Osinbajo: Chinese loans reduced Africa’s dependency on IMF, World Bank

Vice-President Yemi Osinbajo says Chinese lending to Africa has reduced dependency on loans from Western institutions.

Osinbajo spoke while delivering a public lecture on ‘China’s Investment in Africa’ at King’s College, London on March 27, 2023.

The vice president’s comment comes on the heels of the tour of Kamala Harris, the United States’ vice-president, to three African countries — Ghana, Tanzania and Zambia —  to strengthen diplomatic ties on the continent.

Speaking at the event, Osinbajo lauded China for consistently showing up for African countries.

He said this was evident in the investment of the Asian giant in Africa, which he said stood at $254 billion in 2021, about four times the volume of US-Africa trade.

“China is the largest provider of foreign direct investment, supporting hundreds of thousands of
African jobs. This is roughly double the level of U.S. foreign direct investment,” he said.

“China remains by far the largest lender to African countries. Chinese companies have also
taken the lead in exploiting minerals in Africa, many now in lithium mining in Mali, Ghana,
Nigeria DRC, Zimbabwe and Namibia.

“Most African countries are rightly unapologetic
about their close ties with China. China shows up where and when the west will not or
are reluctant.

“And many African countries are of the view that the ‘beware of the Chinese Trojan loans’ advice from the west is wise but probably self serving. Africa
needs the loans and the infrastructure. And China offers them.”

Taking a swipe at the Bretton Wood institutions — such as the World Bank and the International Monetary Fund(IMF), the VP described the conditions attached to their loan facilities as “destructive”.

“The memory of the destructive conditionalities of the Bretton Woods loans are still fresh
and the debris is everywhere,” Osinbajo said.

“And the preoccupation of western governments and media with the so called China debt trap might well be an over reaction, I recommend an
eye opening lecture by Professor Deborah Brautigam about two weeks ago at Jesus
College Cambridge.

“The truth as she points out, is that all of Chinese lending to Africa is only 5% of all
outstanding public and publicly guaranteed debt in low and middle income countries, compared to 23% held by the World Bank and other multilaterals.

“Chinese lenders account for 12 per cent of Africa’s private and public external debt.”

Osinbajo also praised China for being there for African economies when debts cannot be paid.

“In early 2020 as COVID battered
African economies China came together with other G20 members to launch the Debt
Service Suspension Initiative ( DSSI),” he said.

“73 low income economies benefited from the
suspension of principal and interest payments.

“Chinese banks provided 63% of the
total debt relief while being only owed 30% of the debt service payments due.”