China has become one of Africa’s largest creditors in recent years, lending hundreds of billions of dollars to governments to build roads, railways and ports. Now it’s promising to write off a small part of that debt as countries on the continent battle the Covid-19 pandemic.
China will exempt certain African countries from interest-free loans due by the end of this year, President Xi Jinping has said. He was speaking at a summit about how China and Africa can fight the pandemic together.
He did not mention which African countries would be exempt or how much debt would be erased outright. By independent estimates, African countries are substantially indebted to China. Some 20% of African government external debt was owed to China in 2018, according to an estimate from the Jubilee Debt Campaign, a UK-based charity group which advocates for debt cancellation for poor countries.
Chinese lenders signed $152 billion worth of loans to African countries from 2000 to 2018, according to a separate report published recently by the China Africa Research Initiative (CARI), a research program at Johns Hopkins University’s School of Advanced International Studies.
“The world is undergoing profound changes unseen in a century,” Xi said. “Given the new opportunities and challenges we face, closer cooperation between China and Africa is needed more than ever.”
The Chinese leader also promised that his country would offer “greater support” to African countries that have been hit hardest by the virus or are under financial stress. He suggested that China could give countries more time to repay other debts.
Xi’s announcement comes as the coronavirus pandemic inflicts substantial hardship on some of the world’s most underdeveloped countries, including those in Africa — and pressure is building on creditors to step in. The International Monetary Fund and the World Bank, for example, have been calling on creditors to suspend debt repayments from Africa as a way to support some of the continent’s poorest countries as they grapple with fallout from the outbreak.
