China’s debt across numerous African countries has been a hot-button subject as it relates to global economics, so much so that the U.S. Treasury Secretary Janet Yellen on her visit to Africa in January 2023, spoke fervently on the topic, accusing China of setting a debt trap for impoverished African countries.
China was forced to respond to allay any concerns about the country’s deal with many African governments, as the topic was so widely publicized. China, of course, insisted that it had not placed any debt traps for Africa, but finally consented to cancel some debts and extend the payment terms for others.
Even the International Monetary Fund, shortly after Yellen’s visit to Africa, began conversations on restructuring Zambia and Ghana’s debt under its G20 Framework.
The COVID-19 pandemic’s economic effects and Russia’s invasion of Ukraine have made it more difficult for many African countries to pay their debts. Now, 22 low-income African nations are either already experiencing a debt crisis or are at significant risk of experiencing it.
Chinese lenders account for 12% of Africa’s private and public external debt, which increased more than fivefold to $696 billion from 2000 to 2020. China is a major creditor of many African nations, but its lending has fallen in recent years and is set to remain at lower levels.
This situation is likely to worsen over 2023, limiting the ability of African nations to raise the necessary finance to deliver broader social improvements for their populations and respond to climate change.
Seven African nations were identified by the World Bank as being in financial trouble or in danger 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 by Chatham House (an English establishment that helps people, societies, and governments understand and adapt to seismic change) in December 2022, shows the top 20 recipients of Chinese loans in Africa, 2000–20. It is important to note that the figures presented by Chatham House, are based upon loan commitments, and should not be regarded as equivalent to African government debt.
The case study shows how lending to Africa has changed over time, moving from resource-based excess to more strategic or business-minded choices. Below are the 10 African countries with the highest debt to China. The figures below are in millions of US dollars $.