China to forgive interest-free loans to Africa that are coming due, Xi Jinping says

Thursday June 18, 2020
By Jevans Nyabiage

Chinese leader Xi Jinping speaks to participants in the Extraordinary China-Africa Summit on Solidarity Against Covid-19, which was held via video link on Wednesday. Photo: Xinhua

Beijing will write off all interest-free loans advanced to African countries that are due this year, Chinese President Xi Jinping announced on Wednesday.

China will also build hospitals and send more medical experts to Africa to aid in the coronavirus fight, Xi said in speaking at the Extraordinary China-Africa Summit on Solidarity Against the Covid-19 Pandemic, which was conducted by video link.

He said that under the framework of the 2018 Forum on China-Africa Cooperation, “China will forgive the interest-free loans of relevant African countries due to China by the end of 2020.”

He also urged Chinese financial institutions such as Export-Import Bank of China and the China Development Bank “to conduct consultations with African countries on commercial sovereign loan arrangements”.

In April, the group of 20 richest nations (G20) agreed to suspend debt payments until the end of the year for the world’s poorest countries. Last week, Beijing said it would delay loan repayments for 77 low-income countries, including those in Africa, as part of the G20 programme.

Speaking at the summit, South African President Cyril Ramaphosa, who is the chair of the 55-member African Union, said the continent had an urgent need for medical supplies, ventilators and testing equipment as well as new facilities for isolation and quarantine.

The coronavirus-fueled economic slump has pushed some African countries into recession.

Africa has recorded more than 259,000 Covid-19 cases – the number has more than doubled in the past three weeks – and over 7,000 deaths, according to the Africa Centres for Disease Control and Prevention. Experts warn that although the continent might not have registered the number of deaths as elsewhere in the world, cases needing hospital admission could rise and overwhelm health care systems.

“We would like to ask China to consider support for the provision of diagnostic and therapeutic supplies for six months,” Ramaphosa said during the summit, which brought together dozens of African presidents, World Health Organisation chief Tedros Adhanom Ghebreyesus and United Nations Secretary General Antonio Guterres.

He said the support would be managed by the African Export-Import Bank (Afreximbank), in collaboration with its counterpart in China. China Exim Bank held a 4 per cent share in Afreximbank as of December 31. Ramaphosa also said there is now a formal marketplace to enable African governments to access critical supplies from China.

Xi replied that Beijing would continue to provide medical equipment and other assistance to African countries.

Xi, speaking from Beijing, also said China would begin construction on the new Africa Centres for Disease Control and Prevention headquarters and speed up the building hospitals in several African countries. He also pledged to avail Africa of any successful Covid-19 vaccine as a priority. “China is committed to taking the lead in benefiting African countries after the research and development of the new crown vaccine is completed and put into use,” he said.

Observers say that while ­Beijing has, in the past, written off most interest-free loans extended to African nations, they accounted for less than 5 per cent of Africa’s total financial debt to China, with the rest covered by concessional and commercial loans. In 2018, China cancelled US$78 million owed by Cameroon; Botswana’s US$7.2 million; and US$10.6 million owed by Lesotho. The previous year it cancelled US$160 million owed by Sudan. Last year, it restructured debt owed by Congo-Brazzaville, helping the country unlock US$449 million in additional loans from the International Monetary Fund.

China does not publish its overseas lending data, but figures from the China Africa Research Initiative at the Johns Hopkins University School of Advanced International Studies in Washington indicate the country advanced more than US$143 billion to 49 African governments and their state-owned companies between 2000 and

The London-based Jubilee Debt Campaign, which is pushing for loans to the poorest countries to be cancelled, estimates that China holds about a fifth of Africa’s total debt.