From 2000 to 2021, Chinese creditors, particularly state-owned commercial banks (SOCBs) and state-owned enterprises (SOEs), lent more than $75-billion in infrastructure loans across Africa. The topic of Chinese commercial creditors has received very little attention, therefore little is known about what this means for African borrowers. This working paper explores the diversification of Chinese lending over the last decade, highlighting how commercial creditors have introduced new financing sources, and challenging the traditional dominance of policy banks.

It reveals that commercial creditors, despite their state ownership, differ significantly from policy banks in their project financing approaches and risk appetite, often taking on  projects with less favourable financial terms for borrowers. This diversification has critical policy implications for debt restructuring and future infrastructure financing in African economies, emphasising the need for strategic and prudent leveraging of these resources.

This paper draws on quantitative analysis, case studies, and Chinese policy documents. It examines the lending practices of policy banks and commercial creditors in Zambia and Ghana, providing insights into the decision-making processes and the impact of creditor diversification on project finance and debt management.

Paper by the Overseas Development Institute