The Nature of the China-Africa Relationship is Set to Change for Good

The pandemic has decimated Africa’s fragile economic assumptions, sapped Chinese demand for the commodities that support its leading economies, and forced the implementation of growth-eroding lockdowns. The World Bank predicts that GDP growth in sub-Saharan Africa could fall from 2.4% in 2019 to between -2.1% and -5.1% in 2020. That is causing African policymakers to cast a nervous eye towards the continent’s debt pile, swollen by hundreds of billions of dollars in loans from the Chinese government, banks, and state-owned enterprises. Without debt support, unaffordable payments on the vast portfolio of loans from China and other wealthy nations could lead to a series of chaotic defaults by individual African countries.  A flagging outlook and a damaging US-China trade war have spurred doubts over whether Chinese policymakers will continue to plough billions of dollars into African projects with limited immediate upside.

SOURCE: AFRICAN BUSINESS MAGAZINE