Chinese lending to African countries nearly halved to $2.1 billion in 2024, marking the first annual decline since the Covid-19 pandemic, according to data released on Wednesday by Boston University’s Global Development Policy Center (GDP Center).
The figure is a fraction of the $28.8 billion peak reached in 2016, underscoring a structural shift in Beijing’s overseas financing strategy rather than a cyclical slowdown.
The latest numbers suggest China is moving decisively away from the era of billion-dollar infrastructure projects that defined the early years of the Belt and Road Initiative (BRI). Instead, lending is increasingly focused on smaller, commercially viable projects, often backed by new financial instruments and denominated in Chinese yuan (RMB) rather than US dollars.
“As the era of billion-dollar projects winds down, China’s evolving financial instruments may define a new, more selective phase of engagement,” the report said.
From megaprojects to measured bets
Between 2012 and 2018, Chinese lending to Africa consistently exceeded $10 billion a year, driven by large-scale projects such as railways, highways, ports and power plants. A significant share of this financing was dollar-denominated and backed by sovereign guarantees.
That model has come under strain in recent years.
The economic shock of the pandemic, combined with rising global interest rates and domestic pressures within China, exposed vulnerabilities in Africa’s debt profiles. Zambia, Ghana and Ethiopia all slipped into default or debt distress, forcing Beijing to confront losses on some of its overseas loans.
The Boston University database, which tracks Chinese lending to Africa since 2000, shows that these experiences have prompted a rethink. China has increasingly pivoted away from dollar-based megaprojects toward targeted, smaller-scale financing, often routed through African financial institutions or structured as foreign direct investment.
“China increasingly employs RMB-denominated loans, small and medium-sized enterprise (SME) on-lending via domestic banks in African countries, and foreign direct investment,” the report noted, highlighting a clear shift from traditional state-to-state development lending.
Yuan diplomacy gains ground
One of the most notable trends in 2024 was the growing use of the yuan in Africa-related financing.
According to the research, all Chinese infrastructure loans to Kenya in 2024 were denominated in yuan. In October, Kenya converted $3.5 billion worth of existing Chinese loans from dollars into yuan, a move aimed at easing foreign-exchange pressure and reducing exposure to dollar volatility.
Ethiopia is also considering a similar shift, while the China Development Bank and the Development Bank of Southern Africa signed a deal last year to establish their first yuan-denominated financing cooperation.
For Beijing, the push aligns with broader efforts to internationalise the yuan and reduce reliance on the US dollar in global trade and finance. For African borrowers, yuan financing can offer lower costs and more flexible terms, though it also deepens financial dependence on China.
Fewer projects, familiar partners
The contraction in lending has also translated into fewer projects.
In 2024, China financed just six projects across Africa, two in Angola, and one each in Kenya, Egypt, the Democratic Republic of Congo, and Senegal. This marks a sharp contrast with the dozens of projects funded annually during the peak BRI years.
Angola emerged as the top recipient, securing $1.45 billion for power grid upgrades and road improvements. The country’s continued prominence reflects Beijing’s preference for long-standing partners with established repayment track records and strategic importance, particularly in energy.
Historically, the bulk of Chinese lending to Africa has gone to Angola, Ethiopia, Kenya, Zambia, Nigeria and Egypt, often tied to resource-backed or infrastructure-for-commodities arrangements.
What has changed is not just the scale, but the structure. Financing for projects exceeding $1 billion has declined noticeably, with more funds now channelled through regional African banks and directed toward projects deemed commercially viable rather than politically symbolic.
A strategic recalibration, not a retreat
Despite the sharp fall in lending volumes, analysts caution against reading the trend as a Chinese withdrawal from Africa.
Instead, the data point to a strategic recalibration. Beijing appears intent on reducing debt risks, limiting exposure to sovereign defaults, and aligning overseas financing more closely with market-based returns.
“Taken together, the data point to a pattern characterized by more conservative direct lending, coupled with market-based financial tools that reduce costs, mitigate debt risk, and support sustainable growth objectives,” the Boston University Global Development Policy Center concluded.
For African governments, the shift carries mixed implications. While the days of easy access to massive Chinese loans may be over, the new approach could encourage more disciplined project selection and reduce the risk of future debt crises. At the same time, countries with pressing infrastructure gaps may find fewer funding options available on concessional terms.
As China balances domestic economic challenges with its global ambitions, its Africa strategy is no longer about scale alone. The question now is whether this leaner, more selective engagement will deliver durable growth or leave parts of the continent searching for alternative partners to fill the financing gap.
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