August 1, 2008 / 3:43 PM / 9 years ago

UPDATE 1-Africa finance chiefs eye consensus on China funds

(Adds Strauss-Kahn comments, China bank on farm investments)

By Daniel Magnowski and Vincent Fertey

NOUAKCHOTT, Aug 1 (Reuters) - African finance ministers and central bankers met IMF and World Bank counterparts on Friday hoping to hammer out guidelines on handling a tide of new investment into the continent, much from resource-hungry China.

China, Brazil and India have been tying up infrastructure or loan deals in African countries, often in return for oil, metals and other resources, raising concerns among traditional lenders like the International Monetary Fund (IMF) and World Bank.

“It’s good news that there are new sources of financing, but we have to be very careful in order that this new financial help does not destroy the original policies of the Bretton Woods institutions that aim to cancel debt,” IMF Managing Director Strauss-Kahn told Reuters in an interview during the meeting.

The Caucus meeting in Mauritania brought together cental bankers and finance ministers from the poorest continent.

“We decided to set aside a day to talk about non-traditional financing sources, that is, China, India, Brazil and sovereign wealth funds, in order to clarify the way the IMF and World Bank appreciate the interests of these new sources of financing in Africa,” said Ousmane Kane, Mauritanian central bank governor and President of the African Caucus of the IMF and World Bank.

Besides loans, deals with China often involve Chinese workers building roads and other infrastructure projects, while natural resources move the other way, and the sums are awesome.

IMF officials say they must examine the debt implications of a $9 billion mining and infrastructure deal between China and Democratic Republic of Congo before deciding if Congo will qualify for an IMF programme and subsquent debt relief package.

Opposition politicians and anti-graft groups in Niger have criticised the lack of transparency surrounding a deal between the government and China’s state oil company CNCP which could be worth $5 billion to one of the poorest countries on earth.


The China Development Bank said it was “anxious” to work in agriculture and plans further farming investments on the continent, where it has granted loans worth several hundred million dollars, mostly to processing companies in East Africa.

“(The) China Development Bank is willing to share its experience and provide financing to agricultural development in Africa,” Governor Chen Yuan told the Caucus.

Yuan said that in the current food and fuel crisis, Africa should make agricultural development its “top priority”.

Despite rising prices for many of Africa’s commodity exports in recent years, many economists worry countries who have benefited from huge debt forgiveness packages risk plunging into a new round of unsustainable borrowing from new lenders eager to secure access to oil and minerals.

“A big concern is debt. Lots of debt has just been wiped out, and now with China coming, are we going to see a new cycle? Prices of oil and other resources are high at the moment, but if prices drop, African countries will still have to pay interest on loans from China,” said a delegate who asked not to be named.

African countries, rather than lenders, must be responsible for fully assessing the future obligations to which they commit by accepting loans from new sources, Mauritania’s Kane said.

“We are for transparency ... The meeting aims to clarify the position between traditional and non-traditional financing sources, but most important is that Africa has to give its position to these non-traditional sources, to tell them what they have to do for us,” he said.

Chinese interests in Africa have mushroomed in recent years.

"Like it or not, China is a big part of Africa now," another delegate said. (For full Reuters Africa coverage and to have your say on the top issues, visit: (Editing by Alistair Thomson, editing by David Christian-Edwards)

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