The Dragon’s Aid: Demystifying the impact of Chinese Leding and the imperatives of modernising foreign investment policy in East Africa

This chapter weighs into the debate on the sustainability of Chinese lending in Africa. China has been accused by western media, political, and civil society organisations of creating aid dependency on the continent, thereby exacerbating national developmental challenges and obstructing the ability of these nations to realise the United Nations Sustainable Development Goals, in particular, Goal 17.4, which calls on all countries to achieve long-term debt sustainability by 2030. This chapter investigates these accusations, focusing on East African Community (EAC); a region consisting of eight low-income countries with a moderate or high risk of debt distress. We examined the level of indebtedness to China, the designation of the loans, and the challenges faced in honouring the debt repayment obligations. We used dependency theory to unpack and gain a deeper understanding of the challenges inherent in China's contemporary presence in the region. We found patterns consistent with the dependency theory with Chinese loans increasingly relied on as a solution for infrastructure development, thereby increasing the recipient nations' vulnerability to debt distress. As a solution, we proposed a gradual transition away from Chinese loans towards foreign direct investment, requiring the conclusion of modern bilateral investment treaties with a sustainable development agenda.