The European Business Council for Africa

The Diplomat author Mercy Kuo regularly engages subject-matter experts, policy practitioners, and strategic thinkers across the globe for their diverse insights into U.S. Asia policy.  This conversation with Linda Calabrese – research fellow and development economist at the Overseas Development Institute in London – explores China’s loans to African countries, and the impact COVID-19 (and the resulting economic crisis) could have on debt payments.

Explain the impact of COVID-19 on African countries’ debt vis-à-vis China.

With their economies hit by the COVID-19 crisis, African countries face a double health and economic challenge: they need to allocate resources towardS protecting the health of their citizens, while trying to minimize the negative economic outcomes of the pandemic. At the same time, they are burdened by their debt. Many African countries are paying back what they borrowed and have little room to divert these resources towards more pressing health and economic needs.

China is widely regarded as Africa’s largest bilateral creditor. The Chinese government, banks and SOEs [state-owned enterprises] are estimated to hold 17 percent to 24 percent of Africa’s external debt. But African countries also owe money to other governments, to multilaterals, and to the private sector. The latter is estimated to hold 30 percent of Africa’s total external debt, upward of $130 billion.

 Read the article here