August 24, 2022.
In what appears to be a new leg in its mutually beneficial diplomatic relations with African nations, China has announced that it is ready to let go over 20 interest-free loans to 17 countries in the continent. The Asian giant which made the disclosure via its Minister of Foreign Affairs, Wang Yi, also disclosed that it has concluded arrangements to provide assistance to the struggling countries.
Minister Yi, who did not name the affected countries or amount owed, made the disclosure while announcing the cancelation in a meeting at the Forum on China-Africa Cooperation last week. According to the statement, the said loans had matured at the end of 2021.
“China will waive the 23 interest-free loans for 17 African countries that had matured by the end of 2021,” Mr Wang said at the Forum on China-Africa Cooperation, pledging that China will henceforth, continue to actively support and participate in the construction of major infrastructure projects in Africa through financing, investment and assistance.
“We will also continue to increase imports from Africa, support the greater development of Africa’s agricultural and manufacturing sectors, and expand co-operation in emerging industries such as the digital economy, health, green and low-carbon sectors.”
“What Africa wishes for is a favourable and amicable cooperation environment, not the zero-sum Cold War mentality,” Wang said.
Experts say the loan-forgiveness move is not entirely new as Beijing has already declared several debt forgiveness of interest-free loans to African nations since 2000. According to a report credited to the Johns Hopkins University School of Advanced International Studies, China has written off an estimated $3.4 billion in debt through 2019.
According to Yi, Beijing has delivered $3 billion of the $10 billion credit facilities it pledged to the continent’s financial institutions since the inception of the Forum on China-Africa Cooperation in Senegal in November 2021. The minister disclosed that in addition to agreeing to tariff-free entry to 98% of exports from 12 countries from the continent, with more already included in the list, the Asian giant also provided emergency food assistance to a number of African countries including Djibouti, Ethiopia, Somalia and Eritrea.
“So far this year, China has signed exchange of letters with 12 African countries on zero tariff for 98% of their export items to China. We have provided emergency food assistance to Djibouti, Ethiopia, Somalia, and Eritrea. More African agricultural produce has reached the Chinese market through the green lanes,” he added.
According to the World Bank, China accounts for almost 40% of the bilateral and private-creditor debt that the world’s poorest countries need to service in 2022 his year.
Forbes reports that Djibouti, Angola and the Democratic Republic of the Congo, owe the biggest foreign debt to China 43%, 41% and 41% respectively.
Stressed badly by covid-19 outbreak, developing economies, mostly from Africa, have already piled up a quarter-trillion-dollar of distressed debt. Ominously, the debts also come with an impending unprecedented deluge of defaults by economies. Among others, experts adduce the reason to inflationary pressures which resulted in a wave of interest-rate hikes by apex banks around the world, including the US Federal Reserve. The hike also led to a spike in the cost of sovereign loan repayments. For instance, data from the Debt Management Office, has it that Nigeria, already spending 96% of its revenue on debt servicing, is owing China $3.63bn