New Research Reveals China’s Pulling Back on Loans to Africa

China is steadily pulling back the reins on its lending practices in Africa, according to a new report published on Monday by the China-Africa Research Initiative (CARI) at Johns Hopkins University. Researchers Deborah Brautigam and Kevin Acker found that Chinese loans to African public sector borrowers fell again in 2019 to $7.7 billion, down 30% from the year before. And that is a significant decrease when measured against the $28 billion that China lent in 2016.

CARI’s new figures about what’s happening in Africa echo similar findings made by researchers at Boston University’s Global Development Policy Center last year that showed an equally dramatic plunge in total lending by China’s two policy banks, the China Development Bank and the China Exim Bank. In that case, lending amounts went from $75 billion in 2016 to just $4 billion in 2019. 

While the amounts have declined markedly and the way that the Chinese are lending in Africa is rapidly evolving (e.g. less reliance on resource-for-infrastructure deals), the report concludes that it would be a mistake to assume that the Chinese are withdrawing from the continent. “Despite decreasing over the past years, and falling below US$ 9 billion in 2019 for the first time since 2010,” said Brautigam and Acker, “Chinese finance will continue to be an important source of infrastructure finance for African countries.”

Key Highlights From Deborah Brautigam and Kevin Acker’s Latest Working Paper on Chinese Debt in Africa

  • REDUCED LENDING: China’s loan commitments (2000-2019) in Africa now total $153 billion. New Chinese loan commitments of $7 billion dipped 30% in 2019 compared with 2018. 
  • CHANGING LOAN PORTFOLIO: Countries where China reprofiled, restructured or refinanced existing debt between 2015 and 2019, including Angola, Cameroon, Djibouti, Ethiopia, Mozambique, and the Republic of Congo, received far less Chinese finance in subsequent years. In 2019, China’s top borrowers were Ghana, South Africa, Egypt, Côte d’Ivoire, and Nigeria.
  • NEW CREDITORS: In 2019, CARI data included over 30 Chinese banks and other lenders. Lending from China Eximbank, China’s only source of concessional loans and preferential export credits, peaked in 2013. Commercial loans from China Development Bank and other banks have filled the gap.
  • REDUCED APPETITE FOR RESOURCE BACKED LOANS: Although accounting for only 8% of total Chinese lending to Africa (aside from Angola), the controversial resource-backed infrastructure financing model is not dead; it lives on in Ghana and Guinea.

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The post New Research Reveals China’s Pulling Back on Loans to Africa appeared first on The China Africa Project.



source https://chinaafricaproject.com/2021/03/30/new-research-reveals-chinas-pulling-back-on-loans-to-africa/

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