New Trends in Chinese Financing in Africa

 The UK-based Overseas Development Institute (ODI) published in October 2024 a study titled "China's Creditor Diversification in Africa" by Tianyi Wu, Oxford University, and Yunnan Chen, ODI.

China's overseas lending is evolving and diversifying.  Financing is becoming less concessional and more targeted to commercial sectors in energy and mining.  Going forward, commercial creditors are expected to increasingly focus on infrastructure sectors with clear and immediate revenue potential.  

Chinese Financing for Uganda Oil Pipeline Still in Question

 The East African published on 15 January 2024 an article titled "EACOP Partners Race against Time to Close $3bn Financing Deal with China Lenders" by Julius Barigaba.

Developers of the oil pipeline that will transport crude from western Uganda to Tanzania's port of Tanga remain hopeful but concerned about the willingness of China's Sinosure and Export-Import Bank to provide $3 billion in debt financing. Environmental activists have opposed the project, which would be the world's longest heated pipeline in order to permit the flow Uganda's low sulphur crude.  Western banks earlier dropped out of the project as a result of opposition by the activists.

French major TotalEnergies is the lead investor in the pipeline project with a 62 percent stake, the Ugandan government and Tanzania Petroleum Development Corporation each with a 15 percent stake, and China National Offshore Oil Corporation with an 8 percent stake.

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.  

Chinese Port Development in Nigeria: From Contractor to Investor

 The China-Africa Research Initiative at Johns Hopkins School of Advanced International Studies published in January 2023 a study titled "From Contractors to Investors? Evolving Engagement of Chinese State Capital in Global Infrastructure Development and the Case of Lekki Port in Nigeria" by Hong Zhang.  

This case study of Lekki Port in Nigeria serves to illustrate the challenges in China's transition toward "integrated investment, construction, and operation" (IICO) whereby Chinese companies move beyond their traditional role as engineering and construction contractors and also become developers and operators of infrastructure projects.  

The paper calls for continued attention to this emerging form of Chinese state capital's engagement in global infrastructure development, especially on how risks are managed and the implications for the relationships between Chinese actors and host country stakeholders.  

China and the Zambian Debt Crisis

 The Harvard International Review published on 25 January 2023 an analysis titled "Chinese Investment in Africa: A Reexamination of the Zambia Debt Crisis" by Evan Hsiang.  

The author concludes that the Zambian debt crisis reveals how a lack of development drives African loans with chronic mismanagement by both China and Zambia creating today's crisis.  

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.  

Chinese Financing Falls in Africa

 Global Trade Review published on 8 September 2021 an article titled "Chinese Contractors in Africa Turn to Europe for Financing" by Jacob Atkins.

As major Chinese financing institutions such as the China Export Import Bank and China Export and Credit Insurance Corporation (Sinosure) hit exposure limits in heavily indebted African countries, Chinese contractors in Africa have begun seeking financing from European banks and export credit agencies.  

Primer on China's Lending to Africa

 Pinsent Masons published on 12 August 2020 an article titled "Chinese Financing: Banking with Chinese Lenders" by Kanyi Lui, a partner at Pinsent Masons law firm in Beijing.    

This is a very useful explanation of Chinese loans to Africa, which totaled $148 billion between 2000 and 2018.  China offers three categories of loans:  interest free loans from the Ministry of Commerce (about 5 percent of loans to Africa and the only ones that are forgiven); subsidized concessional loans from the China Export-Import Bank (about one-third of loans to Africa); and commercial rate loans from state-owned banks and other institutions (all of China's remaining loans to Africa).  The author provides typical interest rates and repayment periods.  

Ethiopia and Kenya Struggle to Pay Off Chinese Railway Loans

Quartz Africa posted on 4 June 2019 an article titled "Ethiopia and Kenya Are Struggling To Manage Debt for Their Chinese-built Railways" by Yunnan Chen.

China has financed new standard gauge railways in both Ethiopia and Kenya. While both of them have significantly improved the transportation infrastructure, their economic success is not guaranteed and both countries are struggling with loan repayments.

Ethiopia, China, and Debt

The Africa Report, published by the Jeune Afrique Media Group, posted on 27 March 2019 an article titled "Ethiopia's China Challenge" by Morris Kiruga.

Ethiopia currently has an external debt of more than $26 billion, about half of which is owed to China. The article reports that China has agreed to reschedule the repayment period for some of its loans to Ethiopia from 10 to 30 years. Ethiopia has reportedly renegotiated the repayment period for 60 percent of its external debt. The China Export and Credit Insurance Corporation, known as Sinosure, has apparently lost more than $1 billion on the Ethiopian-Djibouti railway project.

Kenya Railway Loan Terms with China under Fire

Kenya's Daily Nation published on 13 January 2013 a story titled "SGR Pact with China a Risk to Kenyan Sovereignty, Assets" by Edwin Okoth.

The 2014 contract between Kenya and China's state-owned Export-Import Bank for funding construction of the Nairobi to Mombasa railway has become public and contains worrisome terms for Kenya. Failure to repay the loan could result in China taking control of the port of Mombasa or other Kenyan properties from airports to natural resources. The contract also states that its terms are governed by and construed in accordance with the laws of China. The goal was to keep the contract secret. China has strongly denied that the contract is an example of debt-trap diplomacy.

China May Sell African Infrastructure Debt To Investors

The East African published on 5 November 2018 an article titled "China Plans To Sell Off Its African Infrastructure Debt To Investors" by Zacharias Abubeker.

As African countries experience increasing difficulties in meeting their loan payments, the Hong Kong Mortgage Corporation is looking at buying a diverse basket of China's infrastructure loans next year and repackaging them into securities for sale to investors. The article points out there may be downsides if African countries become mired in additional debt.

Addis Ababa-Djibouti Railway: A Bad Deal for China?

The South China Morning Post published on 29 October 2018 an article titled "Botched Chinese Railway Project in Africa Is a Warning to Belt and Road Investors" by Eric Ng.

The China Rail Engineering Corporation and China Civil Engineering Construction Corporation built the $4 billion railway between Djibouti and Addis Ababa. The chief economist for the China Export and Credit Insurance Corporation (Sinosure), which helped finance the project, recently stated that mistakes made in the project have cost Sinosure almost $1 billion. The project was backed by $3.3 billion in loans from the Export-Import Bank of China.

Chinese Loans to Africa 2000 to 2014

The China Africa Research Initiative at Johns Hopkins University recently published working paper number 4 dated April 2016 titled "Eastern Promises: New Data on Chinese Loans in Africa, 2000 to 2014" by Deborah Brautigam and Jyhjong Hwang.

The paper provides an overview of a new data base on Chinese loans, the scale of the loans, their African recipients and the sectors where borrowers are investing. The study concludes that Chinese financiers loaned about $86 billion to African governments and state-owned enterprises between 2000 and 2014.