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External Debt - China's loans to Africa worry World Bank

Graham Watson

3rd April 2023

The President of the World Bank, David Malpass, has voiced his concerns about the nature of Chinese lending to Africa, highlighting loans to Zambia and Ghana, in particular.

It's a difficult topic to dissect: some depict Chinese loans as neo-colonialism, but equally you could argue that China is only stepping in when the West fails to offer the same level of support. Equally, a loan is mutually agreed - so the recipient nations have entered into it willingly.

Either way, China has lent a significant amount to African nations, and as a result, has a lot more influence than many Western governments are comfortable with.

Background

According to a 2022 report by the China Africa Research Initiative at Johns Hopkins University, sub-Saharan Africa owes China approximately $60 billion in external debt. This represents about 12% of the region's total external debt.

China has become a major lender to African countries in recent years, providing billions of dollars in loans for infrastructure projects, such as roads, railways, and power plants. However, some critics have accused China of using debt to trap African countries in a "debt trap."

China has denied these accusations, saying that its loans are on commercial terms and that it is committed to helping African countries achieve sustainable development.

Graham Watson

Graham Watson has taught Economics for over twenty years. He contributes to tutor2u, reads voraciously and is interested in all aspects of Teaching and Learning.

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