Africa-Press. China’s loans to Africa fell by nearly half to $2.1 billion in 2024, marking the first annual decline since the Covid-19 pandemic, amid China’s shift toward selectively strategic projects, according to data released Wednesday by Boston University.
These loans, less than a tenth of their 2016 peak of $28.8 billion, reflect China’s move away from massive infrastructure projects, such as railways and roads, toward smaller, commercially viable projects, according to Boston University’s Global Development Policy Center.
“With the decline of the era of multi-billion-dollar megaprojects, China’s sophisticated financial instruments may signal a new, more selective phase of cooperation,” the report said, noting that Chinese loans consistently exceeded $10 billion annually between 2012 and 2018.
The chart shows the value of Chinese loans to Africa between 2000 and 2004 in billions of U.S. dollars. A record of nearly $30 billion was reached in 2016, partly due to $10 billion in refinancing in Angola.
Beijing suffered losses on some loans after pandemic-related economic pressures led Zambia, Ghana, and Ethiopia to default.
Boston University’s China-Africa Loans Database, which tracks lending to the continent since 2000, indicates that China is increasingly moving away from large, dollar-denominated projects, characteristic of the early Belt and Road Initiative, toward smaller, precisely targeted financing denominated in yuan.
The report noted that “China is increasingly relying on yuan-denominated loans, refinancing small and medium-sized enterprises through local banks in African countries, and foreign direct investment,” signaling a shift toward direct investment rather than traditional development loans.
Research shows that all Chinese infrastructure loans to Kenya in 2024, the most recent year available, were denominated in yuan.
Kenya also converted $3.5 billion of loans from Beijing into yuan in October, and Ethiopia is considering the same shift. Last year, the China Development Bank and the Development Bank of Southern Africa signed the first yuan-denominated financial cooperation agreement.
Funding for projects exceeding $1 billion declined significantly in favor of funds channeled through regional African banks toward commercially viable projects.
In 2024, China funded only six projects on the continent – two in Angola, and one each in Kenya, Egypt, the Democratic Republic of Congo, and Senegal.
Angola, which received $1.45 billion to develop its power grid and roads, emerged as the largest beneficiary, reflecting Beijing’s focus on long-term partnerships and strategic projects.
Boston University’s Global Development Policy Center concluded that “the combined data indicate a pattern characterized by more conservative direct lending, market-based financial instruments that reduce costs, mitigate debt risks, and support sustainable growth objectives.”
And your surprised that they defaulted.lol