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China increases loans to Africa while countries struggle with old debt, with analysts claiming that Beijing's policy contains echoes of European colonial-era economic relations with the continent (adf-magazine.com)

submitted 3 months ago by tardigrada to c/finance

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Cross posted from: https://beehaw.org/post/15094770

Archived version

Developing countries owe China an estimated $1.1 trillion, and more than 80% of China’s loans are to countries experiencing financial distress, according to AidData, a research lab at William & Mary. Despite this, China rarely agrees to loan forgiveness or principle reduction, preferring to negotiate longer repayment plans on a case-by-case basis.

Despite promises of two-way trade, African exporters have little access to Chinese markets for their goods. Most of China’s imports from the continent are oil, gas and minerals.
The result is a more one-sided relationship than China says it wants.. One that is dominated by imports of Africa’s raw materials and that some analysts argue contains echoes of colonial-era Europe’s economic relations with the continent.
With the annual Forum on China-Africa Cooperation (FOCAC) set to take place in September, China is expected to announce new projects in Africa. But its lending practices are coming under scrutiny. Several countries that have taken on debt have found themselves forced to make drastic cuts to domestic programs or raise taxes in order to repay the loans.
Kenya, for example, spends about 60% of its revenue on debt payments, with about one-third of that money going to pay the interest on loans.

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[–] tardigrada 2 points 3 months ago

Kenya spends USD 1 billion in a year to repay Chinese loans, burdening taxpayers

(archived version)

[...] cash sent to Beijing [by Kenya] comprised nearly 100.47 billion KES (703 million USD) in principal sums that fell due, and 52.22 billion KES (365.54 million USD) in interest ]...]

The total amount paid represents a 42.14 per cent jump in the previous year, ending June 2023 [...]

[According to research lab] AidData, "The terms of Beijing's loan deals with developing countries are usually secretive and require borrowing from nations such as Kenya to prioritise repayment of Chinese state-owned banks ahead of other creditors." [...]