Silk Roads or Strings Attached?: The Geopolitics of Chinese Finance in Africa

A photograph of African leaders applauding Chinese President Xi Jinping (center) after his speech at the opening ceremony of the Forum on China-Africa Cooperation in Beijing's Great Hall of the People on September 5, 2024 (Associated Press Photo).

By Cheick Sy ‘28

In recent years, China has emerged as a dominant player in global development finance, with Africa standing at the forefront of its ambitious lending initiatives. Through flagship programs like the Belt and Road Initiative (BRI), China has extended billions of dollars in loans to African nations, financing critical infrastructure projects such as railways, ports, and energy facilities. These investments have been hailed as transformative, offering African countries an alternative to traditional Western lenders and addressing long-standing infrastructure deficits that hinder economic growth. However, China’s lending spree has also sparked intense debate, with critics warning of unsustainable debt burdens, eroded sovereignty, and geopolitical ramifications of Beijing's expanding influence. 

China’s Lending Policy: Objectives and Mechanisms

China’s lending policy in Africa is characterized by a combination of concessional and commercial loans, primarily channeled through state-owned financial institutions such as the Export-Import Bank of China (Exim Bank) and the China Development Bank. Concessional loans, which offer lower interest rates and longer repayment periods, are often directed toward infrastructure projects that align with African nations’ development priorities. In contrast, commercial loans, provided at market rates, tend to fund large-scale ventures like mining and energy projects. These financial instruments have enabled China to become Africa’s largest bilateral trading partner, with commitments exceeding $282 billion over the past two decades.

A distinctive feature of Chinese lending is its “tied” nature, in which loans are frequently conditional on the use of Chinese contractors, labor, and materials. This approach ensures that a significant portion of the funds flow back into the Chinese economy to support domestic industries and employment. For African nations, however, this structure can limit opportunities for local businesses and workers, raising questions about the long-term sustainability and inclusivity of such projects.

China’s lending strategy is driven by a mix of economic and geopolitical objectives. Access to Africa's vast natural resources, such as oil, minerals, and agricultural products, remains a key motivation, ensuring a steady supply of raw materials for China’s growing economy. Additionally, infrastructure projects like ports and railways are designed to expand trade routes, integrating African markets into China’s global supply chains under the BRI. Beyond furthering economic interests, China’s loans serve as a tool for strengthening diplomatic ties. They serve to foster goodwill and secure political support in international forums. For example, Beijing has cultivated UN leaders such as Secretary-General António Guterres to champion its initiatives like the BRI. By positioning itself as a reliable partner for development, China has cultivated influence across the continent, challenging the traditional dominance of Western powers in Africa’s economic and political landscape.

Economic Opportunities for Africa

China’s loans have financed some of Africa’s most ambitious infrastructure projects, transforming transportation networks, energy systems, and trade corridors. The Mombasa-Nairobi Standard Gauge Railway (Kenya), a $3.2 billion project largely funded by China’s Exim Bank, has significantly reduced cargo transit times and boosted regional trade. Similarly, the Addis Ababa-Djibouti Railway, a $4 billion venture, has enhanced Ethiopia’s access to ports, strengthening its position as an East African trade hub. In energy, Chinese investments have expanded power generation, including the Caculo Cabaça Dam in Angola and solar farms across Zambia, helping to alleviate chronic electricity shortages.  

Beyond infrastructure, these projects have spurred job creation and industrialization, albeit with mixed outcomes. Chinese firms often employ local labor for low-skilled work while reserving technical and managerial roles for Chinese expatriates. In Ethiopia, industrial parks built with Chinese financing, such as the Eastern Industrial Zone, have attracted manufacturing firms, creating thousands of jobs and fostering light industrialization. However, critics argue that reliance on Chinese contractors limits skills transfer and long-term capacity building. Nevertheless, in nations with high unemployment, even temporary construction jobs and linked service-sector growth provide critical economic stimulus. While debates persist over sustainability and local participation, China’s infrastructure push has undeniably reshaped Africa’s economic landscape—accelerating connectivity but also deepening dependency in key sectors.

