China, the largest sovereign creditor in emerging markets, announced that it will forgive 23 interest-free loans to 17 African countries and redirect $10 billion of its International Monetary Fund (IMF) reserves to African nations.
Foreign Minister Wang Yi announced the cancellations at a meeting of the Forum on China-Africa Cooperation, according to a post on the ministry’s website, cited in a Bloomberg report.
In recent years, China has established itself as Africa’s largest bilateral creditor, funding and lending to key infrastructure projects on the continent.
The Asian superpower will also redirect $10 billion from its IMF to the continent’s as-yet-unidentified nations, according to Yi, who spoke at the coordinators’ meeting on implementing follow-up to the eighth ministerial conference of the Forum on China-Africa Cooperation (FOCAC).
“China is forgoing the 23 interest-free loans to 17 African countries that expired by the end of 2021.
“We will also continue to increase imports from Africa, support further development of Africa’s agricultural and manufacturing sectors, and expand cooperation in emerging industries such as the digital economy, healthcare, green and low-carbon sectors.
“Africa wants an enabling and friendly environment for cooperation, not the zero-sum mentality of the Cold War. So far this year, China has signed an exchange of letters with 12 African countries on zero tariffs on 98% of their export items to China,” he said.
It is unclear whether Nigeria will be among the beneficiary countries, but analysis by the Debt Management Office (DMO) showed that Nigeria’s total borrowing from China as of March 31, 2020 was $3.121 billion.
This amount represents just 3.94% of Nigeria’s total public debt of US$79.303 billion (N28,628.49 billion in USD/361N) as of March 31, 2020.
The Chinese government did not disclose the value of loans that matured at the end of last year, nor did it specify which nations owed the money.
Beijing has announced several rounds of debt relief on interest-free loans to African countries since 2000, canceling at least $3.4 billion in debt by 2019, according to a study published by the School of Advanced International Studies at Johns Hopkins University.
The vast majority of China’s recent loans in Africa, such as concessional and commercial loans, were never considered for cancellation, the report added, although some of them have been restructured.