China and Africa: Need for Care in Reporting Debt

Africa Check posted recently an explanation of Kenya's external debt titled "China Owns 21.3 Percent of Kenya's External Debt--Not 70 Percent As Reported."

Much has been written recently about Africa's growing debt load and the percentage of that debt held by China. While China is the largest holder of debt or a significant holder in a number of African countries, there is much misinformation on this subject. The only way to analyze this issue is on a country-by-country basis for those countries that publish reliable, detailed, and up-to-date debt information. Some African countries do not make this information publicly available. Using Kenya as an example, Africa Check has done this.

Africa Check found that China holds 21.3 percent of Kenya's total external debt. This qualifies, I believe, as significant but certainly not overwhelming. At the same time, China holds 72 percent of Kenya's bilateral debt. This is an overwhelming percentage, but is not the most useful way to describe a country's debt. Bilateral debt, or state-to-state debt, is only one part of external debt. It excludes debt held by international financial institutions such as the World Bank and African Development Bank. It also excludes commercial debt held by foreign commercial enterprises and banks.