Chinese lending to Africa down to 16-year low due to Covid-19

Chinese lending to African governments fell to a 16-year low in 2020 as the impact of the coronavirus deterred countries on the continent from borrowing.

Lending in 2020 fell 78% from a year earlier to $1.9 billion, the lowest since 2004, according to a report by Boston University Global Development Policy Center.

“The Covid-19 pandemic significantly constrained the fiscal discretion of many African borrowers, likely impacting willingness to borrow, and intensified the cautionary lending practices of Chinese lenders in recent years,” said Oyintarelado Moses, a data analyst at the university’s Global China Initiative.

While a collapse in economic growth since the pandemic has strained government finances in the region and increased scrutiny around Chinese lending, the Asian nation is still the biggest single creditor to sub-Saharan Africa. By 2019 it accounted for 59.3% of total official bilateral debt, according to the World Bank’s Africa’s Pulse report published last week.

From 2000 to 2020, Chinese financiers signed 1,188 loan commitments worth $160 billion with African governments and state-owned companies, according to Boston University’s research. The biggest borrowers were Angola, Ethiopia and Zambia, the data showed. Both Ethiopia and Zambia’s governments are seeking to restructure their debts with China crucial for these negotiations to succeed. The Chinese state and commercial creditors account for about one-third of Zambian debt.