No, China Does Not "Own" Africa πŸ‡¨πŸ‡³ πŸ’Έ

A critical examination of China-Africa relations reveals a more nuanced reality than the widely circulated rhetoric

Ruger Stocking
Ruger Stocking

A critical examination of China-Africa relations reveals a more nuanced reality than the widely circulated rhetoric

Date: May 2, 2023

By Ruger Stocking

The belief that "China owns Africa" through debt has become a popular narrative in media and political circles. Many argue that Beijing employs debt-trap diplomacy to control African nations' resources and sovereignty. However, recent data, including a report from Pangea Risk, highlights that China's share of African sovereign debt is significantly lower than assumed, debunking the myth of Chinese "debt-trap diplomacy."

A critical examination of the numbers reveals the true scale of Chinese loans to Africa. According to the China Africa Research Initiative (CARI) at Johns Hopkins University, Chinese loans to the continent reached $153 billion between 2000 and 2021. The Pangea Risk report shows that as of 2023, only 21% of all African sovereign debt is with China. In contrast, the majority of the continent's debt is held by the European Union and the United States.

Furthermore, this is in spite of Chinese loans typically offer more favourable terms than those provided by Western institutions. AidData, a research lab at the College of William & Mary, found that Chinese loans have longer maturities and grace periods than those offered by the World Bank. China has also shown commitment to debt relief efforts in Africa. In 2020, China canceled interest-free government loans to 15 African countries and actively participated in the G20's Debt Service Suspension Initiative (DSSI), providing temporary debt relief to eligible countries.

It is vital to recognize that African governments actively seek and compare financing for their development projects and are not merely passive recipients of Chinese loans. Chinese loans often present an attractive option due to fewer political strings attached and greater flexibility in project implementation. Additionally, African governments are increasingly diversifying their sources of financing, seeking loans from various bilateral and multilateral partners.

Several African countries have successfully navigated their relationships with China, using Chinese loans to drive economic growth and development. Ethiopia, for example, has utilized Chinese financing to construct essential infrastructure like the Addis Ababa-Djibouti railway and the Grand Ethiopian Renaissance Dam. Kenya has also benefited from Chinese loans for the Mombasa-Nairobi Standard Gauge Railway, improving regional connectivity and trade. Neither of these countries has been shown to compromise their sovereignty during these projects.

Chinese investments are also generating jobs and promoting economic growth across Africa that strengthens African independence. A report by McKinsey & Company estimates that Chinese firms created approximately 300,000 jobs in Africa between 2015 and 2021. Over 10,000 Chinese enterprises operate in Africa, contributing to local economies' diversification and the development of various sectors.

In conclusion, the notion that China "owns" Africa through debt is an oversimplification that disregards the intricate and multifaceted nature of China-Africa relations. While vigilance is necessary regarding potential risks and challenges associated with borrowing from any source, it is essential to acknowledge the opportunities and benefits that Chinese loans and investments bring to the African continent. By fostering a more balanced and constructive discourse on the future of China-Africa relations, we can move beyond the sensationalist rhetoric that distorts the reality. Chinese investment should be a vehicle that is used to create a stronger more independent Africa.

Africa 🌍Bullish πŸ“ˆFocus πŸ”ŽFDI πŸ’Έ

Ruger Stocking Twitter

CEO & Founder of Ruil Capital LLC and Editor of the Ruil Report. Contributor at Disclose.tv

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