Banking on the Belt and Road

Key Highlights From AidData's "Banking on the Belt and Road" Report
The China-Africa Daily Brief, 29 septembre 2021

J'évite en principe de reprendre des informations accessibles uniquement sur abonnement, l'intérêt du sujet était l'occasion de signaler la qualité du support The China-Africa Daily Brief.

Key Highlights From AidData's "Banking on the Belt and Road" Report:
  • CHINA'S MORE EXPENSIVE LOANS: Beijing’s lending to low-income and middle-income countries is provided on less generous terms than loans from OECD-DAC (the Development Assistance Committee of the Organization for Economic Cooperation and Development) and multilateral creditors. A typical loan from China has a 4.2% interest rate and a repayment period of less than 10 years.  By comparison, a typical loan from an OECD-DAC lender like Germany, France or Japan carries a 1.1% interest rate and a repayment period of 28 years.
  • IMPLEMENTATION CHALLENGES: 35% of the BRI infrastructure project portfolio has encountered major implementation problems—such as corruption scandals, labor violations, environmental hazards, and public protests—but only 21% of the Chinese government’s infrastructure project portfolio outside of the BRI has encountered similar problems.
  • RISK MITIGATION: "Collateralization has become the linchpin of China’s implementation of a high-risk, high-reward credit allocation strategy. In the interest of securing energy and natural resources that it lacks in sufficient quantities at home and maximizing investment returns on surplus dollars and euros, China has rapidly scaled up the provision of foreign currency-denominated loans to resource-rich countries that suffer from high levels of corruption. These loans are collateralized against future commodity export receipts to minimize repayment and fiduciary risk and priced at relatively high-interest rates (nearly 6%)."
Read a summary of the report here and download the full report here. AidData has also made the dataset they used in their research available for download here.

SUGGESTED READING: PODCASTING PROGRAMMING NOTE: Brad Parks, executive director of AidData, will join us on Friday to discuss the report on the next episode of the China in Africa Podcast.