China Would Consider Debt Relief for African Countries Struggling Against Coronavirus

The Chinese foreign ministry has said it is open to forgiving debts of some African nations as they struggle to contain the spread of the COVID-19 virus.

African nations owe China more than $140 billion, according to research from Johns Hopkins University, but are facing economic disaster as the response to the coronavirus pandemic forces businesses to close and people to stay at home.

The World Bank warned last week that sub-Saharan Africa faces a recession for the first time in 25 years, with growth collapsing from 2.4 percent in 2019 to between -2.1 and -5.1 percent in 2020.

In recent years, China has emerged as the largest single source of loans for African nations. Estimates vary, but Johns Hopkins University stated that between 2000 and 2017, some $143 billion was lent to African nations by the Chinese government, banks and companies.

The country's foreign ministry hinted at a valuable lifeline for indebted African nations on Tuesday, telling Reuters that Beijing is "aware that some countries and international organisations have called for debt relief programmes for African countries, and we are willing to study the possibility of it jointly with the international community."

"The origin of Africa's debt problem is complex, and the debt profile of each country varies," the foreign ministry added.

African leaders have called for a $100 billion stimulus package to help the continent through the dislocation, Reuters noted. Of this, $44 billion would be gained by not servicing bilateral, multilateral or commercial debt. Officials have called for some loans for the continent's poorest nations to be cancelled, with the rest converted into longer-term lower-interest loans.

According to the Jubilee Debt Campaign, some 20 percent of all African government debt was owed to China as of 2018, with 17 percent of governmental external interest payments made to China. Reuters cited Overseas Development Institute figures noting that China accounts for 33 percent of external debt service in Kenya, 17 percent in Ethiopia and 10 percent in Nigeria.

The International Monetary Fund and World Bank are both pushing for debt forgiveness in a bid to encourage a post-coronavirus economic recovery. Reuters—citing two sources familiar with the process—reported that Beijing will likely agree to a temporary freeze on debt payments by African nations, as part of an agreement by G20 nations to be finalized this week.

China's lending strategy has been criticized by its international rivals, who frame loans as a way to exert influence over poor nations or even take possession of national infrastructure in lieu of repayment—so-called debt-trap diplomacy. This approach has already won China control of a major port in Sri Lanka.

Chinese lending is also at the heart of its Belt and Road Initiative, described as a "Chinese Marshall Plan" designed to connect China to Africa and Europe via six land and maritime networks. Estimated to cost $900 billion, the project will stimulate economic growth and supercharge Beijing's political influence.

But China's growing influence has not come without opposition. Beijing has been accused of human rights abuses, corruption and colonialism in Africa in particular, but European nations—plus the U.S. and NATO—have raised concerns about what China's financial clout might buy it.

China has defended its lending practices. At last year's National People's Congress, spokesperson and former foreign affairs vice-minister Zhang Yesui said that China would "neither force others to cooperate on projects nor create any traps."

Kenya, Africa, debt, coronavirus, China, Beijing
Volunteers fumigate a street to curb the spread of COVID-19 coronavirus during a joint operation with Nairobi county during curfew at a residential area in Nairobi, Kenya, on April 6, 2020. YASUYOSHI CHIBA/AFP via Getty Images/Getty