On Wednesday, April 15, Beijing agreed, with the other G20 countries, to freeze, for one year, part of the debt of 77 countries including about forty African countries.

A moratorium, therefore, and not a cancellation of debts. In this regard, nothing can be done without the advice of Beijing, Africa's largest creditor. In recent years, the world's big money makers, led by the World Bank and the IMF, have accused Beijing of re-indebting or even over-indebting Africa.

Apart from the fact that these accusations do little justice to African leaders - implicitly accused of not knowing how to manage their affairs - they only partly correspond to reality, as the situation is so different from one country to another.

For example, if 72% of Kenya's public debt is held by China, this debt does not have the same effects on a country with a dynamic economy, capable of producing wealth, as on Djibouti, 82% indebted to China and whose economy is essentially limited to port activities.

Opacity is still too often in place

One of the major problems with China's debt is the opacity of the Middle Kingdom's rulers, since they do not make public the details of their operations. Thus, there is currently no precise figure of this debt but only an estimate: between 145 and 170 billion dollars for a total stock of African debt estimated at 365 billion dollars.

The China Africa Research Initiative (Cari), a research institute under the American Johns Hopkins University, has calculated that between 2000 and 2018, China made more than a thousand loans to 49 African countries, worth $152 billion. Angola alone received $43 billion, some of which was pledged on oil. Since then, Luanda has reportedly repaid about $16 billion.

What makes the calculations more difficult is also the fact that the announced figures are not always followed by effects. Thus, in 2017, China trumpets that it wants to lend Nigeria $ 5.3 billion but only $ 2.5 billion was actually disbursed, according to cari.

Chinese opacity also concerns the functioning of lending institutions. While the Chinese Eximbank holds the majority of the receivables, many loans are made by other organizations, such as the China Development Bank or large construction or public works companies, dozens of actors that make it difficult to compile figures.

The same vagueness sometimes surrounds the conditions under which the money is loaned. Some leaders are satisfied with this opacity, as in Congo Brazzaville, which has long hidden from the IMF the amount of its Chinese debt. It took the international institution to demand from Beijing an agreement on the restructuring of this debt - which weighed nearly 40% of the country's overall debt - to give its approval to an assistance program in Brazzaville, then in quasi-bankruptcy.

One of the difficulties with borrowing from China is that they sometimes mix direct investment and concessional loans, as noted in 2015 by the economist Sanou Mbaye, in the columns of Le Monde diplomatique. This makes it more difficult to know what is debt and aid. Overall, most of the loans granted by Beijing are concessional loans at advantageous rates, but Chinese companies that are also creditors tend to charge significantly higher rates, associated with shorter repayment terms.

The bad practice of pledged loans

The question that stirs people's minds concerns pledged loans, that is to say repayments in kind, when the borrower is considered insolvent. One third of China's loans are guaranteed, i.e. pledged on resources or infrastructure.

The Chinese do not have a monopoly on this practice, which is usual for some Western oil companies. But it has often been criticized in Beijing for "institutionalizing" this trend. Thus, today, 63% of the oil extracted in Angola is used to repay Chinese loans.

The abuse of pledged loans sometimes makes international financial institutions cringe, as was the case in the Democratic Republic of Congo (DRC) in 2007. At the time, China had granted $8.8 billion in loans to Kinshasa, in exchange for the exploitation of copper and cobalt mines as well as the construction of basic infrastructure. This barter had reacted the IMF which denounced its opacity.

If the Chinese appetite for raw materials is no longer to be demonstrated, Beijing is not necessarily the predator that some of its competitors portray. Its loans also promote the development of infrastructure that enables States to exploit their resources. Thus, the Cari calculated that 40% of the loans granted by China were used to pay for the construction of electricity production and distribution units, and 30% for transport infrastructure (roads, ports and trains).

The fact remains that today, while the average level of indebtedness of African countries has doubled in ten years to 60% of GDP, eight African countries are over-indebted and a dozen others could quickly find themselves in this situation, according to the International Monetary Fund.

Loans down

Now Beijing is more cautious with some of its partners. The Cari also claims that Chinese loans have even begun to decrease, from 2013.

Beijing would also become more attentive to the quality of projects and their solvency. The rapprochement with the Paris Club, which brings together the official creditors of African states and where China now has an observer place, participates in this movement.

If the Chinese giant is not yet to reach Western standards in terms of loans, it is nevertheless beginning to approach it. It is also a bet that the Covid-19 pandemic and the resulting global economic crisis could reinforce this trend.