Chinese Investors Focus on West Africa as Loans Decline
· Research shows Chinese loans to African countries fell 37 per cent during pandemic years
· Investments in West Africa rise as loans to countries traditionally in the top 10 borrowers remain flat
[ABS News Service/25.09.2023]
Chinese loans to Africa have decreased significantly in recent years, according to a US university.
Senegal, Benin, Ivory Coast, Angola, Uganda, Ghana, Rwanda and the Democratic Republic of the Congo were the borrowers in 2021-2022.
In a policy paper accompanying the loan data, the centre said that from the pre-pandemic years between 2017 and 2019 to the pandemic years (2020-2022), loan averages dropped by 37 per cent from US$213.03 million to US$135.15 million.
“This trend is more significant in terms of the number of loans, plummeting from 184 to 32 in the subsequent pandemic years,” the study noted.
Of those, it was West African countries, which have historically borrowed less from China, that stood out for taking the biggest share of the Chinese loans to Africa over those years.
“Given the prominence of Southern and East Africa’s borrowing, West Africa’s borrowing in 2021-2022 is noteworthy,” the study said.
The Boston University researchers said one possible explanation for the rise in Chinese lending to West Africa in recent years may be the lag in officially including the region in the Belt and Road Initiative.
When the initiative was first announced in 2013, only East Africa and the Horn of Africa were included, with the idea of developing a trade cooperation zone near the Suez Canal, according to the study.
The researchers said that while this did not exclude other African countries from borrowing from China, multiple belt and road projects were developed across East Africa, such as the Ethiopia-Djibouti Standard Gauge Railway (SGR) in 2013 and the Kenyan SGR in 2014. This meant loan commitments to East Africa peaked in 2013, but peaked in West Africa in 2018, driven mostly by loans to Ghana and Nigeria.
“[Recently] China has shown significant interest toward Senegal, which could be attributed to its diplomatic clout and financing demands for its development,” the study noted.
Overall, the study estimated that from 2000-2022, 39 Chinese lenders provided 1,243 loans amounting to US$170.08 billion to 49 African governments and seven regional institutions.