lørdag 4. desember 2021

China is getting worried about Africa’s indebtedness to it

While China has consistently doubled or even tripled its financing pledges for Africa during previous Forum on China-Africa Cooperation (FOCAC) meetings, the stagnation of this sum at the last FOCAC summit, held in 2018, should have raised concerns.

This year for the first time, the Asian giant has cut down investment pledges from $60 billion to $40 billion, at the recently concluded ministerial level FOCAC meetings held in Dakar, Senegal. This is a worrying sign of the times for the continent. It’s easy to rationalize this drastic reduction as a result of China’s poor economic performance in the wake of the pandemic with China’s GDP growth at 2.3% in 2020, down from 6.0% in a pre-pandemic 2019, but this doesn’t tell the full story.

As Africa’s largest creditor, defaults and risk of defaults from African countries are a major risk to China. For example, Zambia, the first covid-era African country to default on sovereign debt in 2020, owes China $6.6 billion. With African leaders including during the conference calling for debt renegotiation amid weak economic forecasts for the region, tightening of purse strings in Beijing is understandable.