Yesterday marked the first major development we’ve seen on the debt story in Africa in quite some time. The fact that Angola was the beneficiary was significant, given its outsized position in China’s loan portfolio on the continent.

Angola alone makes up almost a third of Chinese debt stock in Africa, according to Johns Hopkins Professor Deborah Brautigam, and accounted for 41% of all the African debt service that was paid to official Chinese creditors in 2020.

So, reaching some sort of mutually acceptable debt restructuring resolution in Angola will go a long way to resolving China’s larger African debt problem.

Attention is now moving to Kenya, where only 8 days remain before the Treasury will have to start to make payments on a $1.4 billion loan that was used to build the Nairobi-Naivasha Standard Gauge Railway.

Tuesday’s announcement by the Paris Club of creditors that it would grant Nairobi 6 months of debt repayment suspension is a good first step, providing the Treasury with an additional $300 million in funds. But it will probably be insufficient to ward off full-scale debt distress. Kenya still needs to reach some sort of settlement with its largest external creditor in Beijing.

SUGGESTED READING:

• Bloomberg: IMF Disburses $488 Million to Angola, Backs Plan to Cut Debt by Alonso Soto, Henrique Almeida, and Eric Martin
• Business Daily: Kenya eyes China action after Paris Club debt relief by Otiato Guguyu