Angola is the African country that has received the most loans from China over the last 20 years, more than US$42 billion, according to Chatham House, which argues that the region’s debt is a “global priority”.
According to data from the United Kingdom’s Royal Institute of International Affairs (Chatham House), African countries owe US$696 billion, around €651 billion, a five-fold increase compared to the beginning of the millennium, with 12 % of this amount to be owed to Chinese creditors.
The study analyzes seven countries in detail, including Angola, and points out that the debt-to-GDP ratio has improved in recent semesters, essentially due to the appreciation of the kwanza and economic growth, improving from 130% in 2020 to 86.4% in 2021, and falling again to 56.6% in 2022, but the cost of debt service should be close to 13 billion dollars (12.1 billion euros) in 2022, of which 38% refer to the external debt.
Angola, incidentally, owes more to China than the next three countries, exceeding the sum of US$13.7 billion from Ethiopia, US$9.8 billion from Zambia and US$9.2 billion from Kenya, according to Chatham Casa, Lar.
“Debt payment, relief and cancellation remains a priority for President João Lourenço’s government in the second term, which began in September 2022, as well as diversifying external partnerships beyond China’s overdependence”, reads the study by Chatham House, which points out that the debt of African countries should be seen as “a global priority”.
China has been the biggest creditor of African countries in recent decades, surpassing the United States, the European Union and Japan, but researchers at Chatham House point out that “far from being a sophisticated strategy to appropriate African assets, loans from China, at an early stage, may have created a debt trap for China, which became deeply entangled with African partners, who are increasingly mature and assertive”.
The Asian giant is Zambia’s biggest creditor, for example, the first country to enter into Financial Default following the covid-19 pandemic, and the economic consequences not only of the pandemic, but also of the invasion of Ukraine by Russia, made other countries stop paying their debts, as is the most recent case in Ghana.
According to the criteria of the World Bank and the International Monetary Fund (IMF), 22 of the 54 African countries are over-indebted, including all Portuguese-speaking countries.
The Chatham House analysis also shows that China is changing its interaction with African countries, having put a strong brake on disbursements, which went from US$28.4 billion in 2016 to US$8.2 billion in 2019 and just 1.9 billion dollars in 2020, during the pandemic.
The debt crisis affecting African countries has motivated an intense debate among academics, multilateral banks, analysts and investors, with several observers arguing that the current level of the debt-to-GDP ratio, between 60 and 70%, is unsustainable taking into account the rise in interest rates by western central banks and the increase in inflation, namely in food and energy goods, which adds to the high price that investors charge to lend money to African countries, perceived as riskier in terms of payment credibility.
*With Lusa
