Increasing Chinese debt on the African countries.

Amritanshu Raj
3 min readJun 27, 2021
Africa's Chinese debt problem
Africa’s Chinese debt problem. (Pic credits)

China is the largest foreign investor in Africa. China’s ambitious Border road initiative which aims to revive the historic Silk trade route has boosted the presence of China in Africa by many folds. Importance of African countries in China’s diplomacy is quite significant as Africa has large reserves of rare earth elements and minerals like Copper metal which is required for China’s dominance in manufacturing. The mines in countries like Zambia have fallen into hands of Chinese companies due to the debt trap techniques used by them. The deals made by the local African governments to transfer these mines into the Chinese hands have transparency issues and are biased in the favour of China. In some cases the contracts made between the concerned parties have mentioned that the local governments can’t disclose the price per unit exported minerals, which raises a genuine concern that they might be getting significantly less than they would have got if they exported independently. These projects also undermine the environmental concern due to the unsustainable rates of mining.

Nobody knows the exact amount of mined minerals exported to China by these Chinese companies from the African mines due to these ambiguous deals. But one thing for sure is that now China has an upper hand in Africa unlike any other country. The presence of China in Africa is not only in mining , the Chinese companies have also undertaken many road and railway projects. According to the Chinese experts these projects aim to enhance regional connectivity but if we see the dark sides of these deals it becomes very alarming that China is financing these projects to such an extent that it will become nearly impossible for the local African governments to return these loans. Even the interest rates on these loans are quite higher compared to similar projects in Africa & Asia financed by other financial institutions.

The ongoing projects have also undermined the concept of sustainability as in most of the cases the projects are badly affecting the already fragile ecosystem of the host countries. Economic sustainability of these projects is also under scanner as there is a big question on the ability of the African countries to repay these debts on time. Seeing the reputation of China as using the debts to trap the host countries to become China’s pawn in it’s game to encircle it’s adversaries for eg. The case of Hambantota port in Srilanka whose ownership is secured by China through the debt trap to insure naval presence in the Indian ocean. China’s debt has the power to convert neighbours into geopolitical adversaries .

Even from the perspective of job creation these projects are not very helpful as most of the high skilled/ high paying posts in these projects are occupied by Chinese citizens, the remaining underpaid low skilled/ low paying labour jobs are available for the native population.

It is the need of the hour that the local African governments should assess the feasibility, sustainability and future of these projects. The local governments should consider the burden of the loans with respect to their ability to repay.

The local African governments need to realise that loans can also undermine their sovereignty as it will force them to be in Chinese camp rather than being neutral.

No one can deny the fact that cooperating with China will help African countries improve the life standards of their citizens but there are some pretty serious questions on the nature of the deals made by the African governments with their Chinese counterparts.

Once a wise man said “Don’t Put All Your Eggs In One Basket”, It is time for the African leaders to show the same wisdom and start diversifying their debt in order to protect their financial autonomy.



Amritanshu Raj

believes in a new start, interested in economics, Geo-economics, Geo-politics, sustainability, self-help.