Africa: Western private creditors hold three times more debt of African countries than China!

Western private creditors hold three times more debt of African countries than China, according to a study made public on Monday July 11 by the British NGO Debt Justice.

Titled “The growing debt crisis in lower income countries and cuts in public spending,” the study states that 12% of the $696 billion in The continent’s external debts are due to Chinese public and private creditors against 35% due to Western private lenders, 39% to multilateral institutions (World Bank, IMF, ADB etc.) and 13% to other public creditors.

The study, whose calculations are based on data from the World Bank, specifies that Western private creditors are banks, asset managers and commodity traders.

At the end of 2020, these Western private creditors held $247 billion in debt from African countries compared to $83 billion for China, $274 billion for multilateral institutions and $93 billion for other public creditors.

Debt Justice, which presents itself as an NGO campaigning for the end of unjust and odious debt in developing countries, specifies on the other hand, that over the next seven years (2022-2028), 35% of the total debt service which will be paid by African countries will go to the coffers of Western private creditors against 19% for China, 35% for multilateral institutions and 11% for other public creditors.

By 2028, twelve countries among the 22 most indebted African countries will pay Western private creditors more than 30% of the total repayments of their external debts: Cape Verde, Chad, Egypt, Gabon, Ghana , Malawi, Morocco, Rwanda, Senegal, South Sudan, Tunisia and Zambia.

On the other hand, six of these 22 highly indebted countries will have to pay China more than 30% of the total repayments of their external debts: Angola, Cameroon, the Republic of Congo, Djibouti, Ethiopia and Zambia.

The study also reveals that the average interest rates for loans granted by private creditors to African states amount to 5% compared to 2.7% for loans granted to the continent by Chinese public and private lenders,1 .3% for multilateral institutions and 1.4% for other public creditors.

On another level, Debt Justice recalls that China participated in the debt suspension initiatives for low-income countries launched by the G20 at the height of covid-19, unlike Western private creditors.

“Western leaders blame China for Africa’s debt crises, but that’s a distraction. The truth is that their own banks, asset managers and trading houses are far more accountable,” said Debt Justice policy manager Tim Jones, quoted in the study. And to add: “China took part in the G20 debt suspension program during the pandemic, but this was not the case for private creditors. However, there can be no effective solution to the debt problem without their involvement”.