Rajpriya Gautam

Chinese infrastructure lending to African countries is widely expected to slow over the next 1-2 years amid mounting debt sustainability concerns,  according to analysts interviewed by the South China Morning Post.  This would mark a dramatic change over the past twenty years when Beijing emerged as a key source of development finance that helped Africa close its gaping $100 billion-a-year infrastructure deficit. From 2000 to 2018, China extended $148 billion of loans, mostly for infrastructure development, according to data from the China-Africa Research Initiative. But now, as a growing number of those countries are struggling to repay their debts, Chinese creditors are becoming understandably cautious about providing new loans to borrowers facing considerable financial duress.  At least 18 countries are currently renegotiating debts with China, with 12 others still in talks to restructure an estimated $28 billion of Chinese loans, according to the New York-based consultancy Rhodiu

Michael Pettis  is one of the world’s foremost China economists. He shared a few insights this weekend on the current trend of reduced Chinese lending to developing countries.  In a three-part thread published on Twitter , the Peking University professor said Beijing’s new wariness around lending large sums to developing countries was entirely predictable: 10-15 years ago most analysts were either marveling at Beijing’s spectacular success in providing development loans to the world or were terrified at the speed with which Beijing was expanding its influence abroad.  I argued, however, that Beijing was mostly just following the path that every country before it followed when first “going out” to invest abroad: it was significantly underestimating risk, and would soon begin pulling back sharply on its lending once it discovered how risky these loans could be. COVID-19 – as it has done with so many other trends – seems to be accelerating this pro cess. Get a daily email packed

Veteran China journalist Mark K. Magsted’s documentary podcast series “ On China’s Silk Road ” featured an in-depth analysis  in its latest episode , posted on Friday, about Chinese investments in Ethiopia and the new risks presented by the conflict in the Tigray region: “So Chinese and other companies in Chinese-built industrial parks can send their goods on a Chinese-built train to a Chinese-built port. Ethiopians get jobs, a chance to build skills and diversify the economy. And China gets a presence in the strategically vital Horn of Africa. As China’s leaders like to say – it’s a win-win. But Ethiopia is still a volatile place, with many ethnic and political rivalries. And one just turned hot again, in Ethiopia’s northern region of Tigray. That’s included airstrikes against the local Tigrean militia, which attacked a government military base.” L isten to the full episode of “China’s New Silk Road” on the Public Radio International website. Get a daily email packed with

The head of the Africa Centres for Disease Control and Prevention, John Nkengasong,  said last week that his organization, together with the African Union, have started talks with both Chinese and Russian suppliers  of COVID-19 vaccines to ensure the continent will receive sufficient supplies when they become available. There’s mounting concern, both within the AU and among national governments, that African states will either be priced out of the market or placed at the end of the list of recipients for a future COVID-19 vaccine.  While most African countries will qualify to receive vaccine supplies from the WHO’s Covax alliance, that won’t be enough to cover the entire population as Covax only provides for up to 20% of a country’s population. So, Dr. Nkengasong is reaching out to the Russians, Chinese, and others to make up the difference. He said he’s agnostic as to where the vaccines come from: “We are not limiting ourselves to any particular partner. As a continent of 1.2 billio

The Chinese electric vehicle company BYD donated  16 million masks to medical workers in Africa  as part of the  Africa CDC’s public awareness campaign #AfricaMaskWeek  that ends today.  Focus on China’s PPE donations in Africa has dropped significantly over the past few months, but they’ve continued largely uninterrupted, with masks and other materials being given to various African organizations on behalf of a wide variety of Chinese stakeholders ranging from private companies like BYD to the People’s Liberation Army to Chinese provincial governments. Get a daily email packed with the latest China-Africa news and analysis. Read exclusive insights on the key trends shaping China-Africa relations. Connect with leading professionals on the China- Africa Experts Network. You've reached your free monthly article limit. Subscribe today for unlimited access. SUBSCRIBE: $15 per month SUBSCRIBE: $149 per year -17% Savings The post Although Largely Out of the He

