Algeria Cancels Major Port Project to Be Financed and Built by China

 Arabian Gulf Business Insight published on 19 March 2025 an article titled "Algeria Cancels Deep-water Port Project with China" by Chris Hamill-Stewart.

Algeria has shelved a $3 billion project to build a deep-water port at Cherchell, about 90 kilometers west of Algiers.  Algeria signed an agreement in 2016 with the China State Construction Engineering Corporation and China Harbour Engineering Company to build the port. China Export-Import Bank was to finance the project and Shanghai Ports to operate it for the first 25 years.  Several reasons were given for the cancellation.  

Ethiopia's Foreign Debt Downgraded to Junk Status; About Half Held by China

 Nigeria's News Central published on 26 January 2024 an article titled "Ethiopia Defaults, Crumbling Under Chinese Loans" by Nesta Sani.  

Ethiopia is trying to restructure its foreign debt of about $28 billion, which Fitch Ratings has downgraded to junk status.  Chinese loans for infrastructure projects financed primarily by the Export-Import Bank and China Development Bank make up about half of the debt.  In 2023, China suspended debt payments due over the next 12 months.  It is not clear what happens when the debt suspension ends in July 2024.  

Environmentalists Target Chinese Financing of Uganda-Tanzania Oil Pipeline

The South China Morning Post published on 22 November 2023 an article titled "China Targeted by Climate Campaigners over Controversial East Africa Oil Pipeline Project" by Jevans Nyabiage.  

Environmental activists in Uganda, Tanzania, DRC and elsewhere are pressuring Chinese financers to back out of an oil pipeline project that runs from Ugandan oilfields to Port Tanga on Tanzania's Indian Ocean coast.  The activists say the pipeline threatens pristine ecosystems, biodiversity hotspots, water resources, and community land.  

China-Africa Relations in 2024

 African Business published on 27 November 2023 a commentary titled "What's in Store for China-Africa Relations in 2024?" by Hannah Ryder.

The author predicts in increase in financing for Africa from the China Development Bank and China Export-Import Bank, more Chinese investment in Africa, and an increase in African exports to China.  

China Reviews $1.3 Billion in Loans for Ethiopia

 The Addis Standard published on 21 October 2023 an article titled "Ethiopian Authorities Discuss Release of $1.3 Billion Suspended Loan with Chinese Counterparts."

Chinese financial institutions have suspended the disbursement of loans totaling $1.3 billion for at least 8 infrastructure projects pending renegotiation of Ethiopia's debt restructuring with the Chinese government.  Chinese banks did not disburse any loans to Ethiopia in 2021 and 2022 and only $26 million so far in 2023.  The Ethiopian government seems optimistic that Chinese banks will release more of the funding.  

Recent Trends in Chinese Loans to Africa

 Boston University's Global Development Policy Center published in September 2023 a policy brief titled "A New State of Lending: Chinese Loans to Africa" by Oyintarelado Moses, Jyhjong Hwang, Lucas Engel, and Victoria Yvonne Bien-Aime.

China has significantly decreased its lending to Africa.  In 2021, it signed seven loans with African countries totaling $1.22 billion and in 2022 nine loans amounting to $994 million.  This compares with $28 billion signed in 2016.  The decline is due to debt issues in Africa and Chinese domestic, global, and regional priorities.  The Export-Import Bank of China continues to be the top Chinese lender in Africa.  

Although the African energy sector has historically received the most Chinese loans, there were no sovereign loans for energy projects in 2021 and 2022.  Senegal, Benin, Cote d'Ivoire, Angola, Uganda, Ghana, Rwanda, and the DRC were the largest borrowers in 2021-2022.   

A New State of Chinese Loans to Africa

Boston University Global Development Policy Center posted on 18 August 2023 an update to its data base titled "A New State of Lending: Chinese Loans to Africa."   

From 2000-2022, 39 Chinese landers provided 1,243 loans amounting to $170 billion to 49 African governments and 7 regional institutions.  However, China's lending peaked in 2016 ($28 billion) and has fallen dramatically sense, totaling only about $1 billion in 2022.  

Zambian President Visiting China; Debt Restructuring at Top of Agenda

 Reuters published on 8 September 2023 an article titled "Zambian President to Visit China, Seeks to Formalise June Debt Deal" by Joe Cash.

Zambian President Hakainde Hichilema is currently visiting China where obtaining final agreement on Beijing's restructuring of debt held by the China Export-Import Bank is one of the primary items on the agenda. Other countries that hold much smaller percentages of Zambia's bilateral external debt include the UK, France, South Africa, India, and Israel.  

China's Railway Project in Kenya

 The Conversation published on 29 May 2023 an article titled "China in Africa: Kenya Railway Study Shows Investment Projects Aren't a One-way Street" by Gediminas Lesutis, University of Amsterdam, and Zhengli Huang, Tongji University.

The study concluded that the decisions of Chinese state-owned enterprises in Kenya do not necessarily present a grand Chinese strategy.  Instead, they result from changing political and economic circumstances in China, and reflect both state and private Chinese interests.  The China Road and Bridge Corportation constantly shifted its strategies on Kenya's Standard Gauge Railway.  

Chinese Banks Agree to Finance Controversial East African Oil Pipeline

 The South China Morning Post published on 21 May 2023 an article titled "China Doubles Down on Controversial African Pipeline as Western Leaders Walk Away" by Jevans Nyabiage.  

Strong opposition by environmental and human rights groups have minimized Western lending for the East African Crude Oil Pipeline from Uganda's Lake Albert oilfields to the port of Tanga in Tanzania.  China's Export-Import Bank and several other Chinese banks have agreed to finance the controversial project.  

