China fails to reduce Africa’s debt as it promises more money Reuters

By Duncan Miriri and Laurie Chen

NAIROBI/BEIJING (Reuters) – China failed to provide debt relief requested by many African countries this week, but it promised 360 billion yuan ($50.7 billion) over three years in credit and investment lines.

The Forum on China-Africa Cooperation (FOCAC) launched in 2000 has assumed an increased role after the establishment in 2013 of President Xi Jinping’s Belt and Road Initiative (BRI), which aims to recreate the ancient Silk Road for China’s second economy world in size and largest. bilateral creditor to Africa.

“China is coming back to the forefront of overseas capital deployment in emerging markets,” said Tellimer’s Hasnain Malik, adding that it was not yet at pre-Covid levels.

China has also sought to use FOCAC to counter growing competition in Africa from the United States, the European Union, Japan and others.

In Beijing, diplomats and delegates from around the world mingled in the Great Hall of the People in Tiananmen Square as leaders from more than 50 African countries and Chinese officials led by Xi gathered for a group photo.

The new financial commitment is more than what Beijing promised at the last FOCAC in 2021, but below the $60 billion in 2015 and 2018 that marked the peak of lending to Africa under the Belt and Road Initiative.

During those peak years, Beijing financed the construction of roads, railways and bridges. But a drain on funds in 2019 left Africa with construction projects stalled.

The new funds will go to 30 infrastructure projects to improve trade links, China said, without giving details.

The 54-nation continent of more than 1 billion people has an estimated $100 billion annual infrastructure funding gap and needs transport links to turn a new giant pan-African trade bloc (AfCFTA) into a reality.

Beijing has reduced funding for such projects in recent years as it has shifted its focus to “small and beautiful” projects, mainly due to its own domestic economic pressures and rising debt risks among African countries.

Asked how the new commitments fit into China’s current cautious overseas lending strategy, a foreign ministry spokesman said there was no contradiction.

“Cooperation between China and African countries, including the specific implementation of projects, is discussed and determined by both sides,” foreign ministry spokesman Mao Ning told a regular press conference on Friday.

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China also said it would launch 30 clean energy projects in Africa, offer cooperation on nuclear technology and address an energy shortage that has delayed industrialization efforts.

“The results of the FOCAC summit signal a boost for green projects and in particular for renewable energy installations,” said Goolam Ballim, head of research at Standard Bank in South Africa.

China has become a global leader in wind and solar power, Ballim said, controlling significant supply chains and reducing production costs.

Others were skeptical.

“The problem is not so much the size of the investments, but the lack of transparency around the terms of the debt,” said Trang Nguyen, global head of emerging market credit strategy at French bank BNP Paribas (OTC:).

Success has been less clear for countries that owe much of their debt to China, which has made no express offer of assistance to those struggling with repayments.

Beijing instead urged other creditors to “participate in the management and restructuring of African countries’ debts in accordance with the principle of joint actions and fair burden-sharing.”

African leaders hoping to secure big deals for their countries had to settle for less exciting announcements.

Ethiopia and Mauritius have announced new foreign exchange lines with China’s central bank. Kenya said it had made progress in negotiations to reopen loan taps for key projects such as a modern railway to link the region.

However, there was optimism from some as they welcomed China’s increased commitments to Africa’s security, humanitarian challenges and other non-financial affairs.

“After nearly 70 years of hard work, China-Africa relations are the best in history,” Tanzanian President Samia Suluhu said on his X account.

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