The Covid-19 pandemic has exacerbated the flow of critical funds for current infrastructure development projects in Africa. China’s total loans to Africa are roughly $148 billion.
According to economic (times ET), over the last five years, approximately 66% of the loan amount has been allocated to the transportation and energy sectors. Since 2010, Chinese financial institutions have funded an average of 70 projects in Africa each year, with a total value of $180 million.
China is currently the leading bilateral lender in 32 African countries and the continent’s top lender overall.
Let’s take a look at the top 5 African countries with the most Chinese debt!
5. Republic of Congo $2.4 Billion
The Republic of Congo stands with a debt of around $2.4 billion. Corruption is said to have played a crucial role in the debt’s rise to such alarming heights. Last year, in 2021, China agreed to a second debt restructuring for the Republic of Congo. China’s President Xi Jinping responded positively to a direct appeal from Congo to renegotiate terms of US$2.4 billion loans.A renewed agreement with Chinese lenders was meant to help the republic of congo to unlock funding from the IMF
Under terms of the restructuring deal, repayment of over $1.6 billion would be extended an additional 15 years. Congo, however, was supposed to pay off a third of that amount by the end of 2021 and China refused to reduce the amount of principal owed.
The Republic of Congo is actively working to improve its infrastructure. New airports, dams, bridges, roads, stadiums, and administrative buildings have been built in recent years. Chinese construction firms are heavily involved in these projects.
China funding comes with strings attached, such as the fact that contract awarding is not always transparent. Most contracts appear to have been awarded on a non-competitive basis to private Chinese firms, most likely because project funding is provided by Chinese government loans to the government of the Republic of Congo,
and most of the largest contracts between the Republic of Congo and China are not published.
4. Zambia $6.6 Billion
China, like Kenya, has funded a slew of projects in Zambia, leaving it with a $6.6 billion debt to Chinese public and private lenders, nearly double the amount revealed by the previous government, according to an analysis of loan data by the China Africa Research Initiative (CARI).
Zambia became Africa’s first coronavirus-era sovereign defaulter, and its ongoing debt restructuring has become a test case for Western multilateral efforts to force countries to disclose all of their debt. Zambia has $3.4 billion in Chinese debts, according to the former government led by Edgar Lungu. However, President Hakainde Hichilema, who entered office a few months ago, has stated that the debt load is likely to be greater, according to the CARI assessment release.
From 2000 to August 2021, 18 major and minor Chinese banks or funds disbursed $7.77 billion in loans to Zambia and its state-owned enterprises. Zambia has repaid at least $1.2 billion of those.
According to the researchers, the estimate does not change Zambia’s total debt load of $14.3 billion, but it demonstrates that the Former government “was not transparent about the heavy weight of Chinese financiers among its many external creditors.”
Bwalya Ngandu, the former finance minister under said it is not true that Zambia’s debt numbers were understated. However when asked about the new Chinese debt estimate, he did not immediately provide a response.
The researchers found six instances in which Chinese lenders had cancelled debt owed by Zambia, for a total of $392 million.
3. Kenya $7.9 Billion
Kenya comes in third with $7.9 billion. Majority of the accusations that a large portion of the government funding has been lost to corruption under President Uhuru Kenyatta’s administration. According to reports, the country, which is regarded as an economic powerhouse in East Africa, has constantly been struggling to repay its debts.
Last year, ET reported China owns around 72 percent of Kenya’s external debt which stands at $ 50 billion and Over the next few years, Kenya is expected to pay $ 60 billion to the China Exim Bank alone, the report continued to say that Mombasa port can be lost if Kenya defaults on loan re-payment, according to Kenya’s own auditor general.
Nairobi officials have defended the borrowing spree in recent years, claiming that it was part of efforts to upgrade infrastructure investment, expand energy options and distribution, and improve transportation systems. The government’s increasing access to Chinese funding also points to the development of Sino-Kenyan relations, with the government seeking easy loans with fewer strings attached.
Kenya’s rising debt levels are already causing concern around the world. In addition, Kenya’s access to a $1.5 billion standby credit facility was revoked by the International Monetary Fund due to noncompliance with fiscal targets. Kenya was urged by the IMF to reduce its deficits and put the country’s debt on a “sustainable path.” All of this is taking place as Kenya is rocked by a series of corruption scandals involving government officials accused of siphoning tens of millions of dollars from state coffers by using fake tenders and suppliers.
The top 5 Top 5 Chinese funded projects in Kenya are.
- ‘Safaricom’ Stadium formerly Moi International Sports Centre Kasarani
- Sections of A109 National Highway from Voi to Mutito Andei
- Nairobi- Thika Super Highway
- Mombasa- Nairobi Standard Gauge Railway
- Lake Turkana- Suswa power line transmission
2. Ethiopia $13.7 Billion
According to figures gathered by John Hopkins University School of Advanced International Studies, Beijing is responsible for about half of Ethiopia’s external debt and has lent at least $13.7 billion to the country between 2000 and 2018.
In the heart of Ethiopia’s capital, China constructed a new national sports stadium. Addis Ababa’s commercial center has a capacity of 62,000 people.
The $160 million building project is one of numerous high-profile Beijing-backed mega-projects, ranging from hydroelectric dams to skyscrapers, that have helped Ethiopia become its most important trading partner.
China’s Export-Import Bank contributed $2.9 billion to the $3.4 billion railway project connecting Ethiopia and Djibouti, allowing the landlocked country to access ports. The construction of Ethiopia’s first six-lane highway, a $800 million project, the metro system, and multiple skyscrapers dotting Addis Ababa’s skyline were also aided by Chinese money.
Ethiopia, on the other hand, is having trouble repaying debts taken out to build rail lines and other infrastructure projects. The coronavirus pandemic and the deadly Tigray war have complicated the problem, putting the country at risk of default and raising concerns about the risks associated with some of China’s investments.
1. Angola $42.6 Billion
Oil, diamonds, coffee, lumber, and other mineral resources are Angola’s principal exports. Angola has been Africa’s top oil producer since 2008. Oil was responsible for 85% of GDP, 95% of exports, and 85% of government revenue in 2009. Oil and diamond exports provide for the majority of its revenue.
A number of African governments are renegotiating loan terms with Chinese businesses, including deferring interest payments and stopping non-viable projects, in order to avoid further debt. Angola is the most indebted African country, with a debt of $42.6 billion. The southern African country appears to be struggling to service its debt, with reports claiming that the majority of its oil sales are going toward repayment.
The government is severely indebted, and it relies on oil exports to China to repay its debts, a strategy that has exposed it to plummeting oil prices. The administration has been attempting to diversify the economy and renegotiate debts, but it requires Beijing’s assistance for the time being.
With the signing of their first commercial agreement in 1984 and the founding of the Joint Economic and Trade Commission in 1988, Chinese and Angolan economic and political links grew in the late 1980s. Bilateral trade has continuously increased since then, peaking in 2005. Angola is China’s largest African economic partner, with bilateral trade exceeding US$120 billion in 2010.
China’s oil dealings with Angola, on the other hand, are defined by loans and credit lines tied to infrastructure projects. Angola relied on 256 Chinese loans as source of funding in the period between 2000 and 2019. China Eximbank has been involved in three notable multibillion-dollar transactions:
The government is severely indebted and relies on oil exports to China to pay off its debts, putting it at risk of decreasing oil prices.