China Increases Loans to Africa While Countries Struggle With Old Debt - Africa Defense Forum
adf-magazine.com
ADF STAFF Chinese lending to African countries slowed significantly in the years immediately before and after the COVID-19 pandemic. But although many countries still struggle under the weight of enormous debt, China appears poised to launch new projects in Africa with a focus on mineral extraction. Developing countries owe China an estimated $1.1 trillion, and […]

Cross posted from: https://beehaw.org/post/15094770

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Developing countries owe China an estimated $1.1 trillion, and more than 80% of China’s loans are to countries experiencing financial distress, according to AidData, a research lab at William & Mary. Despite this, China rarely agrees to loan forgiveness or principle reduction, preferring to negotiate longer repayment plans on a case-by-case basis.

  • Despite promises of two-way trade, African exporters have little access to Chinese markets for their goods. Most of China’s imports from the continent are oil, gas and minerals.

  • The result is a more one-sided relationship than China says it wants… One that is dominated by imports of Africa’s raw materials and that some analysts argue contains echoes of colonial-era Europe’s economic relations with the continent.

  • With the annual Forum on China-Africa Cooperation (FOCAC) set to take place in September, China is expected to announce new projects in Africa. But its lending practices are coming under scrutiny. Several countries that have taken on debt have found themselves forced to make drastic cuts to domestic programs or raise taxes in order to repay the loans.

  • Kenya, for example, spends about 60% of its revenue on debt payments, with about one-third of that money going to pay the interest on loans.