Advertisement
Belt and Road Initiative
OpinionComment
Kai Zhu
Kai Zhu

Opinion | China’s investment in Africa will return as pandemic effects ease

  • China’s lending to Africa has slowed during the pandemic, with the ‘zero-Covid’ policy and travel restrictions limiting the ability to seal new deals
  • Given China’s long-standing relationship with Africa, though, the effects of the pandemic should be a short-term issue that eases with time

Reading Time:3 minutes
Why you can trust SCMP
1
Trains are parked at the Mobolaji Johnson Railway Station of the Chinese-built Lagos-Ibadan railway in Lagos, Nigeria. While Chinese banks make up about a fifth of all lending to Africa, China’s lending to the continent has slowed during the pandemic. Photo: Xinhua
Kai Zhu
China has long recognised the investment potential of Africa, deepening its relationship with the continent in the past two decades. By establishing itself as a partner for Africa on trade and as a substantial lender and investor, China has supported a wide range of important projects.

The Centre for Global Development recently found that throughout Africa’s infrastructure projects, China’s policy and development banks’ lending reached about US$23 billion between 2007 and 2020.

It is therefore not surprising that Chinese banks now make up about a fifth of all lending to Africa. Most of this is concentrated in resource-rich countries including Angola, Djibouti, Ethiopia, Kenya and Zambia, with annual lending peaking at US$29.5 billion in 2016.
Since the Covid-19 pandemic, however, China’s lending to Africa has slowed significantly, falling 78 per cent in 2020 to a 16-year low. This change is largely a result of the impact of the pandemic in both China and Africa, with China having much less appetite for risk. This is a cause for concern, though the effects of Covid-19 appear to be waning.
China’s “dynamic zero-Covid” policy has kept the country’s borders relatively shut since the start of the pandemic in early 2020. This means the government has directed its focus towards internal policies and stabilising domestic economic growth rather than any external strategies.
The impact of Covid-19 in Africa and China was on multiple levels. On the one hand, the pandemic eliminated government and business travel to and from China, which was an essential part of brokering new financial agreements and funding projects in the region. Compared to 2018 and 2019 which saw 66 and 32 loan agreements signed, there were only 11 new loan agreements in 2020.
Advertisement