Chinese loans to continent slump but West Africa takes larger share

The quantity and worth of Chinese language loans to Africa has decreased considerably in comparison with pre-pandemic ranges, however Beijing is putting a better emphasis on investments in West Africa than has beforehand been the case, in line with information compiled by Boston College’s World Improvement Coverage Centre.

Throughout 2021 and 2022, China signed off on 16 loans price a mixed complete of $2.22bn to African nations. The examine calculated that the typical worth of Chinese language loans was $135.15m between 2020 and 2022, a drop of 37% in comparison with the $213.03m registered between 2019 and 2020.  In the identical interval, the variety of loans dropped considerably, from 184 to 32.

Nonetheless, concurrently China has been lending much less to Africa as a complete, Chinese language loans to West Africa have assumed a better share. Whereas Chinese language funding has historically been concentrated in Southern and East Africa, West African nations have been the largest beneficiaries of Chinese language loans within the post-pandemic interval.

The info exhibits that $1.92bn price of loans throughout 2021 and 2022 – 86% – went into initiatives in West Africa, with Senegal, Benin, and the Ivory Coast borrowing the most important quantities.

Belt and Highway goes west

The Boston College report suggests one attainable cause is that the regional scope of China’s flagship international coverage programme, the Belt and Highway Initiative (BRI), has now been expanded to incorporate West Africa.

When the BRI was launched in 2013, China was targeted on growing political and financial partnerships in East Africa and the Horn of Africa, with the first ambition being to create a brand new maritime commerce route by the Indian Ocean and Suez Canal. This concerned multi-billion greenback loans for initiatives within the area such because the Ethiopia-Djibouti Commonplace Gauge Railway (SGR) in 2013 and an analogous railway mission in Kenya the next 12 months. The examine notes that BRI lending has tended to be pushed by “large-scale loans in Angola, Zambia, South Africa, Ethiopia, and Kenya”.

Nonetheless, the numbers counsel that China is now taking a broader curiosity in Africa past conventional BRI heartlands – with Senegal, the most important beneficiary of Chinese language loans, changing into a very necessary ally for Beijing in West Africa. The Boston College report says that “not too long ago, China has confirmed vital curiosity towards Senegal, which may very well be attributed to its diplomatic clout and financing calls for for its improvement.”

There additionally appears to be a rising political alignment between Senegal and China. Final 12 months, President Xi Jinping met with the President of Senegal, Macky Sall, in Bali. The Chinese language International Affairs Ministry later stated that “China and Senegal maintain extremely aligned positions on main points corresponding to safeguarding world peace and selling widespread improvement.” An identical message was reiterated when the 2 leaders met once more on the BRICS summit in Johannesburg in August.

Senegal, whose second-largest buying and selling associate after France is now China, has additionally struck a pro-Beijing line in regional organisations such because the Discussion board on China-Africa Cooperation (FOCAC). Senegal’s influential place in groupings just like the Financial Group of West African States (ECOWAS) may very well be incentivising additional Chinese language funding into Dakar as Beijing seeks to make additional political and financial inroads in West Africa extra broadly.