johannesburg - As China marks the 10th anniversary of the launch of its global infrastructure project, the Belt and Road Initiative (BRI), new data show lending to Africa has fallen to its lowest level in almost two decades.
A paper released this week by researchers at Boston University's Global China Initiative said the pandemic, domestic economic woes, a policy shift and concerns about African debt were among the reasons lending in 2021 and 2022 dropped below $2 billion for the first time since the inception of the BRI.
In 2000-22, Chinese lenders loaned $170 billion to Africa - one of its major BRI partners - the research showed. But after peaking in 2016 at over $28 billion, lending to Africa dropped considerably in the past two years.
In 2021, China loaned $1.22 billion to Africa, and last year only nine loans amounting to $994.48 million were signed.
"Trends show that loan averages and amounts are decreasing and policy framing in China is also shifting, which leads us to expect less large-scale lending over $500 million," lead researcher Oyintarelado Moses told VOA in an email.
"At the same time, this new policy framing of small and/or beautiful coming from China is showing that there will be more smaller-valued loans."
Social, environmental impact
Moses was referring to what Chinese President Xi Jinping has called Beijing's "small and beautiful" approach, which aims to shift away from investment in large projects like railways and highways to focus on smaller loans that have more of a socially and environmentally beneficial impact.
Another trend the study found was that while previously most lending went to eastern and southern African countries, in 2021-22 there was a shift to western Africa, with countries like Senegal, Benin and Ivory Coast receiving most of the money.
That is because "these countries have historically borrowed less from China, so China had less loan exposure to these countries," Moses said, noting that countries in other parts of Africa that have borrowed heavily in the past are currently managing debt distress.
FILE - Construction work by Chinese state-owned firms is seen at the University of Nairobi, Kenya, Sept. 2, 2015.
Chinese lenders may also have become more cautious, the study found, because several African countries such as Zambia either have defaulted on their debt or are struggling to repay, leading to Western allegations of unsustainable lending.
In 2021-22, several loans for projects in the Democratic Republic of the Congo, Cameroon, Ghana and Zambia were canceled after failed negotiations, the study found.
During that same period, new loans were directed to a wider variety of sectors than in previous years, although transport remained a dominant area.
There were no new investments in energy projects, the African sector that attracted the most previous loans. The paper's authors think China will continue to look for greener projects to fund after pledging to make the BRI "green" and ending the financing of coal projects overseas.
One of the most recent Chinese investments is a deal with South Africa signed in August to help with its energy crisis. The package will include a grant and emergency equipment from China totaling $30 million.
Two areas in which investments increased in 2021-22 were the environment - such as a loan to Senegal to help in "improving water resources" - and improvement in farming and education, the data showed.
Other reasons for the decrease in lending had more to do with China's own economic slowdown.
The study suggests future lending to Africa could include fewer large-scale loans of over $500 million and more loans under $50 million.
"African governments will continue to have demand because of infrastructure deficits and climate goals, but Chinese lenders will likely respond to that demand within these new policy parameters," Moses told VOA.
"In general, we expect Chinese lending to rebound because of African country demands. But this rebound will likely not return to previous levels," she said.
Cobus Van Staden, an analyst at the China Global South Project, agreed that lending rates will never again reach the levels seen in 2016.
However, he said, "there's a tendency, I think, to just see the current decline in lending as, 'Oh, the BRI's over,' which I think is unrealistic.
"I think the BRI has never been a stable thing, and it was always mutating and morphing, and it's mutating and morphing again at the moment. So it's going to take on some leaner, greener version of itself, and then we'll see," he told VOA.
Van Staden predicted that "as the economy in China improves and comes a little bit back up to speed ... I think the lending will creep back up."
He said he expected this to happen after next year's Forum on China-Africa Cooperation.
"I think we're probably in a kind of flat phase at the moment, and then I think it will start creeping back up, because the thing to remember is that Africa isn't going away."
Africa needs China and, likewise, Africa also offers China benefits such as access to the continent's vast mineral resources, he said.