Emmanuel Addeh in Abuja with report
China, the economies’ largest public creditor, said it would cancel 23 interest-free loans to 17 African countries and redirect $10 billion from its International Monetary Fund (IMF) reserves to countries on the continent.
Foreign Minister Wang Yi announced the cancellations at an assembly of the Forum on China-Africa Cooperation, in an article on the ministry’s website, quoted through a Bloomberg article.
In years, China has established itself as Africa’s largest bilateral lender, financing key infrastructure projects on the continent and offering loans.
The Asian superpower will redirect $10 billion from its IMF to the continent’s as-yet-unknown nations, according to Yi, who spoke at the assembly of coordinators on the implementation of follow-up moves to the 8th ministerial convention of the Forum on China-Cooperation Africa (FOCAC).
“China will give up the 23 interest-free loans for 17 African countries that had matured by the end of 2021.
“We will also continue to increase imports from Africa, further progression of Africa’s agricultural and production sectors, and expand cooperation in emerging industries such as the virtual economy and the health, green and low-carbon sectors.
“What Africa needs is an environment of friendly and supportive cooperation, not the Cold War mentality of sum 0. So this year, China has signed an exchange of notes with 12 African countries on 0 price lists on 98% of its exports to China,” he said.
It is unclear that Nigeria will be included among the recipient countries, but audits conducted through the Office of Debt Management (DMO) showed that, as of March 31, 2020, Nigeria’s total loan to China amounted to $3. 121 billion.
This amount, he said, represents 3. 94% of Nigeria’s total public debt of $79. 303 billion (N28. 628. 49 billion to US$361) as of March 31, 2020.
Likewise, in terms of sources of external financing, China’s loans, according to the government, accounted for 11. 28% of the remarkable external debt of $27. 67 billion at the same date.
The Chinese government provided important details about the price of the loans, which it said matured late last year, or hinted at which countries owed the money.
Since 2000, Beijing has announced several rounds of interest-free loan forgiveness to African countries, canceling at least $3400 million in debt through 2019, according to an article published by the Johns Hopkins University School of Advanced International Studies.
The cancelled debt was limited to overdue and interest-free foreign aid loans, and Zambia received the maximum number of cancellations in this period.
However, the vast majority of recent loans from China in Africa, such as concessional loans and advertising loans, were never considered cancellable, the report adds, some of them have been restructured.
Rising inflation has triggered a wave of interest rate hikes through central banks around the world, adding to the U. S. Federal Reserve. In the US, raising the repayment prices of sovereign loans.
Meanwhile, emerging countries have accumulated a quarter of a trillion of debt in difficulty that threatens to create a historic cascade of defaults across economies that suffered even before the Covid-19 pandemic.
Beijing, which has been criticized in the West for its lending practices to poorer countries, accounts for only about 40 percent of the bilateral debt and personal creditors that the world’s poorest countries will have to repay this year, according to the World Bank.
He helped forge recent debt relief agreements, participating in the suspension of Group of 20 payments due to the pandemic.
The announcement highlights China’s efforts to forge ties with emerging countries, especially its Belt and Road Initiative, according to the report.
The United States and China are vying for influence around the world, and Beijing’s announcement comes at a low point in ties between the two superpowers, with tensions rising following a rapprochement with Taiwan through U. S. House Speaker Nancy Pelosi earlier this month.
The IMF’s record injection of $650 billion in resources last year was aimed at helping its members overcome the effects of the Covid-19 outbreak, but the fund’s director, Kristalina Georgieva, suggested richer countries do more by lending their reserves to the poorest.
Wang said the country is willing to channel $10 billion in special drawing rights from China through two of the fund’s trusts set up to help middle-income and poor countries.
Since FOCAC was held in Senegal in November last year, Beijing has granted $3 billion of the $10 billion in loans pledged to African monetary institutions, Wang said in his speech.
In addition, this year China accepted duty-free access for 98 percent of exports from 12 African countries and emergency food aid to Djibouti, Ethiopia, Somalia and Eritrea, Wang said.
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