Africa, Latin American Countries Have Massive Oil-Backed Debt To China

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By Irina Slav

African and Latin American countries have accumulated at least $152 billion in debt to Chinese banks, backed by oil and other mineral resources, a study from non-profit the Natural Resource Governance Institute has revealed.

Chinese loans represented 77 percent of the total $164 billion in resource-backed loans taken out by African and Latin American countries between 2004 and 2018. While the size of this debt load may not be that worrying in itself, spread across 52 loan deals inked by 30 sub-Saharan African countries and 22 Latin American states, the fact that little detail about the terms of these loans has been made public is worrying, the NRGI report notes.

Of the total 52 loan deals, 38 were made with Chinese state policy banks, seven were made with commodity trading companies, four were made with other Chinese state companies, one came from South Korea, another from Russia’s Rosneft, and the last one from Nigeria, the report said.

“While these loans have often provided much-needed infrastructure, such as roads and hydro-dams, in many cases they have led to crippling levels of debt and the risk of losing collateral that is itself worth more than the value of the loan,” the lead author, David Mihalyi, said. “Urgent changes are needed and that starts with transparency. Borrowers and lenders must allow for greater scrutiny of lending terms to ensure that these loans are sustainable and serve the interests of the people and the countries they are supposed to benefit.”

China has over the last decade emerged as the largest importer of African mineral resources, its economy driving a constant rise in demand for these resources while domestic supply falls. The country is also investing heavily in Latin America with a focus on natural resources. The size of the loans granted to countries in these two key regions further highlight the size of China’s bet on international expansion, one of whose aims is securing the long-term supply of vital natural resources.

By Irina Slav for


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