China, Africa and the big coronavirus debt relief question

The pandemic continues to ravage economies on the continent, forcing some countries to appeal for another round of help from creditors

Beijing says it has reached agreements with 19 African nations but critics say it is not doing enough to ease lending arrangements

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As the coronavirus continues to ravage Africa, trade flows and economic activity have yet to recover. Photo: AP

Published: 7:00am, 26 Jul 2021Updated: 7:00am, 26 Jul 2021

When the coronavirus pandemic began to batter economies around the world early last year, G20 members – including China – came up with a debt relief scheme to help the most vulnerable countries.

The Debt Service Suspension Initiative (DSSI) launched on May 1, 2020, offered temporary help to dozens of African nations.

In all, about US$5 billion in assistance to 40 eligible countries has been granted under the scheme, including US$2.1 billion from China. In November, China clarified, saying it had suspended US$2.1 billion of debt service payments from 23 African countries.

As the coronavirus continues to ravage Africa, trade flows and economic activity have yet to recover and some countries from Angola to Zambia are appealing for further bailouts.

But there is contention among creditors about the best way forward.

Zambia, which has defaulted on two instalments of some loans, has joined Ethiopia, which is also facing a debt crisis amid the Tigray war, and Chad, in seeking debt relief under a new DSSI “common framework” supported by the Group of 20.

With the common framework, China and other G20 countries are expected to coordinate their discussions to restructure debts for the three countries – the first time China would be holding debt negotiations multilaterally.

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