Japan steps up lending to Africa amid falling Chinese contributions

By Mahua Venkatesh

New Delhi, April 25: Japan is slowly increasing its lending to Africa amid reduced aid from China, even as the latter remains the largest bilateral lender to African countries. Amid the economic downturn and rising debt levels, the world’s second-largest economy has tightened its purse strings.

Example this. Beijing is expected to provide Kenya with $254.9 million in 2022-23, “a steep cut of $1.2 billion” in the 2015-16 budget.

“It’s the second year in a row that China will lag behind Japan in bilateral lending,” having committed $183.9 million in the current year ending June compared to $315.7 million dollars in Tokyo,” the East African said in its report.

Although China’s lending to Kenya has slowed, overall exposure is much higher than in Japan. Until last year, Kenya owed China $6.95 billion with several major infrastructure projects underway, compared to $1.42 billion in Japan.

“China will now focus most of its attention on domestic issues that affect its economic indicators, GDP growth is slowing while debt is rising – given this situation, Beijing will not focus on Africa at this stage , although the continent is of utmost importance,” an analyst told India Narrative.

According to the Carnegie Endowment for International Peace, the nature of Chinese lending to Africa is changing. Chinese lending to Africa peaked in 2019 when large amounts were directed to the Belt and Road Initiative. But since then, Chinese lending to Africa has slowed, data showed. A sectoral breakdown of Chinese lending shows that more than 65% of lending goes to infrastructure sectors, he said, adding that in comparison, traditional lenders – mainly from Europe and North America as well as the Japan in the OECD Development Assistance Committee (OECD-DAC) – focus more than half – around 55% of their financial assistance – a mixture of grants and loans – on social sectors such as health, population, education and humanitarian aid.

In 2019, former Japanese Prime Minister Shinzo Abe at the seventh Tokyo International Conference for African Development (TICAD) assured African countries of “unlimited support” related to investment and innovation.

Last year, Japan signed a $668 million loan agreement with the African Development Bank (AfDB) to support African countries amid the Covid-19 pandemic.

(Content is released under agreement with indianarrative.com)

–Indian story

(385 words)

Source: IANS

Japan steps up lending to Africa amid falling Chinese contributions

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