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How Chinese lending to Africa is evolving [Business Africa]

Oyintarelado Moses from Boston University’s GDP centre during the interview with Business Africa presenter Ronald Kato   -  
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Business Africa

Over the last two decades, China has established itself as Africa's largest bilateral lender, helping bankroll key infrastructure projects on the continent.

But a new report by the Boston University's GDP centre suggests Chinese credit to Africa may be drying up or at least slowing down.

In 2020, Beijing signed 11 new loan commitments worth $1.9 billion with African governments, down 77 percent from 2019 volumes, when Chinese lenders signed 32 loan agreements worth $8.2 billion.

The 2020 loan agreements were signed with Uganda, Ghana, DRC, Mozambique, Burkina Faso, Madagascar, Rwanda, Lesotho, and Afreximbank, a regional organization.

The Covid-19 pandemic appears to have affected China's desire to lend, but also Africa's appetite for debt.

There is also concern Beijing may be cutting the scope of the Belt and Road Initiative.

The centre's Database estimates that Chinese financiers disbursed $160 billion in loans to African borrowers between 2000 and 2020 mostly to finance infrastructure.

Lending peaked in 2016 before dropping in subsequent years.

At the FOCAC ministerial meeting in Senegal last November, China said it was open to exploring alternative financing means such as Public-Private Partnerships (PPPs) and expanding Foreign Direct Investment (FDI).

Chinese FDI indeed went up in 2020.

But for African countries hungry for infrastructure, there's no alternative to cheap, concessional loans provided by Beijing.

Oyintarelado Moses from the Boston University’s GDP centre joins the show with analysis on how Chinese lending is changing.

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