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TRUMP MOVE TO PAMPER AFRICA AWAY FROM THE CHINESE

Author:
NANA OBIRI,
Date:
2018-09-25 00:38:59





The US is preparing to create an agency that can invest up to $60bn in the developing world in an effort to counter what some in Washington describe as China’s use of debt to wage “economic warfare”.
In what observers say is the biggest shake-up of US commercial lending to developing countries in 50 years, the Overseas Private Investment Corporation will be folded into the new agency and allowed to invest in equity. At present Opic can invest only in debt, putting it at a disadvantage to European development finance institutions (DFIs). Ray Washburne, president and chief executive of Opic, told the FT that China – by using what he called “loan-to-own programmes” – was “creating countries that have the shackles of debt around them”.
That amounted to “economic warfare”, he said.By more than doubling Opic’s lending ceiling to $60bn and allowing it to invest in equity, he said, it would be put on “an equal footing with other DFIs”. Riva Levinson, president of KRL, a Washington-based emerging markets consultancy, said she hoped legislation could be passed by the Senate before midterm elections in November. “This is the first real attempt to recognise that the US needs to support its companies in the commercial battlefield in the developing world,” she said. “Because China is taking it all.”The Better Utilization of Investments Leading to Development act (Build Act), which passed the House in August, has bipartisan support, including from close allies of President Donald Trump such as Wilbur Ross, secretary of commerce.

Opic will be folded into the new agency, called the International Development Finance Corporation. The arrangement has been sold to the president, as spearheading private-sector investment and countering China’s so-called debt diplomacy, while making a profit for the US taxpayer, according to those involved in talks. “Opic started out being viewed as corporate welfare and within a year the office of management and budget was giving it an extra $30bn,” said Ms Levinson. “It’s a blueprint of how to get things done in Trump’s Washington.”






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