China in Africa’s External Debt

The Jubilee Debt Campaign released a study on Africa’s external debt and the contribution of China’s official lending. Overall, Africa’s debt problems continue to increase. External government debt payments have doubled in just the past two years from an average of 5.9% of government revenue in 2015 to 11.8% in 2017. 

While exact figures are difficult to calculate, the study concludes multilateral and private lenders continue to dominate the continent’s debt profile at 35% and 32%, respectively. Between 18 to 24% of Africa’s external debt is owed to China. Assuming 20% as the correct figure, this would mean 70% of Africa’s external debt to individual governments is owed to China. 

Unsurprisingly, private sector loans commanded the highest interest rates and accounted for 55% of interest payments. Extrapolating from this, the study concludes Beijing commands 17% of such interest payments.  China is not overly represented in the ledgers of the 15 African countries the International Monetary Fund lists as being debt distressed – on average 15% of their debt is held by China. 

Many African governments keep poor public records of their debt obligations so only 15 individual countries could be studied. Three of these countries – Zambia, Cameroon and Djibouti – had unusually high levels of exposure to China. China represented 30%, 29% and an astonishing 68%, respectively, of their external debt. 

 

(The views expressed are personal)

Mr. Pramit Pal Chaudhuri
Distinguished Fellow, Ananta Aspen Centre
Foreign Editor, The Hindustan Times

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