Hostages to Fortune

Africa’s indebted sovereigns seek escape route from China-West tensions

in depth

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Resilience and growth


By David Whitehouse

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Posted on June 6, 2023 04:00

Geopolitical tensions between China and the West create the danger that indebted African governments will be the victims of power struggles beyond their control.

The size of Chinese lending, in itself, is not enough to cause African debt distress. Loans from China to Africa were declining well before Covid-19, falling from a peak of $28.4bn in 2016 to $8.2bn in 2019 and $1.9bn in 2020. According to Chatham House, Chinese loans account for only 12% of Africa’s private and public external debt.

Neither is the interest on Chinese loans a particular problem. In 2021, private lenders charged African sovereigns an average 5% interest rate, while China and multilateral lenders charged 2.7% and 1.3% respectively.

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