Africa’s debt rises: Chinese loans to the continent exceed $ 140 billion

Africa has experienced a slowdown in economic growth and the prevalence of the Covid-19 pandemic has exacerbated the flow of funding needed for ongoing infrastructure development projects. Fearing a default, a number of African countries are renegotiating loan terms with Chinese entities, including postponing interest payments and suspending unsustainable projects.

According to IMF estimates, additional funding of up to $ 285 billion would be needed between 2021 and 25 for African countries to step up their spending response to the Covid pandemic.

China’s total loans to Africa during the period 2000-18 amounted to $ 148 billion, mostly in large-scale infrastructure projects. In the past five years, around 66% of the loan amount has gone to the transport and energy sectors, ET has reliably collected. Since 2010, Chinese financial institutions have funded an average of 70 projects each year in Africa with an average value of $ 180 million, and among them, funding for resource guarantee infrastructure has focused on mineral-rich African states. and hydrocarbons, including Zambia (copper), Kenya, Nigeria, Ghana, Angola, Algeria, Mozambique, Egypt, Sudan (Oil and gas), South Africa and Tanzania (Gold), ET told.

China is currently one of the top bilateral lenders in 32 African countries and the continent’s top lender as a whole. The list includes Angola ($ 21.5 billion in 2017), Ethiopia ($ 13.7 billion), Kenya ($ 9.8 billion), the Republic of Congo (7.42 billion dollars), Zambia ($ 6.38 billion) and Cameroon ($ 5.57 billion), ET learned.

The debts triggered a repayment crisis. China holds about 72% of Kenya’s external debt, which stands at $ 50 billion. Over the next few years, Kenya is expected to pay $ 60 billion to the China Exim Bank alone, sources said. The port of Mombasa may be lost if Kenya does not repay its loan, according to Kenya’s own auditor general. In 2015, Reuters reported that there was widespread discontent in Angola over the repayment of oil against loans from China, leaving Angola with little crude oil to export.

Between 2010-15, Nigeria’s debt to China also increased by 136%, from $ 1.4 billion to $ 3.3 billion, and the country had to spend $ 195 million in 2020 to repay its debt. to China. In Djibouti, China provided nearly $ 1.4 billion in funds, or 75% of the country’s GDP, according to reports.

At least 18 African countries have renegotiated their debts while 12 others are in talks with China to restrict loans of around $ 28 billion. In Nigeria, federal deputies have called for an investigation into the country’s lending practices and a review of the “sovereign guarantee clause” in loan agreements with China.

Nigeria must repay an amount of $ 400 million against a loan granted by China for the ‘Nigerian National Information and Communications Technology Infrastructure Phase – II Project’, signed in 2018. The Ugandan government also had to postpone the construction of ‘Kampala -Entebee Expressway after political opposition raised concerns over growing debt trap.

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