Debt Sustainability and Sovereignty Concerns

China’s expansive lending to Africa has fueled growing concerns over debt sustainability, with several nations facing severe repayment challenges. Zambia, which owes nearly $6 billion to Chinese creditors, became Africa’s first pandemic-era sovereign default in 2020 after struggling to service its loans. Angola, another major borrower, has allocated over 30% of its GDP to debt repayment, much of it tied to oil-backed Chinese financing. Ethiopia, despite infrastructure gains from Chinese loans, has sought debt relief under the G20’s Common Framework, highlighting the strain of its $14 billion obligations to Beijing. According to the World Bank, at least 20 African countries are now at high risk of debt distress, with China holding an average of 12% to 20% of their external debt.  

These financial pressures have intensified the “debt-trap diplomacy” debate, with opponents arguing that China deliberately extends unsustainable loans to extract strategic concessions. For example, the case of Sri Lanka’s Hambantota Port, which was leased to China for 99 years after Colombo defaulted, has become a cautionary tale for African nations. Similar concerns have arisen over Zambia’s potential loss of control over key mines and Kenya’s risk of ceding Mombasa Port if loan terms are renegotiated. Beijing dismisses these claims, framing its lending as mutually beneficial and pointing to debt restructuring agreements with countries like the Republic of Congo. President Xi has even stressed the point that China’s aid and loan to Africa will not “come with any political conditions attached.” Yet, the opacity of Chinese contracts—often containing confidential collateral clauses—fuels skepticism. As African governments balance urgent infrastructure needs against long-term fiscal sovereignty, the question remains: is China a partner in development or a creditor with geopolitical ambitions?

Geopolitical Implications: Shifting Alliances and Strategic Maneuvering  

China’s infrastructure, financing, and development loans have translated into substantial soft power gains across Africa. By positioning itself as a non-interventionist alternative to Western donors, Beijing has cultivated strong bilateral relationships, evidenced by African nations’ consistent support for China in international forums. Over 20 African countries backed China's stance on Hong Kong and Xinjiang at the UN on China’s National Security Law in Hong Kong that received plenty of backlash. The Forum on China-Africa Cooperation (FOCAC) has become a key diplomatic platform, with Beijing leveraging economic ties to advance its global governance agenda, including expansion of the BRICS bloc.  

Alarmed by China’s encroachment into traditional spheres of influence, Western powers have launched counter-initiatives. The U.S. Build Back Better World (B3W) and the EU’s Global Gateway aim to offer transparent, sustainable alternatives to BRI financing, though with significantly smaller funding commitments. France has restructured its African military presence while increasing development aid, particularly in Sahel nations seeking to reduce dependence on China. Meanwhile, Russia and Turkey are expanding economic and security partnerships, adding layers to Africa’s complex geopolitical landscape.  

Far from acting as passive recipients, African governments are strategically playing competing powers against each other. Nigeria secured favorable loan terms from China after threatening to pivot to Western lenders, while Angola used its oil reserves to negotiate debt relief from multiple creditors. The African Union’s 2063 Agenda explicitly calls for diversified partnerships to prevent over-reliance on any single power. However, divisions persist: while some nations like Senegal welcome multipolar engagement, others like Zimbabwe and Eritrea increasingly align with Beijing and Moscow. As the continent becomes a battleground for 21st-century influence, African leaders face both unprecedented opportunities and difficult choices in balancing sovereignty against development needs.  

Navigating the Double-Edged Sword of Chinese Finance  

China’s lending policy in Africa presents a paradox of promise and peril. On one hand, it has delivered critical infrastructure, from railways to power plants, addressing gaps that hindered economic growth for decades. Projects like the Mombasa-Nairobi Railway and Ethiopia’s industrial parks have boosted trade, created jobs, and offered alternatives to restrictive Western financing. Yet these benefits come with rising debt distress, opaque loan terms, and concerns over sovereignty, as seen in Zambia’s defaults and fears of asset seizures. The debate over “debt-trap diplomacy” remains unresolved, but the risks of overreliance are undeniable.

Beyond economics, China’s deepening footprint signals a geopolitical realignment, with Africa emerging as a contested arena in the U.S.-China rivalry. While Western initiatives struggle to match Beijing’s scale, African nations are leveraging this competition to negotiate better terms and diversify partnerships. However, the long-term consequences remain uncertain: will China’s model foster sustainable development, or will it prioritize extraction and strategic control? For Africa, the challenge lies in balancing immediate infrastructure needs with preserving fiscal and political autonomy. Globally, the outcome will test whether multipolar engagement can coexist with equitable growth or simply replicate colonial-era dependencies in a new guise.