: What is neocolonialism and Predatory Lending?
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Invasive species. Usually an outside body of population with similar traits and beliefs refuses to adapt to local cultures and customs. They believe that they are superior to, and should be regarded as the standard.
I believe predatory lending is lending to more at risk people. Payday loans and the mortgage loans that caused the 2008/2009 housing crash are predatory loans.
Neocolonialism and predatory lending is, rather than in the past when a powerful country actually colonized a developing country and controlled it politically, to control a developing country through economics.
Say Wealthy Country A would like secure access to Developing Country B’s coffee exports. They might suggest Country B really needs to build a massive hydroelectric dam to create sufficient power for their country. The developing country will need to borrow $10B from the wealthy country, but “the economic growth will easily allow dam to pay for itself!”
but the project takes longer, and costs more than expected, and the developing country’s currency weakens in the meantime making it even more expensive… they cannot possibly pay back the loans and don’t see the economic gains they were sold on. The government has to cut back on services to its citizens just to make debt payments to the wealthy country.
But then the wealthy country comes in and basically offers to forgive or reduce the debt if the developing country will exclusively trade coffee exports with them, on the terms they set. So the country, facing the spector of reducing spending on education and healthcare, or giving up control of its coffee sector chooses to agree to the coffee deal. This may have negative consequences on the coffee growers, coffee traders, etc.
With those specific terms put together, the context must be China’s activities in Africa. It’s often referred to as neocolonialism, and “predatory lending” is a term used to refer to China’s habit of giving poor African nations large loans and then confiscating infrastructure and/or national resources when they inevitably fail to pay them back.
This phenomenon in general is known as debt-trap diplomacy.
Angola owes China $25 billion, Ethiopia owes them $13.5 billion, Zambia $7.4 billion, the Republic of Congo $7.3 billion and Sudan $6.4 billion. In total, African countries owe China hundreds of billions of dollars.
It should be noted that the term has been criticized and that it has been cooked up in Western think tanks for the purpose of harming China’s reputation internationally. In Africa, opinion in split on the issue of China’s activities on their continent. Some see it as a good thing. Others also note that the International Monetary Fund (IMF) has been doing something similar (rescuing economies with strings attached) allthewhile furthering Western ideals such as liberalism.
Personally, I think China is building up leverage. And when the day comes to exploit it, they will.
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