Debt servicing: China flips from Africa’s top lender to net debt collector

By: Chidozie Nwali

China has officially transitioned from being Africa’s largest source of development funding to a net extractor of capital from the continent. Report from Development Finance Observatory (an initiative of ONE Data) confirmed on Tuesday.

The data confirms that for the first time in the 21st century, the flow of money from African treasuries back to Beijing now exceeds the amount of new credit China is extending for infrastructure and development.

According to the report, the financial relationship between China and African nations has undergone a “Great Reversal.” Over the last decade, the net financial flow (new loans minus repayments) has flipped dramatically:

Between 2010–2014 China was a net provider of finance, transferring $30.4 billion to Africa to fuel the massive road and infrastructure boom.

However, between 2020–2024 the flow reversed, with Africa paying out a net $22.1 billion back to Chinese lenders. This represents a massive $52.5 billion swing in the continent’s balance of payments in just ten years.

“Africa went from receiving $30.4 billion in net flows from China in 2010–14 to paying out $22.1 billion in net flows to China over the last five years, a $52.5 billion swing,” the report said.

“The tide has gone out,” says David McNair, Executive Director at ONE Data. “For the rest of this decade, China will be more debt collector than banker to the developing world.”

The shift is as a result of loan defaults from few African countries, and a “perfect storm” of peak repayments.

Last week, a report from Boston University Global Development Policy (GDP) Center, noted that post pandemic struggles in 2021 forced few African countries to default on their Chinese debt, causing a strategic retreat by Beijing.

Many of the massive loans used to build railways in Kenya, ports in Djibouti, and dams in Angola have moved out of their “grace periods” and into high-interest repayment phases. In 2024 alone, debt service outflows to China reached $17.4 billion.

New Chinese loan commitments have plummeted. From a high of over $26 billion in 2018, fresh lending fell to just $2.1 billion in 2024—a 46% drop from the previous year.

GDP center said Beijing is pivoting away from “vanity projects” toward smaller, more bankable investments in green energy and the private sector, leaving a massive gap in sovereign infrastructure funding.

While the trend is continent-wide, the “liquidity squeeze” is hitting specific nations hardest. Countries like Angola, Zambia, Kenya, and Ethiopia—which borrowed heavily during the 2010s—are now facing the dual challenge of high repayment schedules and a lack of new credit to refinance that debt.

As Chinese and private sector lending retreats, multilateral institutions like the World Bank and the African Development Bank (AfDB) have become the new bedrock of finance. The report notes that multilateral net financing has increased by 124% over the past decade, now accounting for 56% of all net flows to developing nations.

However, experts warn that even this surge may not be enough to offset the “capital flight” caused by Chinese debt servicing, potentially forcing African governments to choose between paying foreign creditors and funding domestic healthcare and education.