China's Strategic Shift: Lending to Africa Focuses on Smaller, Viable Projects

Chinese lending to Africa dropped to $2.1 billion in 2024, marking a shift from large infrastructure projects to smaller, commercially viable ones. This change follows losses from defaults during the pandemic. Loans are now often yuan-denominated, with a focus on partnerships and strategic projects.

Chinese lending to Africa significantly decreased in 2024, with financing nearly halved to $2.1 billion. This marks a strategic shift from massive infrastructure projects to smaller, more commercially viable investments, as highlighted in a report by Boston University.

The decline reflects China's new focus on targeted projects rather than the large dollar-denominated initiatives that characterized previous years. China's lending strategy now emphasizes yuan-denominated loans and collaborations involving local African banks.

In 2024, China funded only six projects across Africa, with Angola being the largest recipient. Researchers suggest this selective lending approach supports sustainable growth while mitigating debt risks amid Africa's promising economic and population growth forecasts.

(With inputs from agencies.)