African nations are now sending more money to China than they receive in new financing, marking a significant shift in the continent’s financial landscape. According to analysis by ONE Data, this trend is driven by a decline in new loans from China, while debt repayments continue to rise.
The impact is particularly pronounced in Africa, where an inflow of $30 billion in 2015-2019 turned into an outflow of $22 billion in 2020-2024. This change has coincided with a surge in net financing from multilateral institutions, which have become the main source of development finance.
According to David McNair, Executive Director at ONE Data, the trend is a net negative for African nations, as governments face difficulties funding public services and investment. The reduction in Chinese lending has also promoted domestic accountability, as governments rely less on external financing.
China’s role as a leading financier to developing nations has shifted over the past decade, with new loans falling sharply while debt repayments rise. Multilateral lenders have increased net financing by 124% over the past decade, providing 56% of net flows.
The African Continental Free Trade Area (AfCFTA) presents an opportunity for African countries to diversify their exports and reduce dependence on China. However, the continent’s trade with China remains fundamentally unbalanced, with Africa exporting raw materials and importing manufactured goods.
The trend highlights the need for African nations to rethink their economic strategies and prioritize domestic development.
Source NTV Kenya
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Author: Korkor Anumu
