China denies ’debt trap diplomacy’ amid $59.87 loan to African nations

Chinese foreign ministry spokesperson Wang Wenbin clarified that China is not responsible for African countries' "debt trap," but rather a supportive partner in helping them and other developing nations break free from the "poverty trap," as reported by CCTV.

As per the report, Wenbin stressed that those accusations have no factual basis and, "China attaches great importance to Africa's debt issue and helps African countries to cope with it. China has contributed more to the Debt Service Suspension Initiative (DSSI) than any other Group of 20 (G20) members."

Earlier, Africa Daily reported that China extended loans totalling USD 59.87 billion to African nations between 2000 and 2020, making it the leading creditor to Angola (USD 42.6 billion), Ethiopia (USD 13.7 billion), Zambia (USD 9.8 billion), and Kenya (USD 9.2 billion).v

However, these countries are currently facing challenges in meeting their debt obligations.

The issue has intensified further as a result of the significant rise in interest rates in the United States and other major economies in the past year, coupled with the devaluation of the currencies in African countries.

This has made loans denominated in dollars and other foreign currencies more costly.

As per Chatham House, currently, 22 African countries with low-income status are either already facing severe debt distress or are at a high risk of facing such distress.

Kenyan officials and ministers have emphasized once again that they plan to request an extension of the repayment period for loans totalling USD 5 billion from China, citing concerns that the debt is placing a heavy burden on the country's economy.

Officials and ministers in Kenya have reiterated their intention to request an extension of the repayment period for USD 5 billion in loans from China, citing the debt is "choking" the country's economy.

In addition, according to AidData, approximately 50% of China's lending to developing African countries is not included in official debt statistics.

Furthermore, loans provided by China to African countries tend to come with higher interest rates compared to loans from Western sources. These rates, around 4%, are close to commercial market rates and are about four times higher than similar loans from institutions such as the World Bank or Western countries.

It is to be further noted that Chinese loans typically have shorter repayment periods, usually less than 10 years, in contrast to concessional loans provided by other institutions to developing African countries, which often have repayment periods of around 28 years.

(With inputs from ANI)