List of Top African Nations Burdened by Chinese Debt
Though China remains a major lender to numerous African nations, its recent lending has waned.
The economic downturn triggered by the COVID-19 pandemic and Russia’s invasion of Ukraine has complicated debt repayment for several African countries.
Chatham House, a UK think tank, reports that over 20 low-income African nations face a high risk of defaulting on their debts.
China holds about 12% of Africa’s $696 billion external debt, according to Bloomberg.
The World Bank has identified seven African countries in debt distress or at high risk of it due to substantial Chinese loans.
These countries include Kenya, Angola, Djibouti, and Zambia.
Why might African countries default?
FX Pesa’s lead market analyst Rufas Kamau stated that many African nations, such as Kenya, hold loans denominated in US dollars.
Kamau explained that when the US Federal Reserve raises interest rates, loan obligations increase because countries must use their weaker local currencies to obtain the stronger US dollar for repayment.
“Countries like Kenya with debts in US dollars face increased obligations when the Federal Reserve raises interest rates. They need more local currency to obtain US dollars, making loan repayment more expensive. This situation heightens the risk of default and redirects funds from emerging markets to developed ones,” Kamau stated.
To ease the burden on foreign currency reserves, the Kenyan government negotiates bilateral deals with its major trading partners.
“It benefits Kenya to establish bilateral agreements with key trade partners to alleviate pressure on foreign currency reserves,” Kamau noted.
African nations with the highest Chinese debt
1. Angola
China’s lending to Angola has surged over the past two decades.
Following the end of Angola’s civil war in 2002, the country prioritized reconstruction efforts.
China supported Angola’s reconstruction with over 100 projects, funded largely by oil-backed loans in various sectors.
Business Insider reports Angola’s debt to China at $42.6 billion (KSh 5.7 trillion) as of 2023.
2. Ethiopia
By March 2023, Ethiopia’s foreign debt totaled $28.2 billion (KSh 3.8 trillion).
About half of Ethiopia’s debt, $13.7 billion (KSh 1.84 trillion), is owed to China.
3. Zambia
China is Zambia’s largest creditor, holding about a third of the country’s external debt.
Zambia’s debt to China is estimated at KSh 1.33 trillion.
4. Kenya
Kenya continues to feel the strain of repaying Chinese loans used to finance major infrastructure projects like the Standard Gauge Railway.
Data from the National Treasury shows debt repayments increased by about 50% to KSh 107.42 billion in the 2022/23 fiscal year.
Kenya owes over KSh 1.2 trillion to China.
President William Ruto’s administration plans to issue a $500 million (KSh 67.5 billion) Panda Bond from China to address the 2024/2025 budget deficit.
5. Cameroon
Cameroon also borrows funds from China to finance its budget.
The West African nation’s debt to China stands at KSh 837 billion.
6. Sudan
In the 2000s, China extended billions in loans and investments to Sudan to support oil production and economic development.
As of March 2023, Sudan’s debt to China was $5.12 billion (KSh 832.8 billion).
7. The Democratic Republic of Congo (DRC)
Between 2000 and 2018, the DRC borrowed $2.4 billion across 53 loans from China for projects in mining, transportation, and electricity.
Currently, the DRC owes China over KSh 727.7 billion.
8. Nigeria
Legit News reported that Nigeria’s debt to China increased by nearly $500 million in the latter half of 2023, reaching $5.16 billion (KSh 696.6 billion).
China remains Nigeria’s largest bilateral creditor, although its share of the nation’s total public debt is relatively low at just under 7%.
List of Top African Nations Burdened by Chinese Debt