Chinese debt traps in Africa? No, most African debt owed to Western bondholders: says new research

A joint study by Columbia University (in US) and Oxford University (in UK) refutes claims of Chinese “debt-trap diplomacy” in Africa, and highlights that debt owed to European bondholders is a bigger contributor to debt. In fact:

Chinese entities account for only 8% (US$78 billion) of sub-Saharan Africa’s government debt (US$954 billion) and 18% of total external debt, of which ⅓ was owed to bilateral official partners, ⅓ to international financial institutions, and ⅓ in Eurobonds.

The study – by Harry Verhoeven from the Centre on Global Energy Policy at Columbia University, and Nicolas Lippolis from the Department of Politics and International Relations at the University of Oxford – says the debt-trap narrative is a creation of “China-US strategic and ideological rivalry” rather than a reflection of African realities or perspectives.

“What keeps African leaders awake at night is not Chinese debt traps. It is the whims of the bond market,” the report says.

The published Abstract of the report says:

“In the last two decades, the rapid growth of many African economies has coincided with deepening commercial and political ties with China and a re-emergence of perilous indebtedness.

US administrations have warned that Beijing is ensnarling Africa in debt to gain political leverage and force African states to cede strategic assets to China.

The charge that China is uniquely responsible for Africa’s heavy debt is also shaping the flagship debt initiatives of the World Bank and the IMF.

An analysis of the theoretical assumptions underpinning the ‘debt-trap’ narrative and the empirical evidence indicates that the preoccupation with China’s role is misguided, and is in fact rendering it harder to service and relieve African debt.

Furthermore, framing the African debt problem in terms of great-power rivalry obscures structural features of the international financial system that are far more consequential in shaping the liquidity and solvency of African states.”

Sources:

See also: Modern Ghana, “No More Lies, No More Anti-China Propaganda: There is No China-Africa ‘Debt-trap’ ” https://www.modernghana.com/news/1010885/no-more-lies-no-more-anti-china-propaganda-there.html

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