Out-Law News 1 min. read
22 Aug 2022, 9:41 am
China will forgive 23 loans for 17 African countries which had matured by the end of 2021, foreign minister Wang Yi has announced.
China will continue to help with the construction of major infrastructure projects in Africa via financing, investment and assistance, the minister said in a speech at a recent meeting of the China-Africa cooperation forum.
The country will also be increasing imports from Africa, helping to develop Africa’s agricultural and manufacturing sectors, and expanding co-operation in emerging industries such as the digital economy, health, and green and low-carbon sectors.
The latest announcement follows China’s cancellation of at least 94 interest-free loans amounting to over US$3.4 billion in Africa between 2000 and 2019.
Finance expert Kanyi Lui of Pinsent Masons said: “China has been forgiving interest-free loans made to developing countries for almost half a century. When many African countries experienced debt distress in the 1980s to 1990s, China forgave over 85% of interest free loans then outstanding. This latest announcement shows China’s continued leadership in working with developing countries in debt distress.”
“As the BRI [Belt and Road Initiative] starts to shift its focus from mega infrastructure projects to ‘small and beautiful’ projects which focus on sustainability, raising living standards and social impact, developing countries would do well to carefully consider their own their interests and developmental needs and how to engage with China in a manner that would maximise the welfare of their people,” he said.
As of 2020, the African nations with the highest external debt to China as a percentage of gross national income are Djibouti (43%), Angola (41%) and the Democratic Republic of Congo (29%), according to World Bank data cited in press reports.
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