According to a report issued on Monday amid a discussion about the role of the world’s largest bilateral creditor, African countries’ debts with China are a third of what they owe to non-Chinese private lenders, and interest rates are little over half.
12 percent of the continent’s $696 billion external debts in 2020 were owed to Chinese public and private lenders, while 35 percent were owed to other private creditors, according to a campaign’s study of World Bank statistics.
China’s lending to emerging economies has garnered increased attention as certain countries have encountered debt difficulties and Western authorities have urged China to expedite restructurings. However, bondholders and oil dealers have also been criticised.
“Private lenders did not participate in the G20’s debt suspension scheme during the pandemic,” said Tim Jones, the head of strategy at Debt Justice, a British organisation that advocates against “poverty induced by unfair debt.”
Jones stated, “There can be no effective debt solution without the participation of private lenders.”
In 2021, the average interest rate on debt payments owed to China was 2.7%, compared to 5% for non-Chinese private debt, according to calculations by Debt Justice based on World Bank data.
It was found that there were significant discrepancies across the 24 African nations that spend more than 15% of their government revenue on debt service.
Six nations, namely Angola, Cameroon, the Republic of the Congo, Djibouti, Ethiopia, and Zambia, paid more than one-third of their debts to Chinese lenders in 2021, while 12 nations paid more than one-third of their debts to other private creditors.