CHINA’S LENDING TO AFRICA RISES FOR FIRST TIME IN SEVEN YEARS, STUDY SHOWS

China has vaulted to the top bilateral lender for many African nations like Ethiopia in recent years.

It has lent the continent a total of $182.28 billion between 2000-2023, the Boston University study found, with the bulk of the finances going to Africa’s energy, transport and ICT sectors.

Africa featured prominently in the initial years of BRI, as China sought to recreate the ancient Silk Road and extend its geopolitical and economic influence through a global infrastructure development push.

China, however, started to turn off the cash spigot in 2019, a shift that was accelerated by the pandemic, leaving a series of incomplete projects around the region, including a modern railway meant to link Kenya with its neighbours.

The reduction in loans was caused by China’s own domestic pressures and growing debt burdens among African economies. Zambia, Ghana and Ethiopia have gone into protracted debt overhauls since 2021.

More than half of the loans committed last year, or $2.59 billion, were to regional and national lenders, underscoring Beijing’s new strategy, the study by Boston University found.

“Chinese lenders’ focus on African financial institutions most likely represent a risk mitigation strategy that avoids exposure to African countries’ debt challenges,” it said.

Nearly a tenth of 2023 loans were for three solar and hydropower energy projects, the study found, illustrating a desire by China to move into funding renewable energy instead of coal-fired power plants.

Still, the discernible trends in last year’s figures did not offer a clear direction of China’s financial engagement with the continent, the study showed, since Chinese institutions also wrote loans to ailing economies like Nigeria and Angola.

“It remains to be seen whether China’s partnerships in Africa will retain their quality,” the Global Development Policy Centre said.