China prudent in providing financing to Angola

15 October 2018

Angola obtained additional funding of US$2 billion from China, less than the US$11 billion sought, as China became more prudent in its lending to the African nation.

 

Speaking about the State visit to Beijing by Angolan President João Lourenço on 8 and 9 October, a source quoted by Angolan newspaper Novo Jornal, said that the US$2 billion credit line opened by the China Development Bank represents a policy change in the granting of credit, where the application of the funds should be “well justified” according to the country’s priorities.

 

The amount was lower than that sought by Angola because the Chinese Government considered that the needs submitted can initially be met with the amount now available.

 

According to the same source quoted by the Angolan newspaper, the new Chinese policy has already led to some projects that were to be developed with China’s credit lines being blocked, because it was understood that they were not a priority, and there was also concern about “bad quality (of works) associated with the Chinese.”

 

During the visit to Beijing, Finance Minister Archer Mangueira said that the new “financing will go to projects that can generate cash flow, create income, so as to contribute to the sustainability of this debt itself, which is to say, to pay down medium- and long-term debt.”

 

According to the China Africa Research Initiative (CARI) of Johns Hopkins University, Angola has received loans from China totalling US$42.8 billion over the past 17 years.

 

Official figures from Angola put the current debt to China at US$23 billion.

 

In a recent article on Angolan transport infrastructure refurbished using Chinese credit lines, the Africa Monitor newsletter also reported changes in Chinese funding criteria.

 

The Chinese authorities do not denote a reduction in their interest in the Angolan market, where, in fact, they count on a deferential attitude from political leaders, but they show that they are striving to improve the bad image they have among the population, which stems from bad practices that they are also letting go, said Africa Monitor.

 

In the road rehabilitation projects now under way, including along stretches of considerable length from Luanda to Huambo, one of the main roads in the country, Chinese contractors now show greater concern about the quality of the work, namely the sturdiness of the pavement and rainwater drainage ditches on its sides.

 

Another example is the clearly more solid construction of the new Luanda General Hospital, built in the same place where the previous one was demolished.

 

According to Africa Monitor, a substantial part of the new oil-backed credit facility from China will be used to finance 78 development projects, most of which in the area of infrastructure. (macauhub)

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