China’s Slowing Economy Will Hit Sub-Saharan Africa’s Growth
IMF News, November 9, 2023
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- Authors: Hany Abdel-Latif
- Published: November 9, 2023
China–Sub-Saharan Africa economic ties and trade patterns
- China is the region's largest single country trading partner.
- China buys one-fifth of the region’s exports—metals, minerals, and fuel—and provides most of the manufactured goods and machinery imported by African countries.
- China’s recovery from the pandemic has slowed recently due to a property downturn and flagging demand for its manufactured goods as global growth has also slowed.
Estimated growth spillovers to sub-Saharan Africa
- A one percentage point decline in China’s growth rate could reduce average growth in the region by about 0.25 percentage points within a year.
- For oil-exporters, such as Angola and Nigeria, the loss could be 0.5 percentage points on average.
Sovereign lending and public debt exposure
- Sovereign lending from China to sub-Saharan Africa fell below $1 billion last year—the lowest level in nearly two decades.
- Chinese loans to the region rose rapidly in the 2000s, with China’s share of total sub-Saharan African external public debt jumping from less than 2 percent before 2005 to 17 percent by 2021.
- China is the largest bilateral official lender to countries in the region.
- The share of debt owed to China remains relatively small, at just under 6 percent of the region’s overall public debt and is mostly owed by five countries—Angola, Cameroon, Kenya, Nigeria, and Zambia.
Adaptation and policy recommendations for sub-Saharan African countries
- Build resilience to China’s growth slowdown and declining economic engagements by:
- Increasing inter-African trade.
- Rebuilding buffers, including through tax policy reforms and improvements to revenue administration.
- Diversify economies to sustain future growth; leverage strong demand for minerals that support renewable energy development to:
- Forge new trade relationships.
- Develop more local processing capabilities.
- Improve competitiveness by:
- Creating a favorable business environment.
- Investing in infrastructure.
- Deepening domestic financial markets.
Source: IMF — "China’s Slowing Economy Will Hit Sub-Saharan Africa’s Growth" (November 9, 2023).