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