More headache for Nigeria as China reduces lending

China, Nigeria’s biggest bilateral creditor, is reported to be scaling back lending in Africa amid its worsening growth woes.

The decision of the Asian giant is coming amid increasing criticism from the west and also citizens of African countries.

Moreso the rising interest rates globally and shrinking liquidity factors have already sent bonds of the riskiest African borrowers, such as Ghana and Zambia, and currencies, including South Africa’s rand, to near pandemic lows, Bloomberg reported on Monday.

China is Nigeria’s biggest country creditor, and its debt is currently $3.9 billion, a 12.7 per cent increase from $3.5 billion in the same period last year, according to data from the Debt Management Office (DMO).

Read also: Nigeria-China bilateral trade reaches $12.03bn

According to the Boston University Global Development Policy Center data from 2000 to 2020, the top 10 African government recipients of Chinese loans were Angola, Ethiopia, Zambia, Kenya, Egypt, Nigeria, Cameroon, South Africa, Republic of Congo and Ghana.

Loan troubles for African countries

Of those, according to Bloomberg, Ethiopia has been flagged by JPMorgan Chase & Co. as carrying high repayment risk and under threat of reserve depletion by the end of 2023.

Zambia, which is in default on its Eurobonds, and Ghana have approached the IMF for bailouts that may involve debt restructuring, while Egypt is seeking a new loan, it said.

China is Zambia’s biggest creditor, accounting for almost 75 per cent of bilateral borrowings, and is co-chairing a committee negotiating a debt restructuring after the country became Africa’s first pandemic-era sovereign defaulter in 2020.

President Hakainde Hichilema had criticised the cost of Chinese projects before he won power last year and has since forged closer links with nations including the US and the UK.

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