China cancels Democratic Republic of Congo loans as it joins belt and road

China has cancelled the Democratic Republic of Congo’s interest-free loans that matured in 2020 and promised to fund infrastructure projects as the Central African nation joined the Belt and Road Initiative.

Chinese Foreign Minister Wang Yi said Beijing would write off loans to DRC worth an estimated US$28 million to help the country overcome the impact of Covid-19, and give US$17 million in other financial support. Interest-free loans account for only about 5 per cent of the loans China has advanced to Africa.

While meeting Congolese President Felix Tshisekedi in Kinshasa, Wang said most of the sum pledged, US$15 million, would be channelled towards development projects. The remaining US$2 million would be used to support DRC’s mandate as head of the African Union bloc for the next financial year. China also committed to funding refurbishment of the Congolese foreign ministry headquarters.

DRC took 53 loans worth US$2.4 billion from China between 2000 and 2018, mostly to fund power, transport and mining projects, according to the China Africa ­Research Initiative at Johns Hopkins University.

President Tshisekedi thanked China for helping DRC to fight the coronavirus and develop its economy, and said he “hopes to restart the joint economic and trade committee of the two countries to promote the cooperation”.

“More Chinese companies are welcome to invest in Congo and strengthen cooperation in infrastructure and other fields,” Tshisekedi said.

However, Mark Bohlund, a senior credit research analyst at REDD Intelligence, said Chinese firms’ increasing dominance of DRC’s mining sector could have contributed to Wang’s visit.

He said DRC had taken on less debt than other countries in the region over the past decade. “The debt relief from China is welcome but will not make a material difference for DRC,” he said.

Bohlund said one of the main economic challenges for President Tshisekedi was to mobilise more international support, be it from China or the World Bank, to invest in infrastructure and expand educational opportunities.

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“If China accords more financial support, it is likely to be more piecemeal than the large announcements such as the US$9 billion Sino-Congolese agreement in 2008 and a similar deal announced with Ghana around the same time, where actual lent funds ended up being substantially smaller than initially announced,” he said.

On Wednesday, DRC became the 45th country to join the belt and road, President Xi Jinping’s pet trade and infrastructure development plan, which has funded construction of highways, railways and power plants across Africa.

Wang said signing the belt and road cooperation document “will send a positive signal to the outside world that China and Congo are committed to common development and common prosperity”.

The foreign minister is on a five-country trip to Africa to try to cement Beijing’s influence in the continent. Wang on Tuesday visited Nigeria, where he promised China would continue to fund infrastructure projects, and will next head to Tanzania, where he will witness the signing of a deal for Chinese companies to build a railroad.

Chinese companies have already invested heavily in the mineral-rich DRC, which is the world’s largest cobalt producer, accounting for about 60 per cent of production, according to the International Monetary Fund.

Last month, China Molybdenum acquired Arizona mining firm Freeport-McMoRan’s indirect 95 per cent interest in the Kisanfu copper-cobalt deposit for US$550 million. Several Chinese companies own substantial stakes of copper and cobalt reserves in DRC.

Wang’s trip comes with DRC facing a turbulent period after Tshisekedi in December ended a coalition government formed with his predecessor Joseph Kabila, who had ruled for nearly two decades. Tshisekedi is seeking new coalition partners to give him a majority in parliament.

On the political instability, Wang told Tshisekedi that China respected the choices of the Congolese people and did not interfere in other countries’ affairs. “We hope that the Congo [DRC] will maintain political stability, realise national unity and rejuvenate the country,” Wang said. “I believe that the Congolese side will continue to give China understanding and support on issues involving China’s core interests.”