Study finds limited link between Chinese loans and economic growth in Africa

Between 2000 and 2018, Chinese financiers committed over $148 billion in loans to African governments and state-owned enterprises. Despite this massive financial engagement, the research shows that only a handful of countries experience any meaningful economic growth associated with these loans and for most, the impact is negligible or even negative.

Key findings

Only 14 of the 49 countries show a statistically significant link between Chinese loans and real GDP growth. Of these 14, only four countries (Eritrea, Niger, Senegal, and Togo) demonstrated a positive association. The majority (10 countries), including Chad, Rwanda, and Seychelles, saw a negative correlation. For the remaining countries, no significant association with on economic growth was found.

According to Philip Hans Franses, the study provides important insights into the actual economic outcomes of China's loan strategies in Africa: ‘Despite the scale of lending, the aggregate association with African economic development appears to be limited and highly variable across countries.’

Call for deeper, localised analysis 

What sets this research apart is its country-by-country econometric analysis, revealing a high degree of variation that national averages and pooled studies often obscure. 

Looking ahead, the study calls for deeper investigation into why some countries experience negative outcomes. More granular data, down to the project or regional level, may uncover important nuances. Additionally, future research could explore broader measures of development beyond GDP, including health, employment, and well-being indicators.