Risky Business: New Data on Chinese Loans and Africa’s Debt Problem

Speakers: 

Kevin Acker, Research Manager, SAIS-CARI

Deborah Brautigam, Bernard L. Schwartz Professor of International Political Economy, Johns Hopkins SAIS; Founding Director, SAIS-CARI

Yufan Huang, Research Assistant, SAIS-CARI

Moderated by Kevin Gallagher, Professor of Global Development Policy, Boston University Frederick S. Pardee School of Global Studies

From modest beginnings in the 1960s, Chinese lending to Africa has grown significantly in the 21st century, financing roads, railways, hydropower projects and more. With US-China relations deteriorating and African debt issues worsening in the wake of the COVID-19 crisis, policymakers, academics, and journalists are increasingly interested in China’s lending to Africa. However, Chinese financiers do not systematically provide data on the individual loans they offer to overseas borrowers.

To address the lack of public data on Chinese loans to Africa, the China Africa Research Initiative (CARI) launched a new online interactive database of Chinese loan commitments to African governments and their state-owned enterprises from 2000 to 2018. At the launch event, CARI scholars presented the database, as well as their latest briefing paper, “Risky Business: New Data on Chinese Loans and Africa’s Debt Problem.”

Acker, started the event with an overview of CARI’s China-Africa loan database and research methodology, describing how CARI’s RAs carefully identify and confirm the existence of signed Chinese loan commitments to Africa with a variety of sources, including official African government documents, Chinese embassy reports, and interviews: “CARI teams have identified over 1000 loans worth approximately $148 billion from Chinese financiers to African governments and their state-owned enterprises.”

Gallagher emphasized the importance of data collection efforts in understanding China’s role in global development and debt, especially in Africa: “Africa has quickly gone from being the continent on the move to the continent on the decline… A number of countries are in real debt distress – to have hard numbers that allow folks to have evidence-based conversations about the extent to which Chinese debt is a major component as part of a strategy to alleviate debt distress, fight the virus, and put the region back onto a sustainable recovery.”

Brautigam led the presentation of CARI’s latest research on China’s role in Africa’s debt problems: “New data show that China makes up 22% of public debt stock (2018) and 29% of debt service (2020) in low-income Africa. Yet China’s role should not be overestimated. In over half of the 22 countries facing debt distress, China is a small lender: their debt problems are not made in China. In seven of these 22 countries, China accounts for a quarter or more of all public and publicly-guaranteed debt: Angola, Djibouti, Cameroon, Republic of Congo, Ethiopia, Kenya, and Zambia. Four of these countries negotiated debt restructuring with Chinese lenders in 2018 and 2019.”

Huang put China’s lending in perspective – while debt to China rose to about 22% of Africa’s debt stock in 2018, multilateral institutions made up the largest share, at 41%. He also cautioned that bondholders comprise a growing share of African debt, which is problematic due to the high interest rates on foreign currency bonds. 

The presentations were followed by a Q&A session.