China is Africa's single largest lender, and Africa's largest trading partner. Countries such as Angola, Guinea and the Democratic Republic of Congo export raw materials such as oil and minerals to China, and China has large investments in Africa. Of Africa's total government debt, 20 percent is estimated to be Chinese lenders. According to the World Bank, about $ 150 billion. The corona crisis will make repayments painful.
On average, African countries' economies will shrink by 1.6 percent in 2020, according to the International Monetary Fund. That is a historically low figure.
- It can be raw materials such as oil, natural gas or iron ore, cut flowers from Ethiopia or Kenya, or steak from Namibia - demand for the products produced in Africa is declining, says Peter Stein, economist and African expert.
Stop for tourismThe Corona crisis has also put a stop to tourism. And reduced direct investment, and another, even greater source of income for Africa's economies: referrals. Many Africans in Europe, North America or the Middle East work in industries that have been negatively affected by the corona pandemic and cannot send home as much money.
Peter Stein predicts that the corona crisis will create tensions between Africa and China. In an economic downturn, China will rely more on its domestic market, reducing imports of, for example, raw materials from Africa.
- Many African countries that are heavily dependent on China will look at this and wonder if it is so wise, says Peter Stein.
African leaders, for example from the governments of Ghana and Nigeria, have already gone public and urged China to reclaim some of the countries' debts. There are several earlier examples where China has negotiated with individual countries for minor relief. But China is unlikely to make broad concessions alone.
- Many of the contradictions that were previously handled behind closed doors will now come to the surface, because the win-win situation that existed earlier when China has had rapid growth and invested heavily in Africa will be fundamentally different after corona pandemic, says Peter Stein.