China or the World Bank?
Is this true in Africa (All references to Africa in this article refer to all of Africa, including North Africa, rather than just sub-Saharan Africa)? It depends on how you define “official”. Available evidence shows that although credit from all Chinese financiers, including commercial banks and corporations, to African governments and state-owned enterprises exceeds that of the World Bank, the World Bank is still the largest official creditor in Africa.
World Bank confirms that China is the biggest bilateral official creditor, which means that it is the largest single creditor country. The Paris Club group of bilateral lenders, made up mostly of developed countries in the North, were once major bilateral lenders in Africa, but in 2017 debt to the Paris Club was less than 5% of debt. external in Africa. Other bilateral lenders include Russia, India, and Turkey, but their overseas lending programs are smaller than China’s.
While bondholders are the biggest debt holders in Africa, they are not considered official lenders. The OECD describes official lenders as “international organizations, governments and government agencies, including official monetary institutions”.
Commercial lenders, even if owned by the government, are considered private lenders by the World Bank. Debtor Declaration Manual, and are included as “unofficial” lenders in the World Bank’s international debt statistics.
World Bank loans to Africa
All World Bank loans to African governments are official, but Chinese loans abroad are more complicated. The China-Africa Research Initiative’s China Loans to Africa database records more than 30 Chinese lenders involved in loans to Africa. Only three of them lend abroad with official political mandates from the Chinese government: the Import-Export Bank of China (China Eximbank), the Development Bank of China (CDB) and the China Cooperation Agency. International Development (CIDCA).
World Bank International Debt Statistics (WBIDS) Loan Commitment Data and the China-Africa Research Initiative (CARI) China Loans to Africa database allows us to compare Chinese and World Bank loan commitments in Africa.
WBIDS tracks the public and state guaranteed debt (PPG) of 120 low and middle income countries through the Debtor Reporting System (DRS). CARI monitors loan commitments to African governments and public enterprises of all mainland Chinese financiers.
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Globally, the WBIDS includes $ 150 billion from the World Bank between 2000 and 2019. In Africa, WBIDS excludes data for six countries: Equatorial Guinea, Libya, Mauritius, Namibia, Seychelles and South Sudan. The World Bank’s Projects and Operations database provides data on the six missing countries, bringing the World Bank’s total to $ 151 billion.
The CARI database tracks $ 125 billion from official Chinese creditors – China Eximbank, CDB, and CIDCA – to African governments and state-owned enterprises from 2000 to 2019.
This figure is well below the World Bank’s $ 151 billion. However, Chinese commercial banks, such as the Industrial and Commercial Bank of China (ICBC) and Bank of China (BOC), and Chinese companies, such as Sinohydro and Huawei, also lend in Africa. The CARI database tracks $ 27 billion of these unofficial creditors, bringing the total loan commitments of all Chinese creditors to $ 152 billion, just exceeding the World Bank’s $ 151 billion (Figure 2).
So far, this analysis has excluded regional borrowers, such as African government consortia and African government-owned regional banks, such as the Export-Import Bank of Africa or the West African Development Bank (BOAD).
WBPO database includes at least $ 8 billion in loan commitments from the World Bank to African regional entities from 2000 to 2019, bringing the World Bank’s total to $ 159 billion. The CARI database estimates Chinese loan commitments to African regional entities at $ 2 billion, bringing the total to $ 154 billion.
At the end of the line
In the 21st century, China is the only country whose financiers have lent at levels that rival World Bank lending, which is remarkable. But China is not the largest official lender in Africa, according to World Bank definitions.
Figure 1 shows that over the three years between 2017 and 2019, credits from official and unofficial Chinese financiers have fallen short of World Bank credits. This trend is expected to continue as the Covid-19 crisis and over-indebtedness in Africa continue to put downward pressure on Chinese bank loans.
Kevin Acker is Research Director at the China-Africa Research Initiative at Johns Hopkins University School of Advanced International Studies.
This article first appeared in The China Africa Project.