China to Forgive 23 Interest-Free Loans to 17 African Countries

China, the largest government creditor to emerging economies, said it will forgive 23 interest-free loans to 17 African countries and redirect $10 billion of its International Monetary Fund reserves to nations on the continent.

Foreign Minister Wang Yi announced the cancelations in a meeting last week of the Forum on China-Africa Cooperation, according to a post on the ministry’s website. It didn’t provide details on the value of the loans which it said matured at the end of 2021, nor did it state which nations owed the money.

While disclosing this during his address at the recently held Forum on China-Africa Cooperation, Chinese foreign minister Wang Yi said the move demonstrates China's commitment to fostering stronger economic ties with the African continent.

The foreign minister added that this demonstrates how the Chinese government backs up its words on African development with concrete action.

Although the 17 countries were not named, checks by Business Insider Africa show that Djibouti, Angola, the Democratic Republic of Congo, Kenya, Uganda and South Africa are among African countries with high debt exposures to China.

A copy of Mr Yi's address, obtained by Business Insider Africa also mentioned other specific ways China intends to support Africa going forward.

For one, China will continue to support the continent's efforts to upgrade its infrastructure by providing financing and investment assistance under the Chinese government's transcontinental Belt and Road Initiative.

China will also provide emergency food assistance to 17 African countries in need this year.

Part of the statement also said that China will expand its imports from Africa.

“We will also continue to increase imports from Africa, support the greater development of Africa’s agricultural and manufacturing sectors, and expand co-operation in emerging industries such as the digital economy, health, green and low-carbon sectors,” the statement said.

Finally, in line with its commitment to development cooperation with African countries, China said it will re-channel $10 billion of its Special Drawing Rights (SDR) to Africa through the International Monetary Fund (IMF).

As you may know, there is a widely-held perspective about China's alleged debt traps in Africa. In the same vein, there is the narrative that many African countries are indebted to China.

However, a recent report by Debt Justice has shown that many African countries owe three times more debts to West banks, oil traders and asset managers than to Chinese lenders.

The report also added that the practice of blaming China for Africa's debt crises is a mere distraction.

August 25, 2022