In 2023, Chinese lending to Africa saw an increase for the first time in several years, according to research by Boston University’s Global Development Policy Center. However, the $4.61 billion loaned last year remains significantly lower than China’s pre-pandemic commitments to the continent. During the early phase of the Belt and Road Initiative (BRI), under President Xi Jinping, China’s annual loans to Africa exceeded $10 billion.
The lending decline began with the onset of the COVID-19 pandemic and persisted as China faced its own economic challenges. Additionally, some African nations entered protracted debt restructuring processes. Lucas Engel, a data analyst and co-author of the study, noted that the increase in lending in 2023 should be considered within the context of China’s substantial economic influence and its strategic relationships with long-term African borrowers.
The study identified several trends in China’s 2023 loans to eight African countries and two regional financial institutions. Notably, over half of the funds were directed to African multilateral banks, a move perceived as risk mitigation. Cobus van Staden, managing editor at the China Global South Project, explained that lending to multilateral institutions involves multiple lenders and de-risking mechanisms, reducing the risk impact compared to bilateral government loans.
Despite a cautious approach, China continued lending to key long-term partners such as Angola, Nigeria, and Egypt. Critics have accused China of creating “debt traps” in Africa, but economists have largely dismissed this theory. The research also highlighted China’s renewed focus on energy lending, with commitments to three renewable energy projects in Africa, aligning with a shift towards smaller, environmentally friendly initiatives and a “green BRI.”
Lauren Johnston, an associate professor at the University of Sydney, remarked that the increase in 2023 lending was expected, though it hasn’t returned to previous levels. She suggested that China is now consolidating past investments to maximize economic returns and address any issues from earlier loans.
As Chinese President Xi Jinping prepares to meet African leaders at the Forum on China-Africa Cooperation in Beijing, further loan announcements may be forthcoming. However, van Staden anticipates these will be varied rather than a single large commitment. Boston University’s Engel noted the difficulty in predicting the volume of financing to be announced but expects pledges across diverse cooperation areas.
