• Africa shifted from a net recipient of Chinese financing to a net payer over the past decade.

• Debt repayments to China now exceed new lending across low- and lower-middle-income countries.

• Multilateral lenders have replaced China as the main source of development financing.

China has moved in recent years from a net provider of financing to Africa to a net beneficiary, driven by rising debt repayments and a sharp decline in new loans, according to a report published on Tuesday, Jan. 27, by ONE Data. ONE Data operates as the data platform of ONE Campaign, a non-governmental organization focused on combating extreme poverty and preventable diseases.

The report, titled “The Great Reversal,” said the shift in Chinese financing affects all low- and lower-middle-income countries. Africa remains the most affected region. The continent moved from receiving net inflows of $30.4 billion from China during 2010–2014 to paying $22.1 billion to the Asian power during 2020–2024 in repayments of previously contracted debt.

Across all low- and lower-middle-income countries, China shifted from its role as a major financier that transferred $48 billion during 2010–2014 to a net recipient that collected $24 billion in net flows during 2020–2024 through loan repayments.

“The fact that fewer loans are being issued, while previous loans extended by China must still be repaid, explains the net capital outflows,” said ONE Data Executive Director David McNair, quoted by Reuters.

Rise in financing from multilateral institutions

China became Africa’s largest bilateral creditor during the 2010–2020 decade, relying primarily on its policy banks, including the Export-Import Bank of China and the China Development Bank, as well as dedicated bilateral vehicles such as the China–Africa Development Fund. However, China has tightened lending to the continent in recent years to secure its claims amid repayment difficulties faced by several countries. The country has increasingly shifted away from financing large infrastructure projects toward smaller, higher-quality and more environmentally sustainable projects.

The report also noted that China’s sharp reversal coincided with a strong increase in financing from multilateral financial institutions such as the World Bank and the International Monetary Fund, which have become the leading sources of development funding. Multilateral lenders increased net financing by 124% over the past decade. They provided 56% of total net flows during 2020–2024, equivalent to $379 billion, compared with 28% during 2010–2014.

The report further showed that bilateral financial flows to low- and lower-middle-income countries declined by 6% to $19 billion during 2020–2024 compared with 2010–2014. The report added that these trends should intensify as official development assistance cuts take effect from 2025.

However, non-members of the OECD Development Assistance Committee, including Kuwait, Qatar, Saudi Arabia, Turkey and the United Arab Emirates, increased net financing levels. These countries provided $30.2 billion in net flows during 2020–2024, compared with $17.1 billion during 2010–2014.

Walid Kéfi