The Kenyan Treasury is reportedly considering a new plan to approach its creditors to ask for outright cancellation of some of its debt,  according to a report in Business Daily . Although a final decision has yet to be made, the Treasury is apparently considering the option to approach both multilateral and bilateral creditors for debt forgiveness. Tax revenue is simply not providing sufficient revenue for the government to service its debts . In the four-month period to October, debt servicing costs consumed 58% of all revenue. Meantime, tax revenue fell by 14% during that same period due to worsening economic conditions. While multilateral lenders like the World Bank and the IMF will probably be more accommodating to Nairobi’s request, if it’s made, there’s no indication that China will agree to such a proposal. Beijing has been clear that it will work with borrowing states to restructure loans but, at least so far, has  not shown any willingness to cancel debts . Kenya currently

The  alarming headlines in today’s Kenyan newspapers  about the country’s apparent inability to repay some of its debts contrasts sharply with the message conveyed by Cabinet Secretary for National Treasury Ukur Yatani  in an interview with Bloomberg’s Africa bureau chief David Malingha : David Malingha : Have you talked to China and have they responded to your requests for any form of debt relief? CS Ukur Yatani : Foremost, let me correct the impression that the debt is only owed to China. We have debts to a number of bilateral and multilateral partners and we treat them equally. China is no exception. And we have not made any formal engagements to either reschedule debt or negotiate on any matter because at the moment we [have a] fairly balanced debt situation [and] because of those obligations we don’t want to give an impression that we are straining in any way.” Yatani’s office has been aggressively pushing back on the “Kenya is broke” narrative, which is becoming increasingly

China is turning inwards and will slow its economic engagement in emerging markets in Africa and Latin America in the post-COVID-19-era,  according to new analysis from the research arm of the German financial services giant Allianz. The report was written by three senior economists covering Asia, Europe and the Americas and should serve as an important warning to policymakers in Africa that they should not expect the same steadily rising trade volumes and access to Chinese financing that they’ve become accustomed to over the past ten years. “The tide turned in 2020 (and even before the Covid-19 outbreak), with increasing repayment difficulties of debtors and debt renegotiations,” said the authors. “Ongoing partial defaults and payment deferrals have certainly paved the way for a slow decline in Chinese outbound lending in the coming years,” they added. What a “China-Less Recovery” Will Mean For Emerging Markets in Africa CHINA’S GROWN WEARY OF AFRICA’S DEBT DRAMA : “China is like

600 Chinese nationals  have reportedly been safely escorted out of the conflict zone in northern Ethiopia. “With the assistance of the Ethiopian side, the Chinese citizens there have basically been evacuated,”  confirmed Chinese Foreign Ministry spokesman Zhao Lijian at the regular press briefing on Tuesday in Beijing . Fans of the blockbuster action movie “ Wolf Warrior 2 ” may be disappointed to learn that the thousands of Chinese PLA forces in neighboring Djibouti were not called on to lead the kind of heroic rescue operation depicted in the movie. Get a daily email packed with the latest China-Africa news and analysis. Read exclusive insights on the key trends shaping China-Africa relations. Connect with leading professionals on the China- Africa Experts Network. You've reached your free monthly article limit. Subscribe today for unlimited access. SUBSCRIBE: $15 per month SUBSCRIBE: $149 per year -17% Savings The post Hundreds of Chinese Nationals Ev

China’s new ambassador to South Africa, Chen Xiaodong, led a webinar discussion this week that highlighted the dual role that Chinese envoys play abroad: to represent both the Chinese state and the ruling Chinese Communist Party (CCP). They’re not the same thing. In Chinese politics, the state is subservient to the party — a very different dynamic than in most other countries, where political parties are secondary to the government. This was clearly evident in Ambassador Chen’s discussion about a new book by President Xi Jinping that aims to reinforce the pillars of CCP ideology as dictated by the Chinese leader. In his prepared remarks, Ambassador Chen drew heavily on traditional communist rhetoric that spoke of the CCP’s commitment “ to advancing socialist democracy with Chinese characteristics .” To those unfamiliar with Chinese politics, this kind of discourse may seem antiquated and out of place in modern-day diplomacy. But to Chinese diplomats like Ambassador Chen, Chinese po

Although Zambia missed a $42.5 million bond payment on November 14th, and effectively defaulted on that portion of its debt, it’s still technically not in default yet. It will probably officially cross that line within the next few days, making it the first African country this year to do so. Meantime, regarding the question of who is responsible for the country’s financial mismanagement, fingers are pointing in all directions. Finance Minister Bwalya Ng’andu blames bondholders, private creditors blame the government for not being transparent and others say China is heavily responsible for loading up the country with billions in debt and then using strict non-disclosure agreements to block information about those liabilities from reaching outside investors.  Since Zambia missed the payment, analysts have been trying to work out how much of the crisis is unique to Zambia, and what lessons from this experience that can be applied elsewhere in Africa. Four experts at the London-based O

The China Road and Bridge Corporation (CRBC), a Chinese state-owned construction company, is forecast to earn almost a billion dollars in profits over the 27 years that it will operate the new Nairobi Expressway that’s now under construction.  Details of the deal were revealed last week in parliament and  published in Business Daily on Monday , prompting some degree of alarm among the public that the company is excessively profiting from the deal. The first portion of the expressway is expected to open this year with the full road completed by 2024. CRBC is building a 27.1km portion where it will collect 35% of the toll fees that range between $1 and $15 depending on the size of the vehicle. The reaction was decidedly negative on Kenyan social media and among the journalists on Business Daily’s editorial board who described CRBC’s take as “ excessive. ” But Gyude Moore, a senior policy fellow at the Center for Global Development in Washington and the former minister of public works

Saudi Arabia is emerging as an increasingly important hub on China’s Belt and Road Initiative as Beijing turns to the Kingdom for an increasingly large share of its oil procurement.  Last year, two-way trade surged 23% year-on-year to $78 billion , and even amid the pandemic, it’s expected to move even higher this year due to China’s large demand for Saudi oil. China’s relatively newfound taste for Saudi Arabian oil is coming at Africa’s expense, given that Beijing appears to be moving quickly to diversify its sourcing of vital commodities with the goal of not becoming overly dependent on any single region for a particular commodity. Consider that in 2008, China sourced a third of its oil from three African countries: Angola, Sudan and Republic of Congo. Ten years later that figure fell to just 18% from a single African country, Angola. Meantime, last year, Chinese oil buying in Saudi Arabia jumped  by 47%  and Riyadh is now regularly listed as one of China’s top three suppliers. R

The Ethiopian government is moving forward with plans to sell off a 45% stake of the state-owned Ethio Telecom along two more telecom licenses even though this may not be the best time to do that given the weak economy and the escalating conflict in the northern Tigray region. Telecom companies including Orange, Vodacom, Safaricom and MTN are all lining up to buy into one of Africa’s largest yet still underdeveloped telecommunications markets, but Ethiopian telecoms specialist Terrefe Ras-Work warned  in an interview with The Africa Report  that the “timing is off” for privatization: “We first need economic and political stability. […] If we are selling because of debt, let’s at least do it at a better time,” he said. The debt that Ras-Work referred to was a $3.1 billion Chinese loan to build out Ethiopia’s network communications infrastructure and that’s now coming due, forcing the government to move forward regardless of the circumstances. “It is too late [to delay the liberalizati

China’s ambassador to the Democratic Republic of the Congo handed over a donation on behalf of the People’s Liberation Army to an officer from the Armed Forces of the DRC (FARDC). The donation of health supplies is part of a larger PLA engagement strategy to foster closer ties with African militaries across sub-Saharan Africa through donations of PPE and other materials to help mitigate the spread of COVID-19. Get a daily email packed with the latest China-Africa news and analysis. Read exclusive insights on the key trends shaping China-Africa relations. Connect with leading professionals on the China- Africa Experts Network. You've reached your free monthly article limit. Subscribe today for unlimited access. SUBSCRIBE: $15 per month SUBSCRIBE: $149 per year -17% Savings The post China Combines Military Outreach with PPE Diplomacy in the DRC appeared first on The China Africa Project . source https://chinaafricaproject.com/2020/11/24/china-combines-

