Growing Support For Sovereign Debt Relief to Keep Money Within Africa
As African authorities grapple with rising numbers of COVID-19 infections, there is growing support for sovereign debt relief to keep money within Africa to bolster weak healthcare systems and give financial relief to those harmed by the economic contraction caused by the lockdowns and other pandemic response measures.
China Has Become One of the Largest Creditors For the Continent
Aside from the International Monetary Fund (IMF) and the World Bank (WB), several G20 nations hold African debt, but China has become one of the largest creditors for the continent. China is likely to support a temporary debt payment freeze, but is much less likely to go further and cancel portions of debt outright.
Having already lent African countries about US$143 billion between 2000 and 2017, Chinese banks, companies, and the government were already facing the prospect of some countries failing to pay back the money, much of which has been invested in large-scale infrastructure projects.
Chinese financing of energy and infrastructure projects in Africa has been an economic boon to some of the poorest countries in the world. Yet, as the pandemic continues apace, the economies of even the wealthiest countries have shrunk, which may cancel some planned infrastructure projects, and hold up those currently under construction, unless significant debt restructuring is undertaken.
China, the fiercest player in the game
The geopolitical and geo-economic implications for Africa over the next years are impossible to fathom in detail. What is clear, however, is the current juggling of all parties to position themselves favorably in a post-COVID-19 world—with China, being one of the fiercest players in the game, using various soft power tools.