Africa’s Rising Debt to China

Covid-19 and the Russia-Ukraine war, combined with the economic impact of government and leadership incompetence, state failure and corruption, has seen the debt of many African countries, particularly to China, balloon.

A quarter of African countries now contribute 20% of their national budgets to servicing foreign debt.

Among developing countries, African countries spend the most on interest payments on foreign debt.

Only around 5% of Chinese financial support to Africa is interest free.

Angola, Zimbabwe, Zambia, the Democratic Republic of Congo, Djibouti and Mozambique, are among 15 African countries that now have unmanageable debt obligations to China.


Since Covid-19, many African countries have been forced to repay their debts through commodities they produce.

Angola supplies oil to China’s state-owned Sinochem and Sinopec.

Kenya now owes more debt to China than it does to Western creditors. Of Kenya’s public debt of more than US$50 billion, 72% is owed to China.
Just under 40% of Zambia’s external debt is owed to China.

Angola accounts for 34% of Chinese debt – over US$20 billion – among the 72 least developed countries.

A very small proportion of Chinese loans to African countries are directly in cash.

Chinese loans are structured through Chinese state-owned development banks, by supporting Chinese companies to provide infrastructure in Africa, and through equity in African state-owned companies.

Alternatively, China provides credit lines to African state-owned banks and development finance institutions.

Loans from the state-owned China Development Bank are strictly on commercial terms – with the bank acting as a private lender.

As a case in point, the China-Africa Development Fund held 50% and Sinohydro held 20% in Zambia’s Sinozam Power Corporation, with Zesco, the Zambian state power utility, holding 30%.


African countries’ heavy debts with their high debt-servicing commitments are increasingly straining public finances.

This not only undermines economic growth, but means they have few financial buffers for emergencies.

It also means African countries have less access to international capital and face more expensive borrowing costs and currency instability.
Covid-19 and Russia’s invasion of Ukraine has also negatively affected Western economies.

Not only does the West have less money to lend, but available funds are more often than not channelled to Ukraine and Eastern Europe.
In addition, central banks in Western economies have introduced tighter monetary policies to tackle inflation.

This means African countries seeking to borrow from Western governments and development finance institutions will do so at a higher cost.

The negative economic impact of Covid-19, on top of a pre-Covid-19 economic slowdown and rising political instability, has also dented the Chinese economy.

Even prior to Covid-19, China was forced to reduce its loans to Africa – and is likely to reduce them further.

In 2016, China provided US$30 billion in loans to Africa. By 2020, this had dwindled to US$2 billion.

In 2018, China pledged US$60bn for investments in Africa. In 2021, it pledged only US$40 billion.


A number of African countries have approached China about restructuring their debts. They include Angola, Zambia, Ethiopia, the Republic of Congo (Brazzaville), Djibouti, Mozambique and Kenya.

As a condition, China insists that African countries first repay China’s debt when they are in a position to make payments, and not those of other creditors.

In 2021, China agreed to reschedule its US$2,4 billion loan to the Republic of Congo (Brazzaville) .

Angola has been in negotiations to restructure substantial loans it received from the China Development Bank, China Exim Bank and the Industrial and Commercial Bank of China (ICBC).

The debt restructuring involved granting Angola a moratorium on principal payments – specifically deferring principal payments due between 2020 and 2023 to over seven years.

China has cancelled some non-strategic, smaller loans.

In 2022, Chinese foreign minister Wang Yi told the Forum on China-Africa Cooperation that his country had written off 23 interest-free loans to 17 African countries.
Those receiving loans from China are, among others, expected not to support Taiwan, and to ease local human rights and labour rights provisions for Chinese companies.


Zimbabwe has given mineral resources to China in exchange for repaying Chinese loans.

In 2006, Zimbabwe gave China Eximbank the rights to 50% of platinum deposits in the Selous and Northfields reserves as collateral for a US$200 million loan. The collateral will only be freed when the loan is fully repaid.

Together, the China-Africa Development Fund and Sinohydro own the majority of shares in Zambia’s Sinozam Power Corporation in a public-private partnership with Zesco, the Zambian state power utility.

When Zesco could not find the funds to repay a Chinese loan, China initially proposed taking control of Zesco as a form of repayment.
The high level of debt in Africa will not only result in more defaults, but destabilise currencies, and plunge many economies into chaos.

The African Union should step in to help African countries have their Chinese debts renegotiated, restructured or written off – especially if they provide no benefits to citizens, but only benefit individuals connected to the ruling party.

  • William Gumede is associate professor, School of Governance, University of the Witwatersrand, and the author of ‘South Africa in Brics’.
Stay informed with The Namibian – your source for credible journalism. Get in-depth reporting and opinions for only N$85 a month. Invest in journalism, invest in democracy – subscribe now!


Please enter your comment!
Please enter your name here

Recent Stories

Latest News

Most Read