China loans to Africa transparent

The Asian nation, said all loans are done within international rules.

It was responding to the claim by World Bank President David Malpass who expressed concern about some of the loans China has been lending developing economies in Africa.

Malpass, who spoke with the BBC, said the terms and conditions need to be “more transparent”.

It comes amid worries that countries, including Ghana and Zambia, are struggling to repay their debts to Beijing.

Beijing has become one of the biggest sources for loans to developing economies in recent years. A new study led by the Kiel Institute for the World Economy shows that globally China lent $185 billion (£150 billion) in bailouts to 22 countries between 2016 and 2021.

Developing countries often borrow money from other nations or multilateral bodies to finance sectors that will grow their economies such as infrastructure, education and agriculture.

However, steep increases in interest rates in the U.S. and other major economies over the last year are making loan repayments more expensive because lots of borrowing is done in foreign currencies such as U.S. dollars or euros.

It is a particularly acute problem for developing economies who can struggle to find the extra money that is required as the relative value of their own currency falls.

It is a “double whammy and it means that economic growth is going to be slower,” says Malpass.

Tackling that challenge and its consequences was one of the main reasons for this week’s visit by U.S. Vice-President Kamala Harris to three African countries. It is a visit that comes with big commitments of financial support to Tanzania and Ghana.

There is a growing rivalry with China for influence in the continent, whose abundance of natural resources include the metals, such as nickel, crucial for the batteries needed for technology such as electric cars.

Speaking in Ghana’s capital, Accra, she said “America will be guided not by what we can do for our African partners, but what we can do with our African partners”.

Highlighting a new nickel processing facility in Tanzania Ms Harris said the project would be supplying the U.S. and other markets by 2026 and that it would “help address the climate crisis, build resilient global supply chains, and create new industries and jobs”.

That collaborative approach was praised by Malpass who said the competition between the world’s two biggest economies was “maybe healthy for developing countries” as it provided different options.

“What I encourage strongly is that they be transparent in their contracts. That’s been one of the problems; if you write a contract and say ‘but don’t show it to anybody else’, that’s a minus. So, get away from that,” the World Bank boss said.

There was also a warning that “for governments in Africa, they shouldn’t be offering collateral as an inducement to make a loan, because it locks it up for generations. That’s been happening with China.”

China refutes suggestions that it is exploiting other countries with its financial support.

At a news conference this week, Foreign Ministry Spokesperson Mao Ning said China “respects the will of relevant countries, has never forced any party to borrow money, has never forced any country to pay, will not attach any political conditions to loan agreements, and does not seek any political self-interest”.