China not the main cause for debt distress in sub-Saharan Africa: IMF

China isn’t the primary factor behind the debt challenges faced by countries in sub-Saharan Africa, even though its lending to the continent has witnessed substantial growth over the past two decades, the International Monetary Fund (IMF) said in a recent report.

Now the largest bilateral official lender to countries in the region, China’s share of total sub-Saharan African external public debt rose from less than 2 percent before 2005 to about 17 percent of $790 billion in 2021, the IMF noted in its Regional Economic Outlook for Africa report, which was published in early October.

Chinese lending appears to be more modest in proportion when these countries’ domestic debts are taken into account. Its share in the region’s overall sovereign debt was less than 6 percent in 2021, according to the IMF.

The IMF report seems to have refuted Western allegations that increased Chinese loans to Africa are the main cause for some countries’ debt distress, a rebuttal that’s aligned with comments by African government officials and other debt assessments.

“China only holds 21 percent of Kenya’s public external debt, with private creditors holding another 24 percent and multilateral institutions 45 percent,” said a Briefing Paper titled “Integrating China into Multilateral Debt Relief: Progress and Problems in the G20 Debt Service Suspension Initiative,” released by the Johns Hopkins University in April.

In the case of Zambia, a majority of debts are owed to Western donors, multilateral institutions and bilateral ones, said Chibeza Mfuni, deputy secretary general of the Zambia-China Friendship Association.

“I think we must be factual. The interest rates from Western lenders are higher … Countries have been stuck paying the interest, and the principal remains unpaid for a long time. What does that represent? It represents the rate of exploitation,” said Mfuni, former deputy head of the Zambian mission in Beijing.

China has provided African countries with a new source of funding for infrastructure through the Belt and Road Initiative, while the country’s Foreign Direct Investment (FDI) to sub-Saharan Africa has also grown significantly since 2006, reaching about 23 percent of annual FDI inflows – or about $3 billion – to the region in 2021, said the IMF in its report.

(Cover: Motorists drive on Mombasa road, next to the ongoing construction site of the Nairobi Expressway in Nairobi, Kenya, on July 12, 2021. /CFP)

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