The revelations challenged the long-held narrative/belief that many African countries are more indebted to the Chinese. Recall that this is the same excuse that Western leaders have repeatedly used to justify their lack of commitment to restructuring the debts of African countries.
In the report that was seen by Business Insider Africa, Debt Justice policy manager Tim Jones reportedly said:
“Western leaders blame China for Africa’s debt crises, but that’s a distraction. The truth is that their own banks, asset managers and oil traders are much more responsible, but the G7 let them off the hook. China participated in the G20 debt suspension program during the pandemic, private lenders did not. There can be no effective solution to debt without the involvement of private lenders. The UK and US should introduce legislation to compel private lenders to participate in debt relief.
Using available data from the World Bank to calculate the disparities between Western and Chinese loan exposures of African countries, the report was able to establish the following:
- Only 12% of the external debts of African countries are due to the Chinese.
- On the other hand, 35% of the external debts of African countries are owed to Western lenders, especially private companies such as those mentioned above.
- These private lenders charge the highest interest rates of 5%, compared to 2.7% for the Chinese and 1.3% for multilateral lenders such as the IMF and the World Bank.
- Many African countries with the highest public debt burdens actually have very little exposure to Chinese loans.
- 24 African countries that spend more than 15% of their income on debt service actually have their “average median debt payments by creditor group” at 11% for the Chinese, compared to 32% for Western private lenders.
Debt Justice, which is a global campaign group, said it chose to release the report ahead of the G20 finance ministers meeting later this week, as part of efforts urging Western governments to compel private lenders to participate in the G20 debt relief program “the Common Framework”. Business Insider Africa understands that no African country has received debt relief under this framework, although some have requested it.