Kenya Slashes Funding for Infrastructure Based on Foreign Loans

 Business Daily published on 10 February 2023 an article titled "19 Mega Projects Hit as Sh66.8bn China, Foreign Loans Cut" by Dominic Omondi. 

Kenya has slashed funding for 19 infrastructure projects dependent on loans from international financial institutions and bilateral lenders such as China.  

Kenya's Debt Repayments to China Rise Sharply

 Kenya's Business Daily published on 21 November 2022 an article titled "China's Debt Costs Leapfrog Creditors for First Time in Q1."  

Kenya's bilateral debt repayment to China for the first quarter of 2022 surpassed repayments to foreign commercial banks for the first time.  China is Kenya's largest bilateral creditor by far.  

Controversy Over China's Loan Agreements with Kenya for Railway Construction

 The Conversation published on 10 November 2022 a commentary titled "Kenya Standard Gauge Railway Contracts: What Released Documents Say, And What They Don't" by Deborah Brautigam.  

The three loan contracts recently released by the government of Kenya establish that Mombasa Port was not in any way pledged as collateral for the Chinese loans in the event of Kenyan default.

Text of China's Loan to Kenya for Standard Gauge Railway

The Wall Street Journal recently published a six-minute video titled "Kenya's Chinese-Built Railway Shows Why Belt and Road Is Being Reworked" by George Downs. The $3.6 Billion railway that was built with Chinese loans has struggled to be profitable.  It is an example why China is reevaluating its Belt and Road Initiative.

The government of Kenya has just released the text of the controversial 11 May 2014 "Preferential Buyer Credit Loan Agreement on Kenya Mombasa-Nairobi Standard Gauge Railway Project" between the government of Kenya and the Export-Import Bank of China.

The Star published on 6 November 2022 an article titled "I Have Exclusively Obtained SGR Contract, Says Murkomen" by Felix Kipkemoi.

Kenya's Roads, Transport, and Public Works Cabinet Secretary released the loan agreement to the public.  He said he would also track down and release the even more controversial contract for the standard gauge railway.  

Kenya's Controversial Chinese-financed and Built Railway

 The New York Times published on 7 August 2022 an article titled "'Jewel in the Crown of Corruption': The Troubles of Kenya's China--Funded Train" by Abdi Latif Dahir.  

Five years after its launch, the Chinese-designed, funded, and built railroad from Mombasa on the coast to Nairobi and beyond to a vacant field has become associated with debt, dysfunction, and criminal inquiries.  It is now a hot-button issue in the presidential election on 9 August.  

Are Kenya's Ports Threatened by a Potential Default on Chinese Loans?

 The China Africa Research Institute (CARI) at Johns Hopkins University published in April 2022 a working paper titled "How Africa Borrows from China: And Why Mombasa Port Is Not Collateral for Kenya's Standard Gauge Railway" by Deborah Brautigam, Vijay Bhalaki, Laure Deron, and Yinxuan Wang. 

In 2018, Kenya's auditor general warned that Kenya Ports Authority's assets--of which Mombasa Port is the most valuable--risked being taken over by China Eximbank if Kenya defaulted on loans for Kenya's Chinese-built standard gauge railway.

CARI assembled a scholar-practitioner team, which concluded after an extensive study that China is not going to seize Mombasa port or any port. 

Comment:  A response from Kenya's auditor general or some appropriate Kenyan authority would constitute a useful contribution at this point.    

Is China's Loan for Ugandan Airport Predatory?

 AidData published in February 2022 a study titled "Is Beijing a Predatory Lender? New Evidence from a Previously Undisclosed Loan Contract for the Entebbe International Airport Upgrading and Expansion Project" by Brad Parks, Ammar A. Malik, and Alex Wooley.

AidData's publication of the final, unredacted version of a controversial $200 million loan contract between China Export-Import Bank and the government of Uganda for the Entebbe International Airport Upgrading and Expansion Project reveals that the airport itself is not a source of collateral that the lender can seize in the event of default.

Instead, China Export-Import Bank required the borrower to provide a fully liquid cash deposit in an escrow account that the lender can unilaterally seize in the event the government of Uganda defaults on its repayment obligations.  AidData concluded that Chinese lenders have no desire to seize assets but they are looking out for their own interests. This loan contract does not support the charge of predatory lending but does contain intrusive conditions.  

China's Lending Institutions

 The Overseas Development Institute (ODI) published in October 2021 a publication titled "China's Lending Landscape and Approach to Debt Relief" by Marina Rudyak and Yunnan Chen.  

This is a useful guide to Chinese financial and lending institutions and their approach to debt relief.  It helps remove some of the mystery behind China's development finance program.  

Analysis of Chinese-built Infrastructure Projects in Tanzania and Kenya

 The Washington Post Monkey Cage published on 18 August 2021 an analysis titled "A Chinese Airport Project in Zanzibar Floundered. Here's What the New G-7 Infrastructure Plan Can Learn" by Veda Vaidyanathan.

The analysis looks at 5 Chinese-built infrastructure projects in Tanzania and Kenya--4 financed by the China Export Import Bank and 1 by the World Bank.  The advantages of Chinese projects were high speed, enormous scale, and low costs, although the Zanzibar international airport project experienced major delays and was well over budget.  

Chinese Lending to Africa

 The Carnegie Endowment for International Peace published on 2 June 2021 an article titled "What Do We Know about Chinese Lending in Africa?" by Zainab Usman, director of the Africa Program at Carnegie.

The author arrived at the following five conclusions:

--China's lending portfolio is large but declining.

--Chinese creditors are increasingly commercially oriented.

--The controversial resource-backed lending model persists.

--Lending is mostly to infrastructure and other economic sectors.

--Sophisticated contract terms are needed to manage high-risk borrowers.