How to understand Africa's debt crisis and its impact on key assets

 

Africa’s debt crisis is crippling the continent. Photo credit: africanexponent.com

Africa's biggest lender, China, has come under fire for forcing bad deals on developing nations. However, recent research by Oxford and Columbia Universities found that private Western creditors bear the majority of Africa's external debt rather than the People's Republic of China. The investigation was conducted in the midst of global accusations against Beijing for allegedly entangling Africa in debt.

 

Since 2000, Beijing has given $150 billion to African nations, and according to the World Bank, the continent owes $427 billion in total external debt. China has come under fire for making appalling promises to underdeveloped nations. For example, this has caused Nigeria's debt to China to rise by 136% in just five years. The experts note that the idea of a debt trap is only a strategy in the struggle between China and the United States for supremacy in the world.

 

Studies reveal that the whims of the bond market, not China's debt traps, are what keep African leaders awake. Lenders who lend to developing nations risk taking control of their valuable assets if the borrowers are unable to make their payments on time. Those who buy their debt in the form of bonds are mostly responsible for the debt load of African nations. New York, Frankfurt, and London are just a few of the cities where these lenders have operations.

 

The studies also revealed that pledges have increased more in recent years than in any other African nation. At the end of 2019, the combined national debt of African nations, including Angola, Ethiopia, Kenya, Nigeria, Ghana, and Zambia, owed to China was $78 billion, making up around 8% of the region's total debt and 18% of the continent's total external debt. Similar study findings were validated by the World Bank.

 

Boston University and Johns Hopkins University scholars claim that since 2000, Beijing has lent more than $150 billion to African nations. Although this sum is substantial, it is insufficient to be the main factor contributing to the growing debt of developing nations. The World Bank estimates that Africa owes $427 billion in total external debt, although rampant corruption has also contributed significantly to the continent's poverty.

 

According to analysts, the majority of the funds are distributed under the Chinese "One Belt, One Road" program, and the loans are typically from state-owned banks in China and come with hefty interest rates. In 2020, the G7 countries aim to establish a network of infrastructure and trade that links Asia, Africa, and Europe. As a result, they insist that China reduce the debt load of developing nations.

 

Kenyan officials fear they will lose control of the vital port of Mombasa if they don't fulfill their financial commitments to China. But according to specialists at Johns Hopkins University in April 2022, the port is not a promise made in the agreement. In 2015, Angola had too little crude oil to sell since nearly all of it was used to pay back a Chinese loan, according to Reuters.

 

International organizations are worried about a wave of defaults in African nations because of difficulties in meeting obligations, especially given the challenging global economic climate. Nigeria's debt to China increased 136% between 2010 and 2015. 

Nonetheless, the researchers believe that stubborn private lenders, rather than China, will be a major factor in this, and according to some analysis, default is likely to occur in a number of nations, including Egypt, Ethiopia, and Ghana.

 

Although several African leaders dispute that China has forced their nations into debt, it is thought that the idea of a debt trap is only a ploy in the political struggle between the US and China. 

They believe Beijing has contributed to building the necessary infrastructure on the continent, in contrast to the West. However, according to President Emmerson Mnangagwa, “Chinese companies have invested in Zimbabwe's electricity, aviation, water supply, real estate, industry, and defense.”

 

How China rose to global superpower status: Lessons the world ignored

China, once the least respected country in Asia, has now become the world's most powerful country.

 

China’s transformation into a global superpower did not happen overnight. It took decades of discipline, strategy, sacrifice, and national ambition. Yet only sixty years ago, many developed nations dismissed China as weak, poor, and irrelevant. 

 

Today, the same China stands as one of the most powerful countries on earth, reshaping global politics and challenging long‑established powers.

What Does It Mean to Be a Superpower?

 

A superpower is a nation with overwhelming political, economic, military, and cultural influence, strong enough to project its power far beyond its borders. For years, the United States held this position almost alone. As a student, I admired America because the idea of a superpower symbolized greatness, innovation, and global leadership.

You may also like to read: How China used loans and infrastructure to transform Africa's development

But over time, many nations realized that the United States often preached virtue while practicing the opposite. Its foreign policies frequently undermined weaker nations, creating resentment and awakening a desire for independence and strength.

The Wake‑Up Call for China

Countries like China and North Korea watched closely. They understood that relying on Western goodwill was dangerous. If they wanted respect, they needed power, real power. Today, both nations are considered among the most formidable states in the world, second only to the United States. But how did China, once underestimated and mocked, rise so quickly?

A Lesson From a Pressing Iron

In the late 1970s, I read An African Student in China by Ghanaian author Emmanuel John Hevi. One story in the book has stayed with me for decades.

Hevi bought a brand‑new pressing iron in China. Within a week, it broke. He returned it, and the shop repaired it. It broke again. They repaired it again. This cycle continued.

At first glance, it seems like a simple story of poor manufacturing. But in reality, it reveals something deeper: China was learning, testing, failing, and improving. Every breakdown was a lesson. Every repair was research. Every mistake was a step toward mastery.

Related article: Why the US influence in Africa is shrinking as China advances

This relentless pursuit of perfection is the foundation of China’s electronics and manufacturing dominance today.

Mao Zedong’s Warning

 

Between 1960 and 1964, Mao Zedong expressed deep concern about the growing dominance of the United States and the Soviet Union. He believed both nations were using their power to control the world. He called them superpowers with unprecedented military and economic strength, and aggressive ambitions.

This fear, combined with national pride, pushed China to pursue its own path. While Western nations underestimated China, the Chinese government quietly built strength through discipline, long‑term planning, and national unity.

The Cost of Underestimation

 

Underestimation is a dangerous virus. For decades, the United States dismissed China as a minor threat. But the COVID‑19 pandemic exposed how deeply interconnected — and vulnerable — the world had become.

The same United States that once called African nations “shithole countries” was also responsible for destabilizing Libya and supporting the coup that overthrew Kwame Nkrumah of Ghana. These actions show a pattern: powerful nations often undermine others to maintain dominance.

Bob Marley captured this truth in Redemption Song:

 “How long shall they kill our prophets while we stand aside and look?”

A Message to African Leaders

If this article carries any lesson for African leaders, it is this: Stop relying on foreign powers and stop drowning your nations in corruption.

Africa has every resource needed to rise, minerals, land, talent, and youth. What it lacks is leadership with vision, discipline, and courage.

You may also like to read: Were there black Chinese, and where are they now?

China rose because it refused to remain weak. Africa can rise too, but only when its leaders choose integrity over corruption and development over personal wealth.