New Trends in Chinese Infrastructure Lending to Africa

The document identifies a sharp decline in Chinese infrastructure lending to Africa since 2016, driven by debt sustainability concerns, China's domestic economic contraction, and global shocks. In response, three trends have emerged: a diversification of lenders and partners, a shift toward 'small is beautiful' projects with smaller loans and 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 loads.

• Chinese lending to Africa peaked in 2016 and has since declined rapidly, with 2022 data showing only $10.5 billion in loans for 28 projects, compared to a mid-2010s peak of approximately $80 billion for 150 projects.
• The number of Chinese lenders extending loans to Africa has increased tenfold since 2000, which has provided recipient countries with more options but increased the complexity of debt renegotiation.
• China is adopting a 'small is beautiful' approach, focusing on smaller projects with shorter repayment windows. This is evidenced by average project footprints dropping from 90km2 (2013-2017) to 16km2 by 2021, and average construction deal sizes falling from $558 million in 2021 to $325 million in 2022.
• To avoid increasing sovereign debt, new funding models are being used, such as the build-operate-transfer (BOT) model exemplified by Kenya's Nairobi Expressway, where the contractor (CRBC) assumes the cost and recoups it through a 27-year toll concession.
• The integrated investment, construction and operation (IICO) model, used for the Lekki Port in Nigeria, involves equity investment rather than sovereign debt. This shifts financial risk from the African government and Chinese state lenders to the Chinese companies involved.
• African countries are increasingly diversifying their infrastructure partners beyond China due to concerns over corruption, secrecy, and debt sustainability, as seen in Tanzania's redesign of its railway project to include non-Chinese funding and contractors like Turkey's Yapı Merkezi.

APA

VAN STADEN, C. (2023). New Trends in Chinese Infrastructure Lending to Africa. South African Institute of International Affairs. https://saiia.org.za/wp-content/uploads/2023/07/SAIIA_PB_274_TrendsChineseInfrastructure-1.pdf

Chicago

VAN STADEN, COBUS. New Trends in Chinese Infrastructure Lending to Africa. South African Institute of International Affairs, 2023. https://saiia.org.za/wp-content/uploads/2023/07/SAIIA_PB_274_TrendsChineseInfrastructure-1.pdf.

Wikipedia

{{cite report |last1=VAN STADEN |first1=COBUS |title=New Trends in Chinese Infrastructure Lending to Africa |publisher=South African Institute of International Affairs |date=June 2023 |url=https://saiia.org.za/wp-content/uploads/2023/07/SAIIA_PB_274_TrendsChineseInfrastructure-1.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{vanstaden2023new, author = {VAN STADEN, COBUS}, title = {{New Trends in Chinese Infrastructure Lending to Africa}}, institution = {South African Institute of International Affairs}, year = {2023}, month = jun, url = {https://saiia.org.za/wp-content/uploads/2023/07/SAIIA_PB_274_TrendsChineseInfrastructure-1.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }