Page 10 - AsiaElec Week 14 2021

AsiaElec LENDING AsiaElec

Chinese lending to Africa not transparent

AFRICA BETWEEN 2000 and 2018, Chinese lending countries have accused Beijing, the continent’s
to Africa has been consistently above $10bn largest trading partner, of putting African econ-
per year between 2012 and 2017, with a peak of omies in a debt trap.
$30mn in 2016, with infrastructure being the French President Emmanuel Macron said in
dominant sector. February that “there is no point in restructuring
China is by far the biggest non-Paris Club African debts to Europe and the United States if
creditor in Africa, the African Economic Out- it is to contract more debts from China [...] What
look said recently. we have nevertheless very often seen done, in
However, the report warned that the African recent years.”
Development Bank (AfDB) judged that a large Macron was referring to the results of the
majority of these loans were not transparent. HIPC (Heavily Indebted Poor Countries) initi-
“The number of Non-Paris Club creditors in ative launched between the end of the 1990s and
Africa’s creditor landscape has been increasing, the beginning of the 2000s to cancel the debts of
by far the most important being China. Many several African countries, and which led to a new
of these loans are not transparent regarding round of massive indebtedness to China.
loan terms and collateralisation,” the AfDB said, Paris and the AfDB seem to agree that any
stressing that “most of the countries currently meaningful restructuring or resolution of Afri-
in debt distress or classified as being at high risk can countries’ debt would require negotiations
of debt distress have high exposure to Chinese with official Paris Club lenders and other coun-
loans.” tries, such as China.
Examples are Djibouti, where 57% of the total However, bringing in China to such debt talks
debt is held by Beijing, Angola (49%), the Repub- is likely to be difficult.
lic of Congo (45%), Cameroon (32%), Ethiopia In recent years, the volume of loans dis-
(32%), Kenya (27%) and Zambia (26%). bursed by China each year seems to be declin-
This report comes as the debt issue is at the ing. According to the AfDB, which takes into
heart of African countries’ concerns. In this con- account the China-Africa Research Initiative at
text, they are seeking financial resources to get John Hopkins University’s SAIS, since peaking in
out of the economic crisis caused by the coro- 2016, Chinese lending has fallen back to nearly
navirus (COVID-19). For several years, Western $15bn in 2017 and then below $10bn in 2018.™

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