

"We can assure you that all the agreements that our government enters into are agreements that are based on ethics, they are agreements that are based on good corporate governance, they are agreements that are meant to advance the interests of our people. That’s all I can tell you."

In other words, South Africans don’t need to know any details. They must just trust that the ANC government will act in the country’s best interest. But if we’ve learnt one thing these past two decades, it’s that this ANC government is guaranteed to do the exact opposite.

The last time Eskom obtained a large international loan to finance its Medupi power station – R30 billion from the World Bank – it ended up being part of an elaborate ANC scam in the form of multi-billion Rand contracts to Hitachi Power Africa, which was partly owned by the ANC’s investment arm, Chancellor House. It was an audacious act of corruption for which Hitachi paid a R270 million fine to make the investigation go away.

So no, simply saying "trust us, we’ll act in your best interest" won’t cut it. If anything it should set the alarm bells ringing. And this is not only the view of the DA. In the past month many experts have expressed their concern at the secrecy around the Chinese loan, and for a very good reason. China’s "Belt and Road Initiative", their massive global investment and lending programme, has been described as "a debt trap for vulnerable countries around the world, fuelling corruption and autocratic behaviour in struggling democracies". (New York Times, 25 June 2018)

No country knows this better than Sri Lanka. The island nation paid a heavy price for taking on a high interest loan from China for the development of a port – a loan they would eventually default on. In the end they had to hand over the entire port in question plus 15 000 acres of land around it to the Chinese for the next 99 years. And after all of this they are still more heavily indebted to China than ever before. These are the strong-arm tactics of a loan shark. Except, instead of broken knee-caps the price extracted is part of your country’s sovereignty.

The cloak and dagger nature of this Chinese loan is not at all dissimilar to the secrecy around the ANC’s dealings with the Russian atomic agency as they tried to push through the controversial nuclear build. Back then we were also reassured by Jacob Zuma and his nuclear team: trust us, it’s all above board. But only the extremely naïve would ever believe this. Almost everyone saw it for what it really was: an opportunity for corruption on a scale never before seen in South Africa.

We’re now told the ANC under Ramaphosa is different. We’re led to believe that they have distanced themselves from the corruption and secrecy of the Zuma administration. But six months into the Ramaphosa presidency that seems like nothing but empty words, because the modus operandi looks identical.

If there’s truly nothing to hide in this Chinese deal, then there should be no reason not to play open cards with us. The best way to scrub out corruption is with lots of sunlight. No more secrecy; no more shady deals behind closed doors. I will be formally asking the President to disclose the full terms of the loan in Parliament, failing which I will make a PAIA application to obtain this information.

What I won’t do is blindly trust the intentions of this ANC government simply because Cyril Ramaphosa said so. And neither should you.

- Maimane is leader of the DA.

Disclaimer: News24 encourages freedom of speech and the expression of diverse views. The views of columnists published on News24 are therefore their own and do not necessarily represent the views of News24.

Read more on:    eskom  |  cyril rama­phosa  |  mmusi mai­mane  |  china
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