Debt relief for the world’s poorest countries was high on the agenda at this weekend’s Group of 20 summit organized by Saudi Arabia. The conference ended on Sunday with what’s become standard promises to expand its Debt Service Suspension Initiative (DSSI) and calls on private creditors to provide more debt relief to the world’s poorest countries. One notable change came with the endorsement of a plan to move beyond the DSSI, via a so-called “common framework.”  In their final communiqué , the G20 said: “We endorse the “Common Framework for Debt Treatments beyond the DSSI”, which is also endorsed by the Paris Club.” But for the most part, nothing that emerged from this latest G20 meeting will fundamentally alter the current downward trajectory of the world’s poorest economies, many of which are starting to buckle under the combined weight of surging debt, depreciating currencies, and rising unemployment. WHAT THE G20 DID NOT ADDRESS: PRIVATE CREDITORS: The best the G20 could mu

Chinese Finance Minister Liu Kun provided a robust defense of Beijing’s participation in the G20’s Debt Service Suspension Initiative and said his government is doing more than any other in the group in providing billions of dollars of debt relief to the world’s poorest countries. “China is the country with the largest amount of debt relief among the G20 members,” said Liu in an interview published on Friday on the Ministry of Finance’s official site in the run-up to this weekend’s G20 summit. In total, the finance minister claimed total debt relief totaled $2.1 billion, but he didn’t give a precise breakdown of which countries were aided and what the terms of those settlements were. While that amount may be considerable compared to other G20 members, the reality is that it’s a tiny percentage of the world’s poorest countries’ bilateral debt to G20 countries. Last year, according to World Bank data , developing countries had $178 billion in outstanding bilateral debts, 63% of which

One of the highlights from the latest G20 summit was the group’s endorsement of a so-called “common framework” that would create a set of standards for countries not eligible for the Debt Service Suspension Initiative (DSSI). Officials at the U.S. Treasury who championed the idea said the new framework was also designed to address some of the shortcomings in the DSSI namely the lack of participation by the private sector and certain Chinese creditors. It turns out that concerns about China’s role in the current international debt relief effort figured prominently in the design of the new common framework said participants in an online debate on Friday hosted by the Center for Strategic and International Studies (CSIS) in Washington, D.C. The CSIS discussion was hosted by Stephanie Segal, a senior fellow in the economics program, and featured Brent McIntosh, undersecretary for international affairs at the U.S. Treasury Department, and Mark Sobel, U.S. chairman of the OMFIF think tank.

One week after Zambia failed to meet a deadline to repay $42.5 million on some of its Eurobond debt, African and international media are examining what went wrong and who precisely is to blame. In an appearance on Al Jazeera English’s business program Counting the Cost , IHS Markit Senior Africa Analyst, Alicia Strobel, placed full responsibility for what happened on the government’s mismanagement of its public finances. Meantime, Kenya’s Nation newspaper published a simple, easy to understand explainer article on what led up to the current crisis. Other African Debt News Updates: GHANA: From July to September of this year, Ghana borrowed an additional $1.8 billion, pushing its total debt to $48 billion, according to the latest data from the central bank. The country’s debt-to-GDP ratio is now at 71%, well above the 50% benchmark that economists see as risky for developing countries. (MYJOYONLINE) SOUTH AFRICA: Two of the leading credit ratings agencies, Moody’s and Fitch

