Chinese loans to Africa have experienced a significant decline in recent years, according to data compiled by Boston University’s Global Development Policy Centre. In both 2021 and 2022, China extended 16 new loan commitments to African nations, totaling $2.22 billion, marking the second consecutive year of lending to Africa below the $2 billion mark.
The Chinese Loans to Africa Database from the center revealed that Chinese lenders signed seven loans worth $1.22 billion with African countries in 2021 and an additional nine loans amounting to $994.48 million in 2022. However, both the number and value of loans decreased compared to the pre-pandemic years.
The study pointed out that loan averages dropped by 37 percent from $213.03 million to $135.15 million from the pre-pandemic years (2017-2019) to the pandemic years (2020-2022). The number of loans also saw a significant drop from 184 to 32 during the pandemic years.
Senegal, Benin, Ivory Coast, Angola, Uganda, Ghana, Rwanda, and the Democratic Republic of the Congo were the borrowers during 2021-2022. Notably, West African countries, historically borrowing less from China, received the largest share of Chinese loans in these years. Approximately 86 percent of the Chinese funds went into projects in West Africa, with Senegal, Benin, and Ivory Coast being the top beneficiaries.
In contrast, only two of the historically top 10 borrowers, Angola and Ghana, received loan commitments during this period. Southern Africa historically received more loans from China, primarily due to large-scale loans in countries like Angola, Zambia, and South Africa.
The researchers suggest that one possible explanation for the increased Chinese lending to West Africa in recent years may be the delay in officially including the region in the Belt and Road Initiative. When the initiative was initially announced in 2013, only East Africa and the Horn of Africa were included.
Lauren Johnston, a China-Africa researcher, noted that West Africa is geographically farther from China and has stronger ties with Europe and the US in terms of commodities markets. This shift towards West Africa could be seen as a second stage of the Belt and Road Initiative in Africa, focusing more on the West and francophone African countries.
Overall, the study estimated that from 2000 to 2022, 39 Chinese lenders provided 1,243 loans totaling $170.08 billion to 49 African governments and seven regional institutions. The researchers anticipate future Chinese lending in Africa to involve fewer large-scale loans over $500 million, more smaller loans under $50 million, and loans with greater social and environmental benefits.
Despite the decline in Chinese loans in recent years, experts believe that China’s influence in Africa will continue through commercial and diplomatic channels. The focus on West Africa is attributed to projects aligning with Chinese interests, and the decline in lending is seen as a combination of debt difficulties in African nations and economic challenges in China. Chinese banks are now more cautious and mainly lending to low-risk countries in Africa.