Chinese lenders approved $4.61 billion in loans to Africa in 2023, marking the first increase in lending since 2016, according to an independent study by Boston University’s Global Development Policy Centre.
The figure represents a massive jump from 2022’s lending, which stood at just $1.34 billion, reviewing China’s continued interest in Africa, albeit with a more cautious and targeted approach.
Africa, a key beneficiary of China’s Belt and Road Initiative (BRI), secured more than $10 billion in loans annually between 2012 and 2018, as Beijing extended its economic and geopolitical influence across the continent.
However, since the onset of the COVID-19 pandemic in 2020, Chinese lending to Africa has hugely decreased due to both China’s domestic pressures and growing debt burdens in African countries.
Despite the decline, last year’s surge in lending indicates that China is recalibrating its strategy. The loans in 2023 were spread across 13 deals involving eight African countries and two multilateral lenders. The largest deals included nearly $1 billion from the China Development Bank to Nigeria for the Kaduna-to-Kano Railway and another substantial liquidity facility for Egypt’s central bank.
These developments suggest that while China remains a major financier in Africa, it is now focusing on more strategic projects and lenders, particularly regional and national financial institutions.
China’s financial support has undoubtedly fueled critical infrastructure development across Africa. Countries like Nigeria, Ethiopia, and Kenya have benefited from loans that funded transportation, energy, and ICT projects. China has also moved into financing renewable energy initiatives, with nearly a tenth of 2023 loans supporting solar and hydropower projects. This shift indicates a possible transition from China’s earlier focus on coal-fired power plants to more sustainable energy solutions.
However, these loans come with great strings attached. As African countries face rising debt, the cost of these loans has become increasingly clear. Zambia, Ghana, and Ethiopia have all entered protracted debt restructuring negotiations since 2021, struggling to meet their financial obligations. In some cases, the inability to repay Chinese loans has led to asset seizures by Chinese lenders, creating widespread concern across the continent.
China’s practice of asset seizure in the event of loan defaults has raised alarm in several African countries. Perhaps the most high-profile example is Djibouti, where the Chinese government took control of the strategic Doraleh Container Terminal after the country defaulted on its loan.
Similarly, Sri Lanka’s Hambantota port, though located outside Africa, stands as a case study, as it was leased to China for 99 years after the country failed to repay Chinese loans. While this precedent is not African, it has sent waves across the continent, where many fear that similar situations could unfold.
In Kenya, where the $4.7 billion Mombasa-Nairobi Standard Gauge Railway, funded by Chinese loans, remains mired in controversy. Some fear that Kenya could face asset seizures if it fails to meet its debt obligations.
Other African nations, such as Angola, have also found themselves deeply entangled in debt to China, raising alarms of possible seizures.
