The Chinese foreign ministry has said it is open to forgiving debts of some African nations as they struggle to contain the spread of the COVID-19 virus.
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African nations owe China more than $140 billion, according to research from Johns Hopkins University, but are facing economic disaster as the response to the coronavirus pandemic forces businesses to close and people to stay at home.
The World Bank warned last week that sub-Saharan Africa faces a recession for the first time in 25 years, with growth collapsing from 2.4 percent in 2019 to between -2.1 and -5.1 percent in 2020.
In recent years, China has emerged as the largest single source of loans for African nations. Estimates vary, but Johns Hopkins University stated that between 2000 and 2017, some $143 billion was lent to African nations by the Chinese government, banks and companies.
The country’s foreign ministry hinted at a valuable lifeline for indebted African nations on Tuesday, telling Reuters that Beijing is “aware that some countries and international organisations have called for debt relief programmes for African countries, and we are willing to study the possibility of it jointly with the international community.”
“The origin of Africa’s debt problem is complex, and the debt profile of each country varies,” the foreign ministry added.
African leaders have called for a $100 billion stimulus package to help the continent through the dislocation, Reuters noted. Of this, $44 billion would be gained by not servicing bilateral, multilateral or commercial debt. Officials have called for some loans for the continent’s poorest nations to be cancelled, with the rest converted into longer-term lower-interest loans.
According to the Jubilee Debt Campaign, some 20 percent of all African government debt was owed to China as of 2018, with 17 percent of governmental external interest payments made to China. Reuters cited Overseas Development Institute figures noting that China accounts for 33 percent of external debt service in Kenya, 17 percent in Ethiopia and 10 percent in Nigeria.
The International Monetary Fund and World Bank are both pushing for debt forgiveness in a bid to encourage a post-coronavirus economic recovery. Reuters—citing two sources familiar with the process—reported that Beijing will likely agree to a temporary freeze on debt payments by African nations, as part of an agreement by G20 nations to be finalized this week.
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