New Trends in Chinese Infrastructure Lending to Africa

The document analyzes the transition of Chinese infrastructure finance in Africa from large-scale, policy-bank-funded loans to a more cautious approach. It identifies three primary trends: the diversification of lending partners and contractors, a strategic shift toward 'small is beautiful' projects with shorter repayment windows, and the adoption of new funding models like Build-Operate-Transfer (BOT) and Integrated Investment, Construction and Operation (IICO) to reduce sovereign debt burdens.

• Chinese lending to Africa peaked in 2016 and has since declined sharply, with total loans in 2022 dropping to $10.5 billion for 28 projects, compared to a mid-2010s peak of approximately $80 billion for 150 projects.
• The number of Chinese lenders providing loans to African countries increased tenfold between 2000 and 2019, which has provided recipient nations with more options but increased the complexity of debt renegotiations.
• China has adopted a 'small is beautiful' approach, prioritizing smaller projects with shorter repayment windows. This is evidenced by average project footprints decreasing from 90km2 (2013-2017) to 16km2 by 2021, and average construction deal sizes falling from $558 million in 2021 to $325 million in 2022.
• African countries are increasingly seeking infrastructure models that do not rely solely on sovereign debt. The Build-Operate-Transfer (BOT) model, exemplified by Kenya's Nairobi Expressway, allows contractors to recoup costs through concessions, such as a 27-year tolling agreement, rather than through government loans.
• The Integrated Investment, Construction and Operation (IICO) model uses equity investment to avoid increasing sovereign debt, as seen with the Lekki Port in Nigeria. In this model, Chinese companies like China Harbor Engineering Company (CHEC) take equity stakes, shifting financial risk from state lenders and governments to the companies themselves.
• Several factors drove the contraction of Chinese lending, including the controversy over the economic sustainability of large Belt and Road Initiative (BRI) projects like Kenya's Standard Gauge Railway, China's internal economic contraction, and the impacts of the COVID-19 pandemic and the war in Ukraine.

APA

South African Institute of International Affairs (2023). New Trends in Chinese Infrastructure Lending to Africa. https://saiia.org.za/research/new-trends-in-chinese-infrastructure-lending-to-africa/

Chicago

South African Institute of International Affairs. New Trends in Chinese Infrastructure Lending to Africa. 2023. https://saiia.org.za/research/new-trends-in-chinese-infrastructure-lending-to-africa/.

Wikipedia

{{cite report |author=South African Institute of International Affairs |title=New Trends in Chinese Infrastructure Lending to Africa |date=26 July 2023 |url=https://saiia.org.za/research/new-trends-in-chinese-infrastructure-lending-to-africa/ |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{southafricaninstituteofinternationalaffairs2023new, author = {{South African Institute of International Affairs}}, title = {{New Trends in Chinese Infrastructure Lending to Africa}}, institution = {South African Institute of International Affairs}, year = {2023}, month = jul, url = {https://saiia.org.za/research/new-trends-in-chinese-infrastructure-lending-to-africa/}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }