Limited Sovereignty as African Countries Mortgage Resources to China

Governments in Africa have been mortgaging their natural resources to secure loans from China, a trend that often ignites debt distress when commodity prices collapse.

Angola, Democratic Republic of Congo (DRC), Ghana, Guinea, Sudan and South Sudan are among the countries in the continent that have used future revenues from natural resource exports as collateral for Chinese loans, a new study conducted by the China-Africa Research Initiative (CARI) at Johns Hopkins University shows.

“Contracting future revenues from natural resource exports as loan repayment is a way both for borrowers to attract finance and for lenders to mitigate risks to repayment. However, this lending modality can pose problems when commodity prices fluctuate,” notes the study.
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