China’s waiver of interest-free African loans equal to or less than 1% of its continent-study loans

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LONDON, Sept 12 (Reuters) – China’s waiver of 23 interest-free loans to African countries last month accounted for just 1.1% or less of Chinese lending to the continent, according to a study released on Monday.

China’s Foreign Ministry said in August it had canceled 23 loans to 17 African countries that matured in 2021, but did not give further details.

The canceled loans had maturities of 10 to 30 years and were worth up to $610 million in total, Boston University researchers estimated, using a database of Chinese state loans compiled by researchers.

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China has waived some loans to African countries since 2000 when it canceled loans made in the 1980s and 1990s, although it generally takes a tougher stance on restructuring loans to developing countries under the its Belt and Road Initiative (BRI) launched in 2013, analysts say. Read more

China’s state lenders pledged $53.8 billion in loans to Africa between 2000 and 2012, according to Boston University’s database, which tracks loans made since 2000, so loans canceled last month were only a tiny fraction.

“The granting and cancellation (of interest-free loans) are important diplomatic and symbolic tools in China’s lending practices,” says the report by Jyhjong Hwang and Oyintarelado Moses.

They added that the loans are “closer to foreign policy instruments than results-oriented financial instruments”.

According to African researchers and government officials, China’s interest-free loans to Africa, which included funding for government buildings, stadiums and hospitals, are generally treated as grants.

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Reporting by Rachel Savage; Additional reporting by Martin Quin Pollard and Yew Lun Tian in Beijing; Editing by Susan Fenton

Our standards: The Thomson Reuters Trust Principles.

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