Lagos-based policy analyst Ovigwe Eguegu noted a discrepancy in how Chinese debt issuances to Africa are covered by the international media , compared to when those debts are owed to largely U.S/Europe-based private creditors. Eguegu regularly comments on China-Africa issues at @ OcvigweEguegu . Get a daily email packed with the latest China-Africa news and analysis. Read exclusive insights on the key trends shaping China-Africa relations. Connect with leading professionals on the China- Africa Experts Network. You've reached your free monthly article limit. Subscribe today for unlimited access. SUBSCRIBE: $15 per month SUBSCRIBE: $149 per year -17% Savings The post Analyst: When the Chinese Lend Africa Money, It’s a Debt Trap But Not Apparently When Private Creditors Do appeared first on The China Africa Project . source https://chinaafricaproject.com/2020/11/23/analyst-when-the-chinese-lend-africa-money-its-a-debt-trap-but-not-apparently-when-priva

Critics of Kenya’s multi-billion-dollar Standard Gauge Railway (SGR) definitely have the upper hand these days as the railway sinks deeper into debt. But George Sunguh, managing editor of African Ports Review, argued today in Business Daily that the skeptics are wrong . The SGR isn’t a so-called “white elephant” but instead “is breathing new life into the Port of Mombasa,” he said. George Sunguh’s Defense of Kenya’s SGR RELIEVES PORT CONGESTIONS: “The revitalized rail system couldn’t have come at a better time for the port. The growth in container traffic had recently outstripped the port’s capabilities.” MORE EFFICIENT, FASTER TURNAROUND:  “Containers are now delivered ‘ex-hook’ — discharged directly from the ship and onto the train — to Nairobi Inland Container Depot. This has improved cargo dwell and ship turnaround time and decongested the Port of Mombasa considerably.” IMPROVED ROAD SAFETY: “The shifting of more cargo to SGR has eased traffic pressure on roads, reducin

Chen Xiaodong officially became China’s ambassador to South Africa on Sunday, when he presented his credentials to President Cyril Ramaphosa in Pretoria. Newly-named envoys from Finland, Botswana, Ukraine, Pakistan, Sudan, and Sweden also presented their credentials yesterday. Get a daily email packed with the latest China-Africa news and analysis. Read exclusive insights on the key trends shaping China-Africa relations. Connect with leading professionals on the China- Africa Experts Network. You've reached your free monthly article limit. Subscribe today for unlimited access. SUBSCRIBE: $15 per month SUBSCRIBE: $149 per year -17% Savings The post It’s Official, Chen Xiaodong is Now China’s Ambassador to South Africa appeared first on The China Africa Project . source https://chinaafricaproject.com/2020/11/23/its-official-chen-xiaodong-is-now-chinas-ambassador-to-south-africa/?utm_source=rss&utm_medium=rss&utm_campaign=its-official-chen-xiaod

Afrobarometer is the gift that keeps on giving. Every few years the survey company tracks public opinion in African countries about external partners. The result is a growing and fascinating body of work that shows African public opinion about actors like China shifting in real-time. This time,  it shows that  framing the popularity issue in terms of China versus the United States is missing the real story. The polls show that “there is a mosaic of actors, both African and non-African, that citizens consider having political and economic influence on their countries and their futures.” These include the US and China, but also regional African powers (for example South Africa is a popular development model in Malawi,) Russia, and UN agencies. This mosaic approach could be a positive indicator for Africa’s future. Allow me to explain via a highly dubious metaphor about candy. Last year I was on a layover in Atlanta and I was hunting for snacks. Primed by many years of TV, I had exp

Zambia’s Central Bank Governor Christopher Mvunga said the need to treat all of its creditors equally is the reason why the government couldn’t repay bondholders a $42.5 million interest payment that was due last Saturday. “One of the conditions is that all creditors have to be treated equally. … It’s not that we could not pay. It’s just that if we pay one creditor then we need to pay all the creditors,”  Mvunga told a news conference  on Wednesday. The question of equal treatment has been a major sticking point from the beginning of the current Zambian debt crisis. Private creditors complained that the government’s lack of transparency about its debts to China made it impossible for them to consider restructuring the bond debt. They worried that the Zambian finance ministry would simply use proceeds from delayed bond repayments to funnel money to the Chinese. China’s top diplomat for sub-Saharan Africa, Wu Peng,  tried to soothe those anxieties in an October 20 Tweet  when he commit