Relative Risk and the Rate of Return: Chinese Loans to Africa Database, 2000-2023

A new update to the Chinese Loans to Africa (CLA) Database, managed by the Boston University Global Development Policy Center, estimates that from 2000-2023, Chinese lenders provided 1,306 loans amounting to $182.28 billion to 49 African governments and seven regional borrowers.

In 2023, Chinese lenders issued 13 new commitments with a value of $4.61 billion to eight countries and two regional financial institutions. This represents the first time the annual loan amount to Africa has risen since 2016 but is far below the early years of the Belt and Road Initiative (BRI), in which cumulative commitments surpassed $10 billion annually.

The CLA Database is an interactive data project tracking loan commitments from Chinese development finance institutions (DFIs), commercial banks, government entities and companies to African governments, state-owned enterprises and regional multilateral institutions.

A new policy brief analyzes the state of Chinese lending to Africa ahead of the 2024 Summit of the Forum on China-Africa Cooperation, taking place in Beijing from September 4-6, 2024.

Main findings:

• Total loans: Between 2000-2023, Chinese lenders provided 1,306 loans worth a combined $182.28 billion to 49 African countries and seven regional borrowers. During this time, Chinese loans were channeled primarily to Africa’s energy sector ($62.72 billion), transportation ($52.65 billion), information and communication technology ($15.67 billion), and the financial sector ($11.98 billion).
• New loans: In 2023, Chinese lenders issued 13 new commitments with a value of $4.61 billion to eight African countries and two regional financial institutions. This represents the largest volume of lending since 2019, before the onset of the COVID-19 pandemic, but is far below the early BRI years (2013-2018), in which cumulative commitments surpassed $10 billion annually.

Figure 1: Chinese Loans to Africa, 2000-2023

• Top five borrowers: China’s top five loan recipients between 2000-2023 were Angola, Ethiopia, Egypt, Nigeria and Kenya.

Figure 7: Top Five African Borrowers from China, 2000-2023

• Financing the financial sector: The volume of financing channeled to Africa’s financial sector in 2023 is unique when compared to previous years. More than half the total combined loan amount for 2023, $2.59 billion, was provided to African multilateral banks, as well as nationally owned banks in Egypt. From 2000-2022, a mere 5.29 percent of Chinese loans to Africa were directed to the continent’s financial sector. Chinese lenders’ focus on African financial institutions most likely represents a risk mitigation strategy that avoids exposure to African countries’ debt challenges.

Figure 5: Financial Sector Lending Breakdown, 2000-2023

• Energy loans are back: After a two-year hiatus in energy lending between 2021-2022, Chinese lenders committed loans worth a combined $501.98 million to three renewable energy projects in Africa. The energy types supported (solar and hydropower) and comparatively modest size of these loans is in line with the recent Chinese pivot to the “small is beautiful” approach to supporting projects with beneficial environmental and social outcomes. Support for these projects also provides further evidence of China’s intention to honor Xi Jinping’s 2021 pledge to cease financing new coal-fired power plants abroad and ramp up funding for renewable energy projects instead.

Figure 6: Power Generation Chinese Loan Commitments to Africa by Energy Source, 2000-2023

• Managing risk among strategic relationships: China’s desire to maintain relationships with longtime borrowers is exposing it to considerable risks. Despite growing risk aversion among Chinese lenders, Chinese development finance institutions in 2023 issued loans to three of its longtime borrowers all ailing from economic woes: Angola, Egypt and Nigeria. Rather than shifting lending to the strongest and healthiest economies on the continent, China is prioritizing reinvesting in existing strategic relationships.

Going forward, China will likely continue to pursue a bifurcated strategy of risk-averse experiments with borrowers that received fewer loans in past years and decidedly riskier forms of engagement with its longtime partners. Additionally, the size of future individual loans is expected to shrink, even in countries that have a long history of engagement with China, as the pre-pandemic pipeline of big-ticket projects empties out.