In a recent report by the non-profit organization National Resource Governance Institute (NRGI), Africa owes more than $164 billion to China, after 52 resource-backed loans between the years 2004 and 2018 were put under scrutiny. The African countries with the highest Chinese debt are Angola, Ghana, Niger, and Sudan, according to the China Development Bank.
While there is less denying that the resource-backed loans have helped Africa with the infrastructure, the continent also faces a growing funding gap of $90 billion a year. The inaccessibility of electricity to major African countries and the subsequent impact on the economy makes it arduous to bridge the gap between borrowing and spending.
Further, 24 sub-Saharan African countries have crossed the debt-to-GDP ratio which is evidence enough for Africa’s economic crisis. In a statement made by an NRGI co-director, Evelyne Tsague stated that- African leaders have taken out the loans for their own political ambitions, though the countries are tremendously indebted. Notably, this debt build-up along with a lack of transparency makes no commitment on how the money borrowed is used. Apart from the effect of the debts on the private sector and African economy, the burden is also impeding the growth of new jobs and industries.
