China was forced to respond to allay any concerns about the country’s pact with many African governments as the issue became widely publicized. China, of course, insisted that it had set no debt traps for Africa, but eventually agreed to cancel some loans and extend payment terms for others.
Shortly after Yellen’s visit to Africa, the International Monetary Fund also began talks on debt restructuring for Zambia and Ghana under its G20 framework.
The economic effects of the COVID-19 pandemic and the Russian invasion of Ukraine have made it increasingly difficult for many African countries to pay their debts. Now, 22 low-income African countries are already experiencing a debt crisis or are at significant risk of experiencing one.
Chinese lenders account for 12% of Africa’s private and public external debt, a fivefold increase from 2000 to $696 billion in 2020. China is a major creditor to many African countries, but its debt has fallen in recent years and is set to remain at low levels.
This situation is likely to worsen in 2023, limiting the ability of African nations to raise the necessary finance to deliver broad social reforms to their populations and respond to climate change.
Seven African countries have been identified by the World Bank as being in financial distress or at risk of going into debt distress in 2020 as a result of the volume of Chinese financing. 5 of the seven countries are featured in the list below.
A research report released in December 2022 by Chatham House (an English establishment that helps people, societies and governments understand and adapt to seismic change) shows the top 20 recipients of Chinese loans in Africa in 2000-2020. It is important to note that the figures presented by Chatham House are based on loan commitments and should not be considered equivalent to African government debt.
The case study shows how lending to Africa has changed over time, moving from resource-based surpluses to more strategic or business-minded options. Below are the 10 African countries most indebted to China. The figures below are in millions of US dollars.
