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China Prepares to Forgive Some African Countries of Loans

Udeh Emmanuel, Lagos.

China which is one of the most developed countries in the world, also known for it economic development has become one of Africa’s largest creditors in recent years lending billions of dollars to government to provide essential services to the development of the country

Currently, China has promised some Africa countries to reduce the profit of it loans due to the Covid-19 pandemic facing the country

According to president xi Jumping, he said China has exempted some African countries from interest-free loans which is due by the end of this year in other to contend with the Corona virus pandemic. Through out his speech, the president didn’t made mention of African countries this new development would favour or how much debt would be erased .

By estimate ,African countries are significantly obligated to China financially. Some 20% of African governments external debt was owed to China in 2018 according to Jubilee Debt Campaign

Chinese lenders signed $152 billion worth of loans to African countries from 2000-2018 according to China Africa Research Initiative (CARI)

The Chinese leader also promised that his country would offer “greater support” to African countries that have been hit hardest by the virus or are under financial stress. He suggested that China could give countries more time to repay other debts, for example.
eded more than ever.”

The Chinese leader also promised that his country would offer “greater support” to African countries that have been hit hardest by the virus or are under financial stress. He suggested that China could give countries more time to repay other debts, for example.

Xi’s announcement comes as the coronavirus pandemic inflicts substantial hardship on some of the world’s most underdeveloped countries, including those in Africa — and pressure is building on creditors to step in. The International Monetary Fund and the World Bank, for example, have been calling on creditors to suspend debt repayments from Africa as a way to support some of the continent’s poorest countries as they grapple with fallout from the outbreak.

countries as they grapple with fallout from the outbreak.

But analysts have pointed out that interest-free loans comprise just a fraction of the debt that African countries owe China. The CARI report pegged the total at under 5%.

In the early 2000s, such arrangements “made up a significant percentage of Chinese loans,” the report said. “However, as other sources of financing from China started to increase … [interest-free loans] became a smaller and smaller proportion of China’s total lending to Africa.”

Canceling African debt is also not new for China. China erased at least $3.4 billion worth of African debt from 2000 and 2019, according to CARI — mostly in mature, interest-free foreign aid loans that had gone into default.

But the “vast majority” of loans China has extended to Africa recently — including concessional and commercial loans — have never been considered for cancellation, the report added.

countries as they grapple with fallout from the outbreak.

But analysts have pointed out that interest-free loans comprise just a fraction of the debt that African countries owe China. The CARI report pegged the total at under 5%.

In the early 2000s, such arrangements “made up a significant percentage of Chinese loans,” the report said. “However, as other sources of financing from China started to increase … [interest-free loans] became a smaller and smaller proportion of China’s total lending to Africa.”

Canceling African debt is also not new for China. China erased at least $3.4 billion worth of African debt from 2000 and 2019, according to CARI — mostly in mature, interest-free foreign aid loans that had gone into default.

But the “vast majority” of loans China has extended to Africa recently — including concessional and commercial loans — have never been considered for cancellation, the report added.

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