Browsing: africa china debt

• As national debts grow, many African countries find themselves spending more on debt than on health.
• IMF says the debt ratio in Sub-Saharan Africa surged to 60% from 30% of the countries’ GDP between 2013 and December 2022.
• Kenya is for instance using nearly 60% of its annual revenues on paying debt obligations.

As the Africa debt crisis roils, over half of the countries have found themselves spending more money in servicing their loan obligations than even the amount they have budgeted for health services to their citizens.

This unfolding scenario is further burdening millions of their citizens who have little choice but to shoulder heavy tax burdens to settle mountains of debt.

Prof Danny Bradlow, a Senior Research Fellow at the Centre for the Advancement of Scholarship in Pretoria, South Africa, captures the dire situation, stating: “over the  last three years (2019/22), more than 25 African governments allocated …

According to the database maintained by the China Africa Research Initiative (CARI), between 2000 and 2020, Chinese financiers and African governments signed more than 1,180 loan commitments totalling US$160 billion.

Of these, two-thirds were for transport, power, and mining projects. To put it in dollar terms, the countries that have borrowed the most from China are Angola, Zambia, Ethiopia, Kenya, and Cameroon.

Yi committed to continuing Chinese investment in Africa, including financial backing for a “Great Green Wall” to combat climate change, the provision of food aid to seventeen nations, and increased Chinese imports from Africa.…

Some 11 sub-Saharan African (SSA) countries are currently at high risk of debt distress according to the latest debt sustainability analyses by the International Monetary Fund (IMF). 

Already, six countries are in debt distress and the debt burden is worsening in the region where the public debt ratio to gross domestic product has surged to 65.6 per cent from 56.4 per cent pre-Covid-19 period. 

A study conducted by the China-Africa Research Initiative (CARI) at Johns Hopkins University shows that there is a trend where African governments are mortgaging their natural resources to secure loans from China. This has often ignited debt distress when commodity prices collapse.

Read: Why do lenders want “COLLATERAL”?

This mortgaging of resource is referred to as collateralized sovereign debt. This is where a sovereign loan is secured by existing assets or future receipts owned by the borrowing government. The collateral could be commodities, future export